Patterns to Prepare a Primary Watch List

Prepared by Aneesh Philomina Antony

Twitter: @ProdigalTrader

Telegram Channel: ProdigalTrader

Link: t.me/prodigaltrader

1. Narrow Range 7 (NR7) Pattern

NR7 candle is the narrowest range bar (candlestick) in the last 7 trading days. The NR7 pattern is made of
of 7 bars. The 7th bar will have a range that is much smaller than the previous three candlesticks. Here the
latest bar has the least volatility. Volatility being cyclical, is expected to expand soon. This expansion in
volatility which will come in the form of increased price range, if combined with proper identification of
prevailing trend, can be used a strong set up to cash in.

2. InOutIn Pattern

Bar 1 – Inside bar

Bar 2 – Outside bar
Bar 3 – Inside bar
This sequence of three bars can be quite rewarding. Here in Bar 2 volatility is expanded which was
compressed in the bar before that. That’s expected to continue. So the latest inside bar would be a breathing
space before the expanded volatility returns. Here too the setup is non directional as such. Combining it
with proper trend identifying tools is a worthy set up to filter the scrips.

3. New 52 Week Highest close

Price breaking out to make a new high in the last one year period. The rationale behind this strategy is that
if a price breaks out from its 52-week, there must be some factor that generated enough momentum to
continue the price movement in the same direction. More importantly, the resistance from the past price
action is least from here since price is hitting new range. Even steady volume would be enough to carry the
momentum forward. U don’t need huge volume to beat the overhead supply here.
4. Breakout of 200 SMA

200 SMA is considered as the single biggest tool in technical analysis which can bifurcate the trend as bullish
or bearish just based on if the price trades above it or below it. Breakout of price above that is an excellent
way to filter the bullish scrips. One another parameter which must be added here is that 200 sma should be
slanting up for at least last 20 bars which ensures the current trend is bullish since quite substantial period.

5. Price Volume Breakout

Hand-In-Hand breakout in both price and volume ensures that the spike in price is justified with the new
demand comes in. Here a breakout into new highest close in last 20 bars with twice the average volume is
considered for the setup. If the existing HTF trend is bullish, new breakout would ensure further up move
in price.

6. Double Doji

A doji bar implies there is doubt over continuation of current trend. That’s called indecision candle. If one
doji followed by another doji, that’s too much of doubt over the existing trend. If the price breaks all the
doubts and continue the trend, counter trend traders will have to run for cover which would give an
explosive move. On the other hand, if the trend reverses here, again the heavy trend traders would need to
cover suddenly again resulting in an explosive move. Either way range expanding move can be expected
here.

7. Double IB

An inside bar followed by another inside bar is like price has nowhere else to shrink to anymore. This is a
powerful pattern because it tells you there’s low volatility in the markets. And volatility in the markets are
always changing, it moves from a period of low volatility to high volatility (and vice versa). So, when you see
multiple Inside Bars together, it’s a strong sign the market is about to make a big move soon.

8. PinBar at 200 SMA

Pin bars are one of the most popular candle pattern which show a clear rejection of a price level and are
often followed by a large directional move opposite the direction of the rejection. However, it takes a skilled
eye to find high-probability pin bar setups that are worth risking your hard-earned money on. For that we
need to find a high probability location where if price rejects, there should be enough reasons for that.
Choose 200 SMA as the location. Pinbar at 200 shows a potential large move is coming to the opposite
direction of the spiking tail of pinbar.
9. Fakedown or False Breakdown

Price breaks below a major support area, but price was rejected from there and manages to close abv it at
EOD. Its a breakdown that failed to continue beyond a level, resulting in a ‘Fakedown’ of that level.
Fakedown’ is often a strong clue that price might change direction soon. A Fakedown’ of a level looks like
price will breakdown but then it quickly reverses, deceiving all those who took the ‘bait’ of short. Often
amateurs will enter the short and then the professional’s will push the market back the other way to force
the amateurs to run for cover.

10. Top IB

Imagine an inside bar pattern is formed in a scrip which is very bullish. What does it imply? Most logical
reason is that it’s just a minor pause in the trend; it would resume soon as there is too much force behind
current uptrend. If 5, 10, 20 EMA are sequentially aligned in the descending order just below the current
price, it’s a certain signal that price is very bullish the recent past for short term. Adding to that if an inside
bar pattern forms in this context, it would be a very powerful pattern to go with the trend.