NK SIR CLASS 1
(25-07-2021)
TOPICS
• VWAP
• GAPUP-GAP DOWN TRAP
• PRICE MOVEMENT
• BAND MOVEMENT
AVERAGE: Everything and Anything follows its average.
Meaning: Average of price is very important. Price follows its average or Average follows its price.
Interpretation: If we can build the ability to read the average of the price then we can foresee its movement and determine what has to be
done.
VWAP: Volume Weighted Average Price
70% of the time Price respects VWAP. If VWAP is below the price, Price will come to VWAP and again go up or if VWAP is above the price, price
will come to VWAP and fall. Now a days a lot of VWAP hunting goes and that’s why 70% of the time it works perfectly. It increases the accuracy
of HM System (if HM System shows Buy but price is below VWAP then we should wait and vise-versa)
VWAP ke Upar Mera, VWAP ke neeche Tera
For Example: Suppose In Hourly Chart HM System is sloping down and WMA is above EMA and RSI, but the Price is above VWAP then it means
today mkt will remain range bound.
TIME EFFECT
SETUP FORMATION OF DIFFERENT TIME FRAME CHART HAVE DIFFERENT LASTING EFFECT
HOURLY: Any formation formed in Hourly Chart will last for 2 to 3 days. Suppose we see a sideways confirmation (as per the example stated
above then we will see mkt will remain sideways for at least 2 to 3 days.
DAILY CHART: Any setup confirmation or signal formation in daily setup will have its effect up to 15 to 20 days.
WEEKLY: Any setup confirmation or signal formation in weekly setup will have its effect up to 4 to 6 months. Generally, up to 4 months.
MONTHLY: Any setup confirmation or signal formation in monthly setup will have its effect up to 8 months to 1 year.
Gradually as the time frame reduces the effectiveness of the Setup or Signal also reduces.
Interpretation: ALWAYS FOLLOW HIGHER TIME FRAME
Logic: If there is Buy Signal in Monthly Time frame then we should never think of going short in that Stock for the next 8 to 12 months. If we
see a sell signal of sell setup in smaller time frame of weekly or daily or hourly for the same stock we will wait and use it to let the price come
to its Station so that we can again Enter and ride it.
Lesson 1: VWAP Based Intraday Entry, and SL
Conditions:
• 3 consecutive candles form/close above or below VWAP in hourly time frame
• Size of the candles should not be very big (first big candle is ok, even better if it is open = low or open = high)
• The candles should not be a DOGI or Shooting Star or Pin Bar
• HM System should be in Clear Buy or Sell with WMA sloping in the favorable direction and good gap between WMA and EMA
• SL is close Above or Below the VWAP
Previous Support is Next Support and Previous Resistance is next Resistance
Lesson 2: GAP UP-GAP DOWN
Until now when ever we saw a GAP-UP or GAP-DOWN we started buying and selling. But we must now look for certain formations before
jumping on the trade.
This formation is called at BB TRAP
When ever we see a GAP-UP, we must try to see if the candle formation is completely outside the Upper Bollinger Band. The price should be
far away from any median and if the next or follow-up candle crosses above the VWAP, then we should take a buy position. The HM System
may be showing a sell but this is a strong buy setup. Similarly, in GAP-Down also.
Conditions:
• GAP-UP or GAP-DOWN at market opening
• Price should be far from any median
• Next candle or any follow up candle crosses the VWAP
• System SL is close above the Gap-Up High or below Gap-Down Low
• Running SL would be two closes above VWAP (trail with VWAP)
• Target 20 SMA or 9 SMA High
Note:
If the formation is formed in higher time frame its effectiveness is very high compared to lower time frame.
5 min / 15 min / 30 min / hourly: BB TRAP can form in any time frame but its effectiveness the more towards the top so it gives much higher
accuracy while selling (when UBB Breaks). The higher the time frame of the setup the higher the profits.
Daily: In Daily Chart if we see a BB TRAP formation i.e., one day candle is formed outside the Upper Bollinger Band (UBB) or Lower Bollinger
Band (LBB) and next or follow up candle breaks its Low(in case of UBB break ) or High ( in case of LBB Break) then enter the trade. It will give
good profit.
Weekly: If BB TRAP forms in Weekly time frame then the Stock will give a movement of 30% to 40%.
Monthly: If the BB TRAP forms in Monthly time frame then the stock may correct up to 10 times from the top. Generally it is formed at the top
and very-very rarely at bottom.
Always keep the target and SL of the respective time frame.
BAKI TO SAB MOH MAYA HI HAIN…….!!!
