Grade 2 & Grade 3 High Probability Short covering Rally/Vertical Long Liquidation is more of a visual pattern which explains why a potential short covering / long liquidation pattern has to arrive when a specific trading behavior is observed. How to Initiate trades, when to invalidate setups and what are the high potential probe zones where the price can be expected to revisit in a very shorter timeframe.
Poor Structure in Nifty futures that the regular daily structure last couple of days indicating that more of emotional shorter term players are reacting to every tiny news information very emotionally. However, there is a lack of serious money last couple of days keeping the market in a 200 point tight range since 25th May 2018.
Nifty Futures on Friday’s trading session again bounced back above important and critical reference 10564 (Double distribution reference). Thursday’s and Friday’s trading session involve more of a old money covering their shorts rather than a fresh buying. That brings the question is the inventory adjustment is over as short term inventory when short to too short on Wednesday’s trading.
Nifty Futures on Wednesday trading session exactly respected at the Tuesdays prominent POC and also selling continued at days open. Day ended with a spike with a poor structure combination indicating a potential pullback towards 10540 levels as the short term trading inventory goes short to too short. Current swing low is not secured yet (will be revisited in a very shorter term).
In the financial markets, often a set of market participants keep on adding long inventory of a particular trading instrument during bull markets (long inventory pile up phase) over a period of time. At times the long inventory goes to the extreme which is often followed by the liquidation of those piled up inventories (liquidation phase). It is a trading good practice to understand which participants are piling inventories and who in the markets are cutting down their inventories.
Nifty Futures formed a back to back secured high indicating a potential swing top formation and also on Friday’s trading session broken 2 week low comfortably and closed below that comfortably. Immediate shorter term resistance coming around 10720 levels. In the last article, we talked about Too Many Weaker References dominating Nifty Futures.
“Too many Weaker References” – What does that actually mean? It means more of short term buyers behavior at every dip where they come and pile at very mechanical references. Those are the references which are often susceptible to retest and at times faster. when the weaker reference levels are exponential it indicates that short term inventory is getting long to too long and the revisiting odds of all those references significantly increased.
This is the short post to let you know that I’ll be speaking at Traderscarnival 2018 Conference about Crowd Intelligence and Market Profile. The Traders Carnival Conference that will be held at Mumbai at The Renaissance, Powai, at the financial hub of the country, May 25 to 27, 2018.
Will be presenting a webinar on How to use Bell Market Profile Pro (New Features) and how to analyze Nifty and Bank Nifty Futures using Market Profile and how to take advantage of new Market Profile features in Ninjatrader 8 platform.
Inventory adjustment occurs especially when the market participants goes too long or too short. Short term Inventory Adjustment will be realized in the market either in the form of short covering or long liquidation breaks. Understanding the Long Term, Short Term, Day timeframe inventory conditions will give the true edge from both the trader/investor perspective.
On Fridays trading session price opened lower though the trading sentiment on Fridays trading session is positive price maintained to close below thursdays pullback low reference. Value formed lower to overlapping and trading sentiment turned to negative despite one timeframing higher for 5 consecutive trading sessions on Daily timeframe.
Volume profile is a key study when comes to understanding the auction trading process. Volume Profiles will show you exactly how much volume, as well as relative volume, occurred at each price as well as the exact number of contracts for the entire session. It is a visualization tool to understand the high activity zone and low activity zone.