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Understanding Drop Base Rally Patterns

The document explains the concepts of Drop Base Rally and Drop Base Drop in market trends, highlighting the formation of Demand and Supply Zones. It outlines conditions for these zones, including base formation, the number of candles required, and the significance of price movement from the base. Additionally, it provides tips for drawing zones based on their size and strength.

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Shaheer Riaz
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25 views3 pages

Understanding Drop Base Rally Patterns

The document explains the concepts of Drop Base Rally and Drop Base Drop in market trends, highlighting the formation of Demand and Supply Zones. It outlines conditions for these zones, including base formation, the number of candles required, and the significance of price movement from the base. Additionally, it provides tips for drawing zones based on their size and strength.

Uploaded by

Shaheer Riaz
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Drop Base Rally

(a) Drop. Price opened at a higher point but due to excessive supply, price
dropped and closed at a lower point.
(a) Base. For a certain time, market halted and remained in consolidation. This is
our Demand Zone.
(b)

Supply Zone

Drop Base Drop (Trend Continuation)


(a) Drop. Price opened at a higher point but due to excessive supply, price
dropped and closed at a lower point.

(b) Base. For a certain time, market halted and remained in consolidation. This is
our Supply Zone.
(b)
(c)
Tip: For Demand Zone, the last word should be Rally.

Rally Base Drop


(c) Rally Rally represents that price started from a lower point but due to increase
in demand, it closed at a higher point.

(d) Base. For a certain time, market halted and remained in consolidation. This is
our Supply Zone.

Tip: For Supply Zone, the last word should be Drop.

In diag below;

Top two are Trend Continuation Supply & Demand

Bottom two are Trend Reversal Supply & Demand


Supply Zone Demand Zone
Supply Zone

Demand Zone

Conditions for Formation of Supply / Demand Zone

a) Base formation
b) Zone should comprise of minimum 3 candles (applicable at all TF). Any zone
bearing candels less than 3 is a fake zone which may be created when low vol.
Are in market / no session is open.
c) Powerful Move from Base - Market should go far from the Base (instituiional
Move)

Drawing Conditions

If zone is small - Only l;ast candle is considered


If zone is big - last 5 candles would be considered. However, it must be noted that
zone must not be very big

Tip. Shorter the zone, more stronger it would be.

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