Price

behaviour
“ PRICE IS NOTHING BUT AN
OUTCOMES OF BUYER’S AND
SELLER’S BEHAVIOUR
 What is Price Action ?

Price action is nothing but understanding , how the price is behaving at

a certain important level
Price action is simple looking at the past data , in order to predict the
future
It refer’s to understanding who’s is stronger , the buyer or seller ?
Who’s is getting trapped ?
And just common sense
NOTE – “ Price action on it’s own is very vague , you need handy tools to
execute “
 SUPPLY AND DEMAND ZONES

SUPPLY ZONE
AN AREA FROM WHERE EXTREME SELL OFF TAKES PLACE IS
CALLED A SUPPLY ZONE.
DEMAND ZONE.
AN AREA FROM WHERE EXTREME BUYING TAKES PLACE IS
CALLED DEMAND ZONE.

NOTE: THEY ARE SIMILAR TO SUPPORT AND RESISTANCE LINES

BUT INSTEAD OF A SINGLE LINE IT IS MORE OF A ZONE.
 SUPPLY ZONE

AN AREA FROM WHERE EXTREME SELL OFF TAKE PLACE.

WE EXPECT WHEN PRICE AGAIN REACHES NEAR SUPPLY ZONE
WE MAY SEE A SELL OFF AGAIN.

PSYCHOLOGY:
SELLERS WHO MISSED THE PREVIOUS FALL
 WAITS FOR THE PRICE TO COME TO THE SAME
 LEVEL AGAIN TO START SELLING OFF.
 DEMAND ZONE

AN AREA FROM WHERE EXTREME BUYING TOOK PLACE.

WE EXPECT WHEN PRICE REACHES NEAR DEMAND ZONE WE
MAY SEE BUYING AGAIN.

PSYCHOLOGY:
THOSE WHO MISSED THE PREVIOUS RALLY WAITS FOR
PRICE TO COME BACK TO MAKE POSITIONS.
Supply and demand zone
 Simply...

Demand/Supply zones are nothing but extreme zones where sell-off

started (supply zone) Demand Zone is an extreme zone where buyers
pushed prices up.
 How to mark and Identify supply and demand zone ?

It’s pretty simple , let’s not complicate it.

First know that supply and demand zone is created by strong buyer’s
and seller’s
The reaction from action is usually huge
 The Key ways to identify supply and demand zone is as follow’s
 Always see a chart on daily timeframe to get a bigger picture to mark
major levels
 Identify swing high and swing low on a hourly timeframe
Demand zone
Supply Zone
Supply zone
DEMAND ZONE
Hourly time frame
 NOTES

WHEN A SUPPLY ZONE IS BROKEN IT TURNS INTO DEMAND

ZONE.
WHEN A DEMAND ZONE IS BROKEN IT TURNS INTO SUPPLY
ZONE.

WHEN PRICE REACHES FIRST TIME TOWARDS THE SUPPLY

AND DEMAND ZONE WE EXPECT THE PRICE TO FALL OR
RISE SIGNIFICANTLY FROM THE ZONE BUT WHEN THE
PRICE KEEPS ON TESTING THE ZONE IT BECOMES
WEAKER.
Bank nifty , hourly TF
WHEN A ZONE IS
TESTED MULTIPLE
TIMES IT BECOMES
WEAKER
Range Contraction
 Range contraction

Remember one thing , market moves from low volatility period to high
volatility period
Market never moves in a constant volatilty
Every high volatile market is followed by a low volatile market
The big move happens in the market , usually after a low volatility
period
The low volatility period leads to a tight range in the market
The tight range in the market suggests balance between buyer’s and
seller’s
RANGE
 Range in Stock Market.

In stock market , prices are said to be in a range when buyer’s and seller’s
are fighting it out , and not able to go on either side with full swing.
In such cases , prices narrow down in a defined range as it struggles to
make a clear decision.
This is basically known as consolidation where in prices stay in a defined
range.
A range denotes balance in the market
Remember every consolidation lead’s to a Big Move.
Henceforth we wait for the market to come out of the narrow consolidation
to enter and capture the big move on either side ( BUY / SELL )
Supply / demand zone and range contraction
 SIMPLE LOGIC TO FOLLOW

Remember one thing , when a resistance is tested a multiple times it

becomes weaker
And when a support is tested a multiple times it becomes weaker
WHEN A SUPPORT IS BROKEN , IT ACTS AS A RESISTANCE
When a resistance is broken it acts as a support
And a breakdown of this level usually leads to a good parabolic one
sided move
Identifying a tight range can give some amazing profit’s
Multiple retest at resistance
SAME LEVEL BEING TESTED AGAIN AND AGAIN
SUPPLY ZONE

HIGHER HIGHS
Multiple retest at a support ( Buyer’s getting exhausted )
 LOWER HIGHS

DEMAND ZONE

SAME LEVEL TESTED

BAJAJ FINANCE
BAJ FINANACE
TITAN
 What really goes behind a breakout ?

What really happens when the market is inside the range ?

When the market is inside the range , both buyer’s and seller’s are in a
very comfortable position
They’re in balance of the current scenario
Once the breakout happens, one of them start’s to Panic.
BREAKOUT
BREAKDOWN
 Volume – “ who’s moving the price ’’

Volume is one of the most integral part of price action trading

Volume tells you how many shares have been bought and sold in a
particular period of time.
An active share would mostly have higher volume.
Volume is created by a transaction between a buyer and a seller .Just a
buyer or seller can’t create volume.
 VOLUME INTERPRETATION

Volumes indicate how many shares are bought and sold over a given
period of time. The more active the share, the higher would be its
volume. For example, you decide to buy 100 shares of Amara Raja
Batteries at 485, and I decide to sell 100 shares of Amara Raja Batteries
at 485. There are a price and quantity match, which results in a trade.
You and I together have created a volume of 100 shares. Many people
tend to assume volume count as 200 (100 buys + 100 sells), which is
not the right way to look at volumes.
 What does volume tell us about the buyer and sellers ?

 Have a look at below co relation between price and volume below –

price increases, volume increses – highly bullish supported by strong
buyers like fii’s and dii’s.
Price increases, volume decreases, - weak buyers. ,mostly retail traders.
Price decreses, volume increses – highly bearish , seling by big boys
Price increases , volume decreses – weak sellers , retailer’s.
 
PRICE UP

PRICE UP

VOLUME UP

VOLUME DOWN
 Possible outcomes after a breakout

A clear breakout
A good retest
A continuation breakout
Simple a fake out
Outcomes of breakout’s
Another probable scenario
VOLUME CHART
 Types of range

To be frank , it’s silly to name a range breakout setup as range can be of
any type on the chart ( we will see it on the live chart )
Range simple means contraction in volatility leading to prices
narrowing down to a tight range
Such tight range represents balance in the market , where both buyer’s
and seller’s are comfortable.
However once the range is taken out , one of them is trapped which
leads to one sided ( Panic / euphoria ) move.
The more time the market spends in a range , higher are the chances for
the market to give a strong breakout.
Other types of range
 Three types of trend

There are three types of basic trend’s in the market

Uptrend
Downtrend
Sideway’s
Uptrend
DOWNTREND
Sideways ( Ranging market )
 Location – “ Previous day high / low “

After understanding the types of trend , one thing is pretty clear , The
previous day and high is a reaction point for any trend.
Therefore this becomes an important area for all the trader’s.
 PDH / PDL

Previous day high / previous day low is not just a reaction point , but a
watch out area for all the trader’s
You know why we focus so much on PDH and PDL ?
If you look at the stock prices on newspaper , all it mentions is open ,
high , low and close.
During old times ,there were no chart’s people relied just on PDH /
PDL and traded near this important location.
DOW THEORY
DOW THEORY UPTREND
DOW THEORY DOWNTREND
HOW DOES A TREND MOVE ?
 Move , pause and move

A strong trend is usually followed by a good pause

This pause is nothing but consolidation
It is the correction , that we see in an uptrend or a downtrend
This phase is nothing but a simple consolidation , where weak hands
are moved out
The pause is like a petrol pump , where the car stops , fills the tank and
then moves ahead with momentum
These pause are considered to be healthy for a strong trend
 EXERCISE ( Put all the things together )

Pick any 10 stocks ( you can pick your choice , or follow the watchlist given to you )
Follow the step’s

 To understand supply and demand zone

 Identify supply and demand zone on a daily time
 To find value areas

 To understand Trend structure and range contraction / expansion

 Go to hourly chart and apply Trend study
 Find range contraction and range breakout’s