Dear, PAN
Thanks a lot for the detailed reply and also for mentioning that my observations on the chart are same as your observations. I am very excited by reading those lines. 🙂
I have taken bunch of printouts of your articles and reading them as and when i get time. I am that much attracted to your articles 🙂 I have been trading for seven years and never been successful.
Now i am getting more confidence by reading your articles.
Thanks a million for boosting my confidence level…. 🙂
Regarding the Nifty chart: It did move as you have mentioned and currently it is almost near the high.
I got a doubt at the current position of Nifty. I would like to know if the banks are still long or are they started to place fresh selling.
I have attached my new observations (Blue callouts) along with this mail. Could you please provide your valuable comments..
Regards,
My Response:
No problem!
The new observations you’ve made are all correct.
The only thing I would add is that all the swing lows formed during this current move higher which started on the 27th March, have all formed as a result of the bank traders placing more long positions into the market.
These long trades are much much smaller than the longs they may or may not have placed to cause the market to move up and create the two swing lows we saw form at the 9,024.01 and 9,018.06 levels back on the 22nd and 27th March.
The fact that these long trades are much smaller than the long trades they may have potentially placed at the two lows, means that it’s unlikely we’ll see another move higher develop if the market falls into the lows next week, it’s much more likely we’ll see another move higher begin when the market drops into the demand zone which encompasses the two lows, as these would have formed from the bank traders placing a much larger number of buy trades into the market.
At the moment it looks to me like the bank traders are still long.
If they were taking profits or going short some kind of larger reversal structure would have to form in the market.
What we’ve seen form so far does not look to me like a large reversal structure. That could change though depending on how the market reacts to the source of the drop which took place on the 17th March.
A drop from here would be a signal the banks are potentially getting sell trades placed or are taking more profit off buy trades they’ve already got open.
From the price action thats formed now I can’t tell right now which one it’s more likely to be, so I can only recommend you to continue watching the price action to see what happens tomorrow.
If you see some kind of large drop take place tomorrow it will be a sign a move down to the demand zone I showed you in the previous email is likely going to take place.
A large drop to me is a drop which consists of at least two large bearish candlesticks, so if you see something like that form be aware that a move down is probably going to occur for the rest of the week.
I see that you currently can’t purchase the Large institutions book.
Unfortunately there is no other payment method so I’ll just let you have the book for free.
You can find it attached to the top of this email, enjoy the rest of your afternoon!
Continued…
Dear PAN,
Trust you are doing well.
By following your method I placed my very first trade and it did go very well. I am excited to share my experience with you. The reason I like to share is because, the knowledge I acquired from your great articles gave me more confidence while I was in the trade.
In the attached chart, you can see two black arrows, and that is where I entered and exited my short trade on the next day in Nifty. (For your information: Our Indian markets operate from 9:15 a.m. to 3:30 p.m.)
As you can see in the chart, after I entered my short trade, price started to move against my position.
Usually I will close the position with small loss. But after reading your articles, I know that there is a supply zone on top and I waited for the price to react at that supply zone. Price did pause there and I kept my position open. On the next day, the market gapped up little and it was bullish for first 30 minutes. Though I was tempted to close the short position with small loss, all the articles I read from your blog came in to my mind and I held the position knowing that the banks have already placed short positions and there is a supply zone on top.
As expected, it did fall and I covered the short with decent profit when it reached the swing low. This change in my psychological thinking wouldn’t have happened without reading your articles. Thanks a lot Forexmentor…..
I also need your expert opinion in the attached chart.
-  I can see the banks are placing sell orders at the top of the chart. Will the price break the demand zone that I have marked in green and move down? Or…
- Â As the overall trend is up, should I treat the current fall in the market as retracement of the up move? Retail traders may be thinking that the trend has changed to bearish and may be placing short trades. Banks may be using these sell trades of retail traders to enter long trades
Could you please guide me how I should read the market now…. This will greatly help me to position myself in the trade. Thanks a million once again and eagerly waiting for your response as usual.
Regards,
My Response:
Hello,
Sorry for not replying sooner, I saw your email last week but decided I’d reply to at the weekend as I was trying to get an article finished.
Seems like your trade worked out pretty well. You did good holding onto it when the market moved against you.
Just remember that if that happens in the future and you end up losing on the trade, don’t think that closing the trade prematurely is a good idea because it almost always isn’t, and the pain of closing what would’ve been a profitable trade is often much greater than actually losing money in my opinion, so just keep that in mind when you’re holding trades in the future.
As far as the Nifty is concerned, I think we’re going to see the market drop through the demand zone you’ve marked and fall into the demand zone below which is now a buy zone due to the move up.
The current downmove that been taking place since the 5th April, is occurring as a result of the bank traders either taking more profits off buy trades or placing sell trades to make the market reverse.
The fact that the drop has started after the market broke only a small distance past the previous high made on the 16th March, suggests that it’s because the bank traders have placed sell trades to make the market reverse, although we need to see more price action to confirm this.
My advice to you is to watch for an entry long when the market falls down to the demand zone/buy zone you’ve got marked at the bottom of your image.
If the banks are placing sell trades it’s unlikely they have been able to get all of their trades placed, so another move back up to the source of the current move down is probably going to occur once the market falls into the demand zone/buy zone at the bottom of the image.
If they haven’t got sell trades placed, then a move back up is still probably going to occur, as the lows found near the demand zone/buy zone are the most recent points where the banks have got buy trades placed into the market.
They could be making the market fall back to these lows so that they can get more buy trades placed ready for another move higher.
In either case a move out of the demand zone is likely to take place, so keep an eye out for entries long when the market enters the zone. A large bullish engulfing candle which engulfs a similarly large bearish candle would be a good signal, as would a sharp move higher consisting of multiple bullish large range candles.
If you see something like that form expect a move out of the zone to take place.
Hope this helps…