First bar of the day showed selling at higher levels (upper tail). One bar is however not enough and a confirmation came in next 2-3 bars... these are shown in the first circle.
Break of support (horizontal line) led to a short trade. Before this you can sense that there was some buying happening all of which failed. So the path of least resistance is down and you should short.
Another view which may arise is that one should wait for break of day's low... in which case you would have just about caught the big move down. Or you may have shorted after the big bar (not advisable as a lrge move has already happened and markets are close to their 3 day low support).
Second circle shows buying emerging at lower levels (lower tails in candlesticks). Break of resistance (horizontal line) should lead to covering of short positions. This should be done even if you have shorted AFTER the 60-70 point fall.
Depending on your comfort level, you would have taken a long position on breakout above 2nd or 3rd horizontal line... the trade would have given nominal profits as there were signs of selling at levels in 3rd circle.
At this point, it does not make sense to take more trades. The logic is that the long position is giving marginal profit yet there is no sell signal.
The 4th circle is for reference only just to show how a warning can appear. A warning is a just a note of caution so if you are long you can book profits but it doe NOT mean you should short.
Hope this helps. Comments welcome.
Break of support (horizontal line) led to a short trade. Before this you can sense that there was some buying happening all of which failed. So the path of least resistance is down and you should short.
Another view which may arise is that one should wait for break of day's low... in which case you would have just about caught the big move down. Or you may have shorted after the big bar (not advisable as a lrge move has already happened and markets are close to their 3 day low support).
Second circle shows buying emerging at lower levels (lower tails in candlesticks). Break of resistance (horizontal line) should lead to covering of short positions. This should be done even if you have shorted AFTER the 60-70 point fall.
Depending on your comfort level, you would have taken a long position on breakout above 2nd or 3rd horizontal line... the trade would have given nominal profits as there were signs of selling at levels in 3rd circle.
At this point, it does not make sense to take more trades. The logic is that the long position is giving marginal profit yet there is no sell signal.
The 4th circle is for reference only just to show how a warning can appear. A warning is a just a note of caution so if you are long you can book profits but it doe NOT mean you should short.
Hope this helps. Comments welcome.
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