Market Generated Information is the key to better market understanding which tracks what out competition is doing and how dumb they really are. This tutorial explains how we can understand the market behavior with emotional players and how do they react and how we can spot them using market profile. As always market profile is not a trading strategy but a completely a different way of looking into markets, in fact, I call it as radical thinking.
[Currently, this tutorial access is limited to TradeZilla Workshop members only] [ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”1″ ]Here is the live case study of exponential emotional sellers information in Nifty Futures Oct 2018 contract.
Day 1(17th Oct): 8 anomalies indicates poor structure which in turn indicates emotional selling from short-term players
Day2(19th Oct): a 45-degree line formation where price plunging below value area(emotional sellers) followed by price closing around POC line indicates short-term players getting short in the hole attempting to catch poor prices. Whoever sold below value area are mostly emotional short-term sellers.
Day 3(22nd Oct): Late Spike base where price migrated lower but not the POC level. (Emotional Selling) + Weak ORR indicates weaker stops from short-term emotional sellers
Day 4(23rd Oct): 6-day failure breakout with POC forming above 6 day low indicates lack of serious sellers on Tuesday’s trading. In addition, a 45-degree line formation where price plunging below value area(emotional sellers) followed by price closing around POC line indicates short-term players getting short in the hole attempting to catch poor prices. Whoever sold below value area are mostly emotional short-term sellers.
Based on the above-combined information one can conclude that we are dealing with emotional shorter term sellers crowd with short-term trading inventory getting short to too short. With weaker stops around 10400 (weak ORR levels) and high probability of fading those poor structures (8 anomalies) in the short term.
Also, momentum selling (top made in the first half hour itself (i.e at A period) is witnessed on 17th Oct, 19th Oct, 22nd Oct. so we are mostly dealing with emotional momentum sellers. One of the key learning is avoid trading against the momentum sellers even if they are weaker hands unless you see high confidence buying in the market.
Signs of Market Bottom
1)Market Plunged below the major put writing zone 10200PE in Nov series and a pullback above 10200 in the Nifty spot is a true sign that markets bottomed out (as expiry is near one need to look into next series OI data).
2)Nifty Spot adjusted close comes at 10146. However late 1-hour rally seen till 10182 levels
3)VIX crashed more than 10%.
Based on the above information Late hour Ramp is good but looks like not enough may be a gap up and continue tomorrow(Wednesday session – Oct 24th confirms the potential bottom in place till then its time to live with those emotional players data points.
Also, a Gap up and continue indicates a high confidence buyer which is very much required for the market to make a potential short-term trend reversal. Failure to show high confidence market one to deal with some more exponential data points.
If there is any high confidence buyers continuation on Wednesday trading then shorter term targets could come around the break of weaker stops around Weak ORR 10387 levels and later repair of poor structure i.e 10600+ in short term.
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