PRACTICAL CONCEPTS

Plan Action
• CREATE One Page ACTION PLAN
• First start with a simple trending move. Once this setup is mastered, then move onto the next one.
• Take 20 such trades and become master at catching the trending moves at start and then riding the complete wave. Once 20 trades are
done, analyse them and see what went wrong. Write down the mistakes made in those trades and make sure not to repeat the same
mistakes in the next block of 20 trades. THERE WILL BE LOSING TRADES IN THIS SET. LEARN TO ACCEPT THEM AND NOT TO TAKE ANY
TRADE OUTSIDE OF SETUP.
• If most of the trades in block 1 are losing trades, then make sure to reduce loss by 30% in each trade for the next block of trades. Don’t
focus on profits. Focus on booking the losses as per limit decided.
• Final aim is to be able to take a trade every 8 mins. And every block of 20 trades should be net profitable.
• I should be able to take any chart with the setup and talk about it for at least 5-10 mins. This is the level of involvement that every
successful trader has. I have seen the same with Siva, Vijay, KGS and OV.
 Plan

• Event: Elephant Bar, Tail Bar, Colour Change, RBI/GBI

• Location: Near 20, Near 200, Near 20 &200, Fabulous Four, PDH/L/C, Faraway violent bar, Contrast bar far from 20
• Entry: Anticipation/Confirmation
• SL: Below entry bar / 2 bar rule
• Addition: First pullback where bars reverse above 50% level of the initial move/ RBI/GBI
• Profit Booking: Book 1/3rd quantity at 20-30 points. Book next 1/3rd at second push. Rest after 3 pushes or if new high/low
is made
• Stop Adjustment: Big Bar low, 20MA trail, 8MA trail, Bar by Bar
• Position Size: Start with 50% of deployed capital. If Addition signal appears, then deploy rest.
• CPR: Use CPR to identify the type of the trade to get the initial bias.
 Scalping Thumb Rules

• Always trade with the 20MA. If daily candle is green bar • Questions to ask before a trade
and it loses more than 55% from the top of the range, then
• What am I playing? BT, TT, RBI, GBI, Elephant Bar, Tail
bearish trades can be taken.
Bar, Colour Change
• With VCM strategy, it is better to scalp and not wait for big
• Where is it happening? At or near rising 20, at prior
trade. If a trending move happens, then re-entry will always
high/low, at PDC, at price resistance, at 200ma
appear. But if I go after acquiring big trade, I mostly lose on
many small trades. I need to keep on booking profits every • When do I strike? 55% retracement of big bar, normal
2nd and 3rd candle. Even if it gives only 5-10-15-20 points. bar 100% retracement, previous red/green bar takeout
• If a trade gets stopped out and immediately the same
candle retraces back 100% of neutral candle or 55% of big
candle, enter the trade again, even if it is the next moment.
• A master trader hires the stock and asks it to do it job while
he does his. The stock’s job is just to move either way.
Trader’s job is to cut the trade if one bar is violated and trail
if it moves into profit.
 Scalping Thumb Rules

• We can NEVER KNOW what the candles are going to do next. We • 3 Push trade: After entry off 20ma, you need 3 pushes before you
can only observe the current candle and its location and its start Trailing. After a pullback, once price retraces 80% of pullback,
relationship with previous candles and then take a trade based on you can trail SL to the latest low. This is if we have VIX above 12-13
probability. and good volatility is present in market.
• WHEN IN DOUBT- Get in the trade. The trade should be in direction • Addition in trade: The addition in trade should not be far away
of daily candle and 20ma. The SL will be the low of entry candle from the entry. It should be near the entry candle and preferably
unless it's very far off. If we get stopped out, enter again at next near 20/200. If it is far away then don’t add, book the trade and
entry signal. wait for next re-entry.
• 2 Bar Rule: Always wait for second candle unless we get an ENO
candle at top or bottom.
• MTF Rule: When we have an established uptrend on 15 mins chart,
buying dips and breakouts on 2 min and 5 min charts have better
odds of working.
• Patience: Remember, you need to watch the market continuously
and still take entry only when setup appears. So, this will require
long times of watching the screen and keeping the trade window
ready without getting bored.
 Master the Open

• OV trades the open like a pure scalper. • His morning trade session lasts for 30 mins only. After that, in
second session, he takes the normal swing trades
• Based on Elephant bar below 20/200 or above 20/200, he enters in
anticipation. Building position slowly. It doesn’t matter whether all • Check Only Elephant Bar at open.
positions are filled or not. Even if he can take 10000 qty, if only • If green EB is above 20 and 200 and if it’s not far, then enter near end of candle
3000 gets filled, he continues the trade with 3000 qty. he doesn’t with 25% position. Keep other orders below entry just in case price comes below
run after the price. He immediately sells them at 5 to 10 cents profit entry point.
to open the day with appositive note. • If red EB is below 20 and 200 and if it's not far, then enter near end of candle with
25% position. Keep other orders above entry just in case price comes above entry
• Once first trade is successful, he enters the second trade (again point.
with anticipation) with more qty. He places orders for every 2-3
cents and waits for them to get filled. If they don’t fill up, it is fine. • Don’t take open trade if:
Profit will be small. He books profits in second leg again at 5 to 10 • Any other candle apart from Elephant, look for other stock/index.
cents. He doesn’t wait for very long. • Even if its Elephant bar, but it is not in line with 20/200.
• While entering and existing the trade he always enters market
orders beforehand, so that as soon as stock moves in the direction
of anticipation, profit books automatically. THIS IS A VERY
IMPORTANT CONCEPT FOR TRADING THE OPEN.
• He can enter multiple positions in morning if he finds entry in other
stocks. But his most go to stock in Apple. He looks for elephant bar
and enters the stock where he finds the EB in the best location.
Remember

i. If I keep on trading the same way, then results i. A

are not going to change. To stop the losses, I ii. a
need to take trades in a different way.
ii. I need to take the trade entries as per the plan.
Need to know the SL before I enter the trade.
iii. I need to wait for entry signal to come and not
to take any unnecessary trades.
iv. I need to stop when daily target is done, until I
become net profitable trader.
v. If I lose any one trade, it is just ONE trade. No
need to take any revenge trade with higher
quantity.
vi. If I change my behaviour during market hours,
my trading outcomes will change.
 Risk Management

• The max I can lose in a day is Rs. 10000. So that

gives me Rs.3500 to lose per trade. Now this limit is
set, I can enter trade when setup appears.
• Once profit is made, make sure not to lose more
than 50% of the Positive MTM. If this value comes,
then that is official end of trading day.
• For ex once profit crosses 5000 Rs, then SL is 2500.
Also reduce the qty in case trade is not high
probable.
• It is better to save profits in hand than to recover the
profits given away.
 Risk Management

• Start by making 1500-2000 Rs. Per trade (60
qty)
• Then move to 3000-4000 Rs. Per trade (120
qty)
• Then move to 6000-8000 Rs. Per trade (240
qty)
• Then move to 12000-16000 Rs. Per trade (480
qty)
• Then move to 24000-32000 Rs. Per trade (900
qty)
• This move will happen once I get the
confidence in the system and the fact that I am
able to execute my system as per the rules
defined.
• The quantity of trade will be derived from the SL
during entry.
• For anticipation trade, take 50% qty and after
confirmation enter rest 50% or 25% qty.
• Starting small is very important. Once in profits
even if we let some trades go, it is fine. It is very
essential to develop confidence that profits can
be made repeatedly without blowing accounts.
• Once this confidence is absorbed in the
consciousness, position size can be increased to
make big profits.
 Risk Management

• Decide upon the maximum loss for one day. Divide this amount 1. Trade with 20ma
into 3 and give yourself 3 chances every day. 2. NRB Color Change
If trading capital is 100000, and daily SL limit is 10000, then I can 3. Max loss per trade is 2000
take 3 trades with SL of 3500 for each trade. So, if I trade with 60 4. Max loss per day is 6000
qty, then I can lose max 50 pts per trade. 5. Max qty is 100 per trade
6. Breakeven stop after 2000
• Don’t utilize whole max loss in a single trade. 7. Sell half after 4000 with Stop
• Qty must vary based on the SL (entry candle). Adjustment to 2000
• Don’t limit the profits. Wait until trade stops you out ( except in low
VIX, when keep on booking 15-20 pts at every entry rather than waiting for
trending move. If trending move starts, take entry at every colour change )
• Never get out on fat bars unless its climactic bar faraway from
20/200. Wait for the next bar.
• If immediately to the left there are candles, then trade
probability decreases. We need a clean space on the left.
• Map out your trade plan in a single page.
 Multi Time Frame Analysis

• Check the candle structure in weekly, daily, hourly and 15 mins timeframe.
• If 15mins or above TF is in bull run, then ignore Sell setups and focus on Buy setups.
• If 15mins or above TF is in bear run, then ignore Buy setups and focus on Sell setups.
• Check 5min and 15min MA levels to identify a major reversal support or resistance in 2 mins TF.
THEORY CONCEPTS
 The Powerful 8MA & 20MA

• Trade with 8MA and 20MA, not against them:

• If daily bar is green, but on 5 mins, 20 MA is declining then do not go long.
• If 20ma is rising, then focus should be on longs.
• If 20ma is declining, then focus should be on shorts.

• Use 8MA and 20 MA as support & resistance:

• If we get 55% retracement, that are bouncing off 8 or 20, it’s a good buy.
• The steeper the ascent of 8ma or 20ma, more powerful support it will be.
• The steeper the descent of 8ma or 20ma, more powerful resistance it will be.
• Violation of 20MA will occur only when we have 2 consecutive bars close below 20. One single wick below 20 is nothing but an
insignificant poke and it should be used to add position.
 The Powerful 8MA & 20MA

• ALL MA’s are zones and not skinny lines. So we can get reversal before or after touching the lines as well.
• Use 20MA as a median line:
• During sideways consolidation, 20ma will be flat and usually positioned right in the middle of the trend. Candles will keep on cutting
across 20ma up and down.
• Always be watchful on which side the candles halt on. [8ma is early indicator for this]. After multiple criss-crosses, the 20ma will
wake either a bull or bear.
• Use 20MA as a magnet
• When candles get far away from 20ma, it becomes a magnet and a quick snapback is eminent.
• This typically happens when a big elephant bar occurs far from 20. Almost always, there will be a very quick pullback at least till
8MA.
 50MA and 100MA

• 50MA:
• This is the institutional moving average. It’s so focused on by professional traders that its support and resistance qualities are almost
self fulfilling.
• It is a must for medium term time frames. [15min, 60 min]
• 100MA:
• One of the most used MA of all for the long term view in your focus [1D, 1W, 1M]
 20MA Halt

• When daily bar is rising and candles are below 20 MA, but slowly start rising above 20 MA and stop going
below 20 MA. That is your 20MA halt.
• Candles are below 20ma,but held in check by 20ma once candles rise above.
• 20ma Halt gives the first catch before the trend starts.
• 20ma Halt can help signal the end of downtrend and when can we swiTch from bear to bull trades.
• Good on 2min for Stocks and 5mins for Forex
• Criterai
• Stock needs to spend some good period under declining 20ma.
• Stock need to get from under 20 to above 20. There has to be some space between 20 and stock when below
• When we get a elephant bar, color change near 20, then entry can be taken.
20MA Halt
20MA Halt
 The Mighty 200MA

• Flat 200ma is the king

• 200 is most powerful, when it is flattish.
• Use as support if candles approach from above.
• Use as resistance if candles approach from below.
• Acts as a magnet:
• If candles are far from 20ma and 20ma is too far from 200ma, then major reversal is close at hand.
• The further the candles are away from 20ma at the time of its 200ma retest, the more powerful the reaction.
• This will occur mostly when market is volatile and we have one sided moves on both sides with SL hunting going on.
• Not every touch of 200 can provide a trade. This trade mostly works when 20MA is far from 200MA and candles are far from 20 as
well.
 200ma Examples

• This is classic 200ma reject example. This happens

rarely.
• A fast down move with bars moving rapidly away
from 20ma and 200ma is also far away from 20ma.
 The 3,5,8 Bar Max

• During NORMAL markets, candles cannot move in the same direction more than 5 to 8 bars in a row;
however, candles tend to stay trapped in a 3 to 8 bar max cycle 80% of the time. 20% of the time, candles
moves can top and bottom outside of this zone. But 5 bars is a truly pivotal number.
• Alternatively
• After a 3 to 5 bar run, candles sharply reverse, creating a nice trading opportunity. Every now and then, candles can slip into the
next 5 to 8 bar zone.
• Neither bulls nor the bears can consistently win more than 5 bars in a row. After a sharp 3 to 5 bar rally, the bears usually quickly
regain control. After a sharp 3 to 5 bar decline, the bulls usually quickly regain control. These moves can move to the 5 to 8 bar
zones at times.
• After 3 to 5 green bars in a row, trader should look to take advantage of an upcoming series of red bars. After 3 to 5 red bars in a
row, traders should look to take advantage of an upcoming series of green bars.
• In nutshell, if a reversal candle appears after continuous 5 or more bars, then its better to book the profits
and wait for next entry.
Examples - 3,5,8 Bars

• Examples from BN
TSL Method 1 – Bar by Bar method

• Use this method, when we have consecutive same coloured bars. For ex.if we enter into a long trade and get continuous 5 or more
green bars, then trail with bar by bar.
• Use this method when candles are far away from 8 ma as well especially after a good upmove or downmove, use bar by bar.
• In case of elephant bar, mark 55% of 75% level. If any next candle retraces to this level, then SL is hit.
• In case of normal bar, the previous candle low needs to be marked.
• TSL can be entered once we have 2 proper bars in our direction. This method can be employed only in case of profits. If we do not
have profits, then do not engage it.
• In case of elephant bars, 1 candle is enough. Trail to 55% of the bar.
• If candles are far away from 20ma and we encounter an ENO candle, (full body red turning green or full body green turning red),
then also we can exit.

• Candles always need a wiggle room before moving in their intended direction.
• 55% of big red bar.
• 100% of current bar.
Examples
TSL Method 2 – 8MA Momentum Stop
• Long Trade: If candles are above 8ma and 8ma moves higher than initial stop, then initial stop can be moved along 8 ma.
• Short Trade: If candles are below 8ma and 8ma moves below initial stop, then it can be moved along 8ma.
• This strategy can be mostly used for the trades that originate near 8ma.
• This strategy, once mastered, has potential to make huge returns on a particular trending day.

• 8ma is miraculous at containing the most powerful moves.

• Once a successful retest of 8ma occurs, the assumption must that you we have landed a 8ma Bull Run.

• If entry happens at 20, then wait for first retest at 8ma. If 8 is rising and is able to defend the candles, then switch to 8ma TSL.
Examples
 TSL Method 3 – 20MA Momentum Stop

• Sometimes 8ma cannot be used to trail the stop.

• If entry is bought off 20,then use 20ma as TSL method
• If entry is bought off 8,then use 8ma as TSL method
• In case entry was off the 20, and candles are being pushed away by 8 continuously, then switch to 8. If
candles move far away from 8, then use bar by bar.
20ma TSL Examples
20ma TSL Examples
 The Three Uptrends

• Regular Uptrend
• A rising stock above a smooth rising 20ma.
• Buy dips towards 20ma. Buy breakouts away from 20ma
• Most commonly occurring scenario.
• Power Uptrend
• A rising stock above a rising 20ma which is above the 200ma.
• Here dips towards 20ma are no concern and can be used to accumulate large positions.
• Super Uptrend
• A rising stock above a rising 8ma which is above a rising 20ma.
• The most powerful trend. It signifies pure unadulterated buying power.
• Buy any dip towards 8ma.
 The Three Downtrends

• Regular Downtrend
• A falling stock above a smooth falling 20ma.
• Sell rises towards 20ma. Sell breakdowns away from 20ma
• Most commonly occurring scenario.
• Power Downtrend
• A falling stock below a falling 20ma which is below the 200ma.
• Here rallies towards 20ma are no concern and can be used to accumulate large positions.
• Super Downtrend
• A falling stock below a falling 8ma which is above a falling 20ma.
• The most powerful trend. It signifies pure unadulterated selling power.
• Buy any rally towards 8ma.
Buy Setup

• This is an extremely defensive setup. Only for beginners.

• Bullish Trend
• Rising stock above rising 20ma (a 20ma above 200 ma is ideal but not required)
• Daily candle is bullish
• Full Setup
• Three or more consecutive Lower Highs and Lower Lows, or
• Three or more red bars
• Add Ons
• Bottoming Sign: BT, GBR, NRB, NB
• Location (not necessary, but HP if it happens): Price Support, moving average support, retracement support, PDH/PDL/PDC.
• Buy Action
• Wait for retracement of previous red bar. If wide range bar, then 33% , if regular bar then 55%, if neutral bar then 100 %
• Place mental stop of 5p below entry candle. If too close, then use prior bar’s low.
 Buy Setup

• TSL
• Employ either of TSL method.
• If origination is near 20, then observe behaviour near 8ma. If 8ma is respected or candles cross above 8ma, then TSL as per 8ma.
• If 8ma is not respected, then TSL as per 20ma.
• In case of trending move, if candles get far from 8ma as well, then use bar by bar TSL method.
• In case of move happening inside PDR, then skip 8ma/20ma method and instead deploy bar by bar method if there is place for
wiggle room above.
• Targets (Nothing specific. This is an art, not science)
• T1: 55% retracement level from the last higher high.
• T2: If T1 is crossed easily, then previous swing high is target.
• T3: If T2 is crossed easily, then a new high. By this time 8ma should start working and we can employ 8ma and bar-by-bar method is
required.
• Once T2 is achieved, then TSL is T1. Once T3 is achieved, then TSL is T2.
Buy Setup
Sell Setup

• This is an extremely defensive setup. Only for beginners.

• Bearish Trend
• Falling stock below falling 20ma (a 20ma below 200 ma is ideal but not required).
• Daily candle is bearish.
• Full Setup
• Three or more consecutive Higher Highs and Higher Lows, or
• Three or more green bars
• Add Ons
• Bottoming Sign: TT, RBR, NRB, NB
• Location (not necessary, but HP if it happens): Price Support, moving average support, retracement support,
PDH/PDL/PDC.
• Sell Action
• Wait for retracement of previous green bar. If wide range bar, then 33% , if regular bar then 55%, if neutral bar then 100
%
• Place mental stop of 5p above entry candle. If too close, then use prior bar’s high.
• Stalk the candles until you get a full red bar taking out 100% of previous neutral green bar.
Sell Setup

TSL
• Employ either of TSL method.
• If origin near 20, then observe behaviour near 8ma. If 8ma is respected or candles cross above 8ma, then TSL as per 8ma.
• If 8ma is not respected, then TSL as per 20ma.
• In case of trending move, if candles get far from 8ma as well, then use bar by bar TSL method.
• In case of move happening inside PDR, then skip 8ma/20ma method and instead deploy bar by bar method if there is place for
wiggle room above.

Targets (Nothing specific. This is an art, not science)

• T1: 55% retracement level from the last higher high.
• T2: If T1 is crossed easily, then previous swing high is target.
• T3: If T2 is crossed easily, then a new high. By this time 8ma should start working and we can employ 8ma and bar-by-bar
method is required.
• Once T2 is achieved, then TSL is T1. Once T3 is achieved, then TSL is T2.
 Bull Elephant Bar
• Look out for a big bar that is taking out
previous 8-10 bars and is more than twice
the size of average candles.
• Buy when the candle is closing (5-10 secs
before bar closes). If missed, then buy
when next bar breaks the high of this bar.
• Protective stop goes under the low of this
elephant bar. (1 bar loss)
• Very high probable if it happens near 20 or
200.
 Bear Elephant Bar
• Look out for a big bar that is taking out
previous 8-10 bars and is more than twice
the size of average candles.
• Sell when the candle is closing (5-10 secs
before bar closes). If missed, then sell
when next bar breaks the low of this bar.
• Protective stop goes above the high of this
elephant bar. (1 bar loss)
• Very high probable if it happens near 20 or
200.
 Reversal Signs – Tail Bars

• Bottoming Tail
• Red bar retracing 55% or more of its
redness.
• The tail must represent more of the
bar than the colour.
• This is more powerful after a 3 to 5 bar
decline.
• If this occurs at any significant support
and/or away from 20ma, then its much
more powerful.
• Protective stop below the bar low. (1
bar loss)
 Reversal Signs – Tail Bars

• Topping Tail
• Green bar retracing 55% or more of
its green-ness.
• The tail must represent more of the
bar than the colour.
• This is more powerful after a 3 to 5
bar rally.
• If this occurs at any significant
resistance and/or away from 20ma,
then its much more powerful
• Protective stop above the bar high. (1
bar loss)
 Reversal Signs – Colour Change

• Bull 180
• A full body Green bar that follows a
red bar and covers it entirely.
• If this occurs at any significant
resistance and near 20ma, then its
much more powerful.
• Not much suitable if this occurs away
from 20.
• Protective stop below green bar low
(1 bar loss)
 Reversal Signs – Colour Change

• Bull 180
• A full body Green bar that follows a
red bar and covers it entirely.
• If this occurs at any significant
resistance and near 20ma, then its
much more powerful.
• Not much suitable if this occurs away
from 20.
• Protective stop below green bar low.
(1 bar loss)
 Reversal Signs – Colour Change

• Bear 180
• A full body red bar that follows a
green bar and covers it entirely.
• If this occurs at any significant
support and near 20ma, then its
much more powerful.
• Not much suitable if this occurs away
from 20.
• Protective stop below green bar high
(1 bar loss)
Reversal Signs – GBR and RBR

• Green Bar Reversal (GBR)

• Multiple Red bars in a row are followed by a green bar.
• When the green bar retraces the 55% of the last red bar and/or very next time when previous bar’s high is violated, long
entry can be taken. SL will be just below the entry bar’s low.
• When GBR forms after a steady 3 to 5 bar decline, the odds of a bottom are greatly increased.
• This can be taken far away from 20 as well as bounce at 20.

• Red Bar Reversal (RBR)

• Multiple Green bars in a row are followed by a red bar.
• When the red bar retraces the 55% of the last green bar and/or very next time when previous bar’s low is violated, short
entry can be taken. SL will be just above the entry bar’s high.
• When RBR forms after a steady 3 to 5 bar rally, the odds of a bottom are greatly increased.
• This can be taken far away from 20 as well as rejection at 20.
Reversal Signs – Red WRB and Green WRB

• Green Wide Range Bar

• This is like a runner running multiple laps. He will run the last lap with all his strength.
• This bar is a very big/wide range green bar after multiple bar rally. It indicates the race or bull rally is almost over.
• Sell entry when a red bar retraces 33% or 55% of this bar with stops below entry bar high.

• Red Wide Range Bar

• This is like a runner running multiple laps. He will run the last lap with all his strength.
• This bar is a very big/wide range red bar after multiple bar decline. It indicates the race or bear rally is almost over.
• Buy entry when a green bar retraces 33% or 55% of this bar with stops below entry bar low.
Reversal Signs - NRB

• Narrow Range Bar (NRB)

• This is a bottoming or topping bar.
• Firstly, a narrow range bar gives a very good risk to reward ratio. We can have very small stop loss levels.
• Secondly, market’s biggest moves tend to ignite from its smallest bars.
• When NRB forms after 3 to 5 bar decline, a good rally can be expected. Entry when NRB high is taken out by next candle
with SL below entry bar’s low.
• When NRB forms after 3 to 5 bar rally, a good fall can be expected. Entry when NRB low is taken out by next candle with SL
above entry bar’s high.
• NRB can be of any colour and still be powerful.

• Location: Near 20ma => continuation of the trend. Far from 20ma=> reversal
Reversal Signs - NRB
7 Buy Reversal Signs

• Any one of the 7 reversal bars here marks

a strong sign to prepare to buy the next
confirming trigger.

• A 3 to 5 bar decline can be bought only if

either of these Buy reversal signs are
encountered after this decline.

• This decline can be a temporary pullback

or the end of a bear rally.
 7 Sell Reversal Signs

• Any one of the 7 reversal bars here marks

a strong sign to prepare to sell the next
confirming trigger.

• A 3 to 5 bar rally can be sold only if either

of these Buy reversal signs are
encountered after this decline.

• This rise can be a temporary pullback or

the end of a bull rally.
 Location Items

The locations are the places where trades will be taken.

 Support Points

Price Support Types

• Prior High Support:
• This support occurs when a current low(dip) revisits or retests a prior high. Often, this coincides with the 50%retracement level.
• Prior Low Support:
• This support occurs when a current low revisits or retests a prior low. In essence, this is a100% retracement of the prior rally.
• Prior lows are prior reward points

• Rule: Any of the bottoming signs that occur near these support points have high odds of success. Limit all
your buys to some area of price support.
 Support Points

MA Support Types
• Trending MA Support:
• This support occurs when an up-trending stock pulls back to or near the rising 20ma or 8ma and stabilizes (forms one of the
bottoming signs).
• Often it becomes stronger after the first successful rebound off the r20ma.
• Flat MA Support:
• This support occurs when there is a flat 200ma beneath the price. It is not often that a stock falling back to a flat 200ma fails to at
least stall for a period. The first move to a flat 200ma will usually result in some form of rebound, if only temporarily.

• Rule: Any of the four bottoming signs that occur near these MA support points have high odds of success.
Limit all your buys to some form of MA support.
Support Points
Support Points
Resistance Points
Resistance Points
 Climactic Decline Buy

• Pattern Setup
• Remember 3,5,8
• 5 or more consecutive Lower Highs or 5 ore more red bars
• BT, GBR, NRB, NB, WRB (one or more reversal signs)
• Far below 20ma or prior support area(this is visual concept). Best if far below 8ma.
• Optional: Near any major support/resistance, then it becomes much more powerful.
• Ideally primary trend should be bullish. If the last 2-3 bars are very huge(200% or more than normal), in that case this trade can be
taken in bear phase as well.
• Buy Action
• Buy just above prior bar’s high or drop to next lower time frame if prior bar’s high is too faraway
• Place SL below entry bar’s low. No exceptions.
• Set minimum target at 20ma or the 50% retracement level.
• After 2 bars, place a TSL under each prior bar’s low until
• Price objective is met
• Major RBR has occurred.
 Climactic Decline Buy

• As per Oliver, this setup should be bought when daily bar is green. However in Nifty and Banknifty, this setup
works best during a daily big red bar day, when very big candles take index far below 8ma.
• This is the pattern that we use to buy withing the context of a downtrend. While bucking the trend is normally a recipe for disaster,
there are moments when doing so is intelligent. The entry criteria needs to be followed very strictly.
• If we find ourselves doing this more than 10% of the time, we are likely doing something wrong.
• T1 is 50% retracement of the total down move
• T2 is overhead declining 20ma
• T3 is area above declining 20ma
• In this case, mostly boom or bust makes sense as any TSL method might make you stop out earlier just for the move to continue
again.

• Mostly, before the explosive down move, the bars are hugging 20ma during the earlier down move.
• If a climactic decline way below 20 is happening inside the daily green bar, then enter the long positions.
• If a climactic decline way below 20 is happening inside the daily red bar, then exit the short positions.
 Climactic Advance Sell

• Pattern Setup
• Remember 3,5,8
• 5 or more consecutive Higher Lows or 5 or more green bars
• TT, RBR, NRB, NB, WRB (one or more reversal signs)
• Far above 20ma or prior resistance area(this is visual concept). Best if far above 8ma.
• Optional: Near any major support/resistance, then it becomes much more powerful.
• Ideally primary trend should be bearish. If the last 2-3 bars are very huge(200% or more than normal), in that case this trade can be
taken in bull phase as well.
• Buy Action
• Sell just below prior bar’s low or drop to next lower time frame if prior bar’s low is too faraway
• Place SL above entry bar’s high. No exceptions.
• Set minimum target at 20ma or the 50% retracement level.
• After 2 bars, place a TSL under each prior bar’s high until
• Price objective is met
• Major GBR has occurred.
 Climactic Advance Sell

• As per Oliver, this setup should be taken when daily bar is red. However in Nifty and Banknifty, this setup
works best during a daily big green bar day, when very big candles take index far above 8ma.
• This is the pattern that we use to short within the context of an uptrend. While bucking the trend is normally a recipe for disaster,
there are moments when doing so is intelligent. The entry criteria needs to be followed very strictly.
• If we find ourselves doing this more than 10% of the time, we are likely doing something wrong.
• T1 is 50% retracement of the total up move
• T2 is the rising 20ma
• T3 is area below rising 20ma
• In this case, mostly boom or bust makes sense as any TSL method might make you stop out earlier just for the move to continue
again.

• Mostly, before the explosive up move, the bars are hugging 20ma.
• If a climactic rally way above 20 is happening inside the daily red bar, then enter the short positions.
• If a climactic rally way above 20 is happening inside the daily green bar, then exit the long positions.
 Sideways Break Strategies

• 72% of breakouts fail.

• The rest 28% that work, then do so in a very big way. Big Profits!
• Breakout are amongst some of the most powerful profitable plays in existence.

• So, what we need to learn is how to side-step the 72% that fail, we can catch the rest of 28%.
• We need to learn the characteristics of the rest 28%.
 Traditional Breakout

• Assume a stock rallies, then consolidation needs

minimum of three highs and three lows to have a
true consolidating base.
• One of the peak is higher than the others. Breakout
traders buy once a candle goes above highest high
with SL below lowest low of the consolidation.
• This fails as we have seen many times.
 Break-Out Play BOP

• Breakout Play
• This will be second most frequently traded
event. On most days, it will be the only pattern
traded, as stocks tend to spend the majority of
their intra day time drifting sideways in bases.
• Bases that are tight and narrow with declining
volume, rising lows and a rising 8 or 20ma
produce highest odds of exploding on the
upside, once they clear over head resistance.
• These pauses are not negative, rather they are
pit stops before further up move can begin.

• Buy the bar that clears the last 2/3rd of the

base. This helps keep stop at minimum.
 Break-Out Play BOP

• Pattern Setup
• The sideways base can occur in an established uptrend or
after a downtrend.
• The base should be narrow and thin, not wide and whippy.
• The bars in the base should be small and narrow, no wide
range.
• The 8ma and or 20ma should be ideally rising during the
base’s formation.
• Buy Action
• Buy the bar that breaks above last 2/3rd of the base.
• Place stop below the breakout bar (entry bar).
• Project the length of the base upward for target, if there is
no prior reference point.
 Break-Out Play BOP

• Important Points
• The best breakouts occur at or near point of contact with the rising 20ma/8ma.
• A buy setup at the bottom of a base can be an early buy opportunity for the watchful trader, if the breakout is occurring at or the
rising moving average.
• This setup can be taken on 2- and 5-mins charts when scalping
• A Pause(base) vs a Top – When a Base is a Top and not a Pause.
• Pauses are narrow, Tops are wide and whippy.
• Pauses have small bars, Tops have big wide range bars.
• Pauses have light volume, Tops have big volume.
• Pauses usually don’t cross the 20ma by much, Tops cross below it.
 Break-Down Play BDP

• Pattern Setup
• The sideways base can occur in an established downtrend or
after an uptrend.
• The base should be narrow and thin, not wide an whippy.
• The bars in the base should be small and narrow, no wide
range.
• The 8ma and or 20ma should be ideally declining during the
base’s formation.
• Sell Action
• Sell the bar that breaks below last 2/3rd of the base.
• Place stop above the breakdown bar (entry bar).
• Project the length of the base downward for target, if there
is no prior reference point.
 Break-Down Play BDP

• Breakdown Play
• This will be second most frequently traded event. On most
days, it will be the only pattern traded, as stocks tend to
spend the majority of their intra day time drifting sideways in
bases.
• BDP work better than BOP.
• Bases that are tight and narrow with declining volume,
declining lows and a declining 8 or 20ma produce highest
odds of exploding on the downside, once they clear over
head resistance.
• These pauses are not bullish, rather they are pit stops before
further down move can begin.

• Sell the bar that clears the last 2/3rd of the base. This helps
keep stop at minimum.
 Narrow and Wide States of market
• [This slide is just for theory. In BN, I have noticed
that the its difficult to take trades based on this.
This really needs to be supplemented with other
fundamentals]
• Narrow State
• When 20ma is relatively flat or
parallel to 200, then it’s a flat state,
not when its approaching 200 from
far away.
• Neutral State
• When we have a slopping or rising
20
• Wide State
• When 20 is far away from 200
• Market always moves in cycles of these
states. Narrow to Neutral to Wide.
 Bullish trade from Narrow State

• If we get a green power bar

above 20 and 200 in a narrow
state, then it’s a BUY
 Bearish trade from Narrow State

• If we get a red power bar below

20 and 200 in a narrow state,
then it’s a SELL