Here is the bar by bar commentary of the #BANKNIFTY 30500CE short trade I took today.

As I always say
that you need to understand the context before you enter a trade so here is the context.

Overall trend on Monthly, Weekly is up & on daily/hourly it is showing the pullback signs & short term
momentum was on downside so I tried to catch this short term counter trend trade. In such counter
trend trades, you need to act swiftly as you are swimming against the big wave & at any moment trend
may reverse with power & you will see unexpected losses if you don’t keep strict SL. You can also
reverse the trade in the main trend direction whenever you see the price confirmation but that comes
with experience. For newbies I don’t recommend this counter trend trading & I strictly advise following
the main trend.

Here is the bar by bar commentary for today's trade. Bullet points below represents the candle number
on the chart for easy understanding purpose. I shorted #BANKNIFTY 30500CE at 167.68 at 12:52:44 &
covered at 125.75 at 14:21:57 -

1. Wide range bar with wicks both sides & massive volume & close below yesterday's low. Shows
weakness but since there is a wick at the bottom, we need to see if that was buying or selling. So we
wait. No shorts yet.

2. Price tried to move up but faced some selling at the higher levels. May be those who did bottom
fishing are booking quick profits within 30 minutes of opening. Positive close but on lower side shows
weakness

3. Same behavior as 2nd candle but this time weak close in Red. It means candle 2 & 3 top wicks have
bears sitting so we need to observe how far they can push the price down.

4. Some buying has come & we see a strong positive close towards the top of the candle. It means that
last 2 candles didn’t have actual selling pressure. It was simple profit booking by weak bulls. While
volume is less, next candle couldn’t pull the price up & gave a weak closing. This shows we still don’t
have strong buyers & a test is pending.

5. This candle did a beautiful low volume test & closed towards the high. Signs of selling getting dried
but we need to wait for confirmation on next candle if there is a follow through buying. Normally such
tests are followed by immediate strong bull candle. As we see next candle doesn’t gave a follow up
buying & made a indecision candle with low volume. No trades yet.

6. This candle gave another beautiful low volume test & closed towards the high. This shows that bulls
are providing support in the lower range of this candle & won’t allow price to fall below it easily. This
means that probability of price falling down is less & a proactive/aggressive buy order can be placed
above the high of candle before 6 (red Doji). Safe buyers can still wait for the bull candle to form to take
an entry.

7. Super bullish candle taking highs of all previous candles (2-6 candles) in a jiffy & closed towards the
high. Bulls must be happy to see no resistance at this moment.

8. Here they meet bears & they reject the price brutally at EMA21 which also coincides with opening
candle top wick. That's my signal which I was waiting since morning patiently (You know I always say,
wait for your favorite setup & that's what I was waiting for). See the massive sell volume which confirms
that bears are residing here.

9. Aggressive bears can short on the break of this candle low which is also a nice entry but I wanted to
wait for some more time to see if bulls are making any more attempts to test the wick made in candle 8.
They tried a couple of times in the next 2 candles after 8 but beaten badly by bears again on candle 9.
This confirms that bears are getting active in this zone. See the volume here for additional confirmation.

10. This is the last attempt made by bulls to take price up but it gave a weak close & volume was also
not promising. Shows weakness.

11. Price confirmation comes here to go short. Bear candle with higher volume than previous candle &
closing towards the low. It confirms the view & we can short either at close of this candle or open of
next candle.

12. I shorted at this candle & waited for price to fall further. Next candle goes up but gave a weak closing
showing bears are present in the wick area. Next candle gave a super bearish close followed by another
attempt made by bulls to pull price higher. It shows bulls are still present and defending the low of this
zone.

13. This candle breaks the lows of all previous candles & rejected the prices in the top zone as well.
Super bearish close towards the lows. It also broke the opening candle low with almost the same
volume. Very bearish move. Ideally with this force price should fall much faster. Let’s see what happens
next.

14. Price made a new low but found solid buyers in that zone. Bears couldn’t push the price lower &
overruled by bulls who have pulled the price higher & massive volume and positive close. This is a sign of
warning for bears to exit shorts. If it’s buying then the up move would be faster & quicker.

15. Price made another test & comparatively lower volume than previous candle. Let's wait for next bar
and see if this was real selling. I exited my trade on this candle seeing the strength of candle 14. On 5
minutes candle it also broke the high of previous candle so better to exit.

16. Price rejected the highs of last 2 candles (14 & 15) & closed above these with higher volume.
Strength confirmed. Bears should cover their shorts quickly & they actually did which forced the price
even higher & price is pushed back towards the morning supply zone. Aggressive buyers can take a long
trade here with SL below day low.

This is exactly I thought & took my trade. I waited very patiently till 12:52 PM to get my favorite setup
form before I entered. Since it was a counter trend trade I was very quick to enter & exit to avoid losses.

Hope it was helpful in understanding the psychology behind bulls & bears mindset. It is pure price action
with additional confirmation of volume to strengthen entry & exits.

Happy Learning!