I did not take any trades. Thus once in a while I could stare at charts.

Lets start with 30 Min chart

Nifty Chart 30 Min 9th Dec

Homework always gives us resistance and support

On 30 Min chart, I have not expected Gap down as we have +ve divergence. However, no one can predict market with cent percent accuracy. It is adaptability which is key to success in this industry. Once price gaps down, A and B becomes rock solid resistances.

Next once price gaps down it has to either:

  1. Consolidate
  2. Sustain and go down or
  3. Try to fill the gap.

It did the 3rd one.

Now at C the price retested the resistance.

Lets see how it looks on 5 Min chart.

Nifty 5 Min 9th dec res

Resistance is clearly visible.

Lets look at the structure.

structure on 5 Min 9th Dec

Structure of 5 Min chart

Gaps always spoil the play as we are aware. Reason – the imbalance in supply and demand. In other words the down movements which would have been covered by bars are now avoided by that gap means we have most of the move already covered in gap.

To explain it more better. Say daily range of nifty is 100 points. 4930 to 4870 say 60 point has to be covered by down movements. Now those 60 points are already covered by a gap means we are left with only 40 points to play around!!! Got it? Lets keep things simple…..

A is Low of day (LOD)

Wave 1 has good momentum. However get halted at round number

Wave 2 very sluggish means sellers are not participating. Hence look to get support AT LOD. Exactly the same thing happened. Also see the divergence in Stoch. Remember I told Naveen I guess that there are no AA+ Set ups.

Wave 3 has good momentum and hence goes till our resistance area. Then wave 4 has a structure of a good trending market as it makes swing highs and lows.

Now entry and exits

Ideal entry 5 Min 9th dec

We had a false breakout

Self explanatory. Trailing stop is a difficult subject to teach and I will take it separately as we go on. Now we had a false breakout and you have to figure it out as it will have its impact on Next week.

Also note that when market goes to sideways and since hourly and 30 Min stochs take time to go to OB you cane take entries from 5 Min. That is each time Stoch goes to OB short it and make 20-25 points with strict S/L. Just look at today. Also see if you follow rules you cannot make bad trades.

Also you may ask one question. Why do we go short at 4890 despite of stoch in OB>5 bars.

Remember – Price first, Stoch next. Here price made false breakout and then broke previous swing low.

Now the homework for you is to prepare a plan for Monday considering different possibilities and marking support and resistance.