Trading Breakouts Reversal and Ranges 1 ZJCPCZLRRF

Indus School of
Te c h n i c a l A n a l y s i s
One-stop solution to gather analytical skills
and learn trading strategies
Trading Breakouts, Reversals

And Ranges
Winning methods to catch the market swings
Presented by:
Thoviti Brahmachary
Phone: ±91 96180 31555
Email: [email protected]
DISCLOSURE
The material presented here, oral narrations, explanations,

etc., are purely educational in nature and should not be
construed in any way as financial or trading advice. You
alone will be fully responsible for all consequences of all
financial decisions involving investments, trading, or
anything directly or indirectly related to such decisions. I will
not be responsible for any consequences of any of your
investment or trading decisions. Please consult your
authorised Financial Advisor/s before making any financial or
trading decision.
TRADING REALITY
Trading Is About Knowing:
What To Trade? When To Trade?
How Much To Risk? When To Exit Trade?
A Trading Strategy should tell all

these aspects, in clear terms
The Trader’s job is to Execute the Strategy with discipline,

keeping emotions out of the process.
WHAT IS IT THAT WE TRADE?
?
➢ BREAKOUTS?
➢ RANGES?
➢ REVERSALS?
➢ FUNDAMENTALS?
➢ NEWS?
TRADABLE TIME FRAME?
First Step Is… Trade Set-up
200 BARS IN A CHART

Look For 3 Time Frames
Long-Medium-Short
Every Chart Must Show Swings
HIGHER THE TIMEFRAME = HIGHER THE ACCURACY

MULTI TIME FRAMES
MULTI TIME FRAMES
Markets always move in waves-like patterns –

Dow Theory:
• Primary waves – Long-Term Trends
• Secondary Waves – Intermediate-Term Trends
• Short-term Fluctuations
MULTI TIME FRAMES
Markets always move in waves-like patterns –

Dow Theory:
• Primary waves – Long-Term Trends
• Secondary Waves – Intermediate-Term Trends
• Short-term Fluctuations
Why ISTA ?
HOW TO READ A PRICE BAR
Price Bar Structure – Previous Close to Current Close
PRICE, MOMENTUM, & SENTIMENT HIGH.

BULLISH 100% JOYFUL BULLS & PANICKED BEARS
BULLS GETTING CONTROL & BEARS GETTING
NEUTRAL TO BULLISH 75%
PRESSURE
PREVIOUS CLOSE NEUTRAL 50% BULL POWER & BEAR POWER IN BALANCE
NEUTRAL TO BEARISH 25% BEARS GETTING CONTROL & BULLSS GETTING

PRESSURE
BEARISH 0% PRICE, MOMENTUM, AND SENTIMENT LOW.

JOYFUL BEARS & PANICKED BULLS
PRICE BAR READING
LET’S APPLY OUR UNDERSTANDING OF
PRICE BAR READING
THE FIRST TRUTH OF THE MARKET
PRICE MOVES IN TRENDS

➢ Up-trends:
➢ Higher Highs & Higher Lows – Swings, Candles
➢ Down-Trends:
➢ Lower Lows & Lower Highs – Swings, Candles
➢ Trendless:
➢ No clear Higher Highs & Higher Lows / Lower Lows &
Lower Highs
Why ISTA ?
THE SECOND TRUTH OF THE MARKET
Two Types of Price Movements:

• Price Expansion – Momentum
• Price Contraction – Pull-back / Mean Reversion
Our job is to identify the dominant force in the market –

Expansion or Contraction &
Trade in the direction of Expansion / Momentum
Logic: in trending markets SUM of Expansions is always larger
than the SUM of Contractions
THE THIRD TRUTH
Markets always move in waves-like patterns – Dow

Theory:
❖Primary waves – Long-Term Trends
❖Secondary Waves – Intermediate-Term Trends
❖Short-term Fluctuations
DOW THEORY
➢ Learning from Dow Theory:

➢ Importance of Multiple Timeframe Analysis
➢ Minimum 3 timeframes
➢ Higher Timeframe – Direction of market
➢ Trading Timeframe – decision dynamics & RR potential
➢ Lower Timeframe – Precision Entries & Exits.

THIRD & MOST BASIC TRUTH
The Market Is Always In One Of 4 Stages, Irrespective Of Timeframes
❖Consolidation - Stage 1
❖Advancing - Stage 2
❖Distribution - Stage 3
❖Declining - Stage 4
However, the same market can be in

different stages across timeframes.
THIRD
Why & MOST
ISTA ? BASIC TRUTH - STAGES
Method: Market Structure

Stage -3
Distribution
Termination
Stage -2 Markdown
Markup B/D Stage -4
Continuation
Consolidation
B/O Consolidation/ / Pull back
Pull back
Stage -1 Stage -1
Accumulation Accumulation
DATLA KMS RAJU

THIRD & MOST BASIC TRUTH - STAGES
KNOWING STAGES!...HOW TO APPROACH TRADING?
Once you know what stage of the market you are in,
You know how to trade the market
You will know what strategy you will use,
Which in turn will tell you
❖ When to enter a position?
❖ Where is the STOP?
❖ When to exit a position.
Trading against the stage a market is

in accounts for over 80% of losses
KNOWING STAGES!...HOW TO APPROACH TRADING?
Throughout The All 4 Stages, A Market Can…
1 – Go Up (Uptrend- Stage-2)
2 – Go Down (Downtrend – Stage -4)
3 – Go Sideways (Range – Stage-1 or 3)
When A Market Goes Sideways, It Can Move In

A RELIABLE PATTERN, Or It Can Move In An ERRATIC PATTERN
STAGE-1 –SET UP – PATTERNS & BREAKOUTS
Declines At Least 50-60% From The Top

Low Volume Phase
Several Months 18-24 or More
Before the Breakout
Increase In Volumes
Forms Higher lows
30-Week MA flattens & Turns Up
Patterns
Inverted Head & Shoulders
Ascending triangle
Breakout Characters
➢ Definitive pattern - Back into rhythm

➢ Spikes in Volumes
➢ RSI shifts its Range
➢ RS improves
PATTERNS - BREAKOUTS -
PATTERNS - BREAKOUTS -
EXPANSIONS are always larger than CONTRACTIONS

Look Patterns
Flat Base Cup & Handle
6-8 weeks 10+ weeks
Double Bottom Triangles
15+ Weeks 3+ Weeks
➢ Low Volume on Pattern Formation BUY SET-UP:

➢ Strong Bullish Bar BUY ABOVE PRIOR HIGH
➢ Volume Spike on Breakouts STOP: BAR LOW
➢ RSI Above 60
Why ISTA ?
STAGE-3 –SET UP – REVERSALS
Reversal signals
Trend Reversal Or A Pullback
End Of The Prior Trend
• Two-bar reversal.
• Three-bar reversal.
• An inside bar
• Outside bar
• Double top and bottom
SELL SET-UP:
SELL BELOW PRIOR LOW
STOP: BAR HIGH
Why ISTA ?
PATTERNS & BREAKOUTS
PATTERNS & BREAKOUTS
PATTERNS – RANGES – BREAKOUTS/DOWNS
-r
STAGE-2 BASES AND BREAKOUTS
BREAKOUTS FAILURE
BREAKOUTS FAILURE
PATTERNS –BREAKOUTS & REVERSALS
REVERSAL
Why ISTA ?
Why ISTA ?
TREND CONTINUATION
Continuation Signal In The Spike Phase

Of A Strong Trend
Signal Can Be Buying At The Top Of A Bull Trend Or
Selling At The Bottom Of A Bear Trend.
Strong Bull Trend Bar In A Bull Spike
Strong Bear Trend Bar In A Bear Spike
CANARA BANK
GUJARAT GAS – BIG BARS IN DOWNSIDE

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Indus School of

Trading Breakouts, Reversals

The material presented here, oral narrations, explanations,

How Much To Risk? When To Exit Trade?

A Trading Strategy should tell all

The Trader’s job is to Execute the Strategy with discipline,

First Step Is… Trade Set-up

200 BARS IN A CHART

Every Chart Must Show Swings

HIGHER THE TIMEFRAME = HIGHER THE ACCURACY

Markets always move in waves-like patterns –

Markets always move in waves-like patterns –

Price Bar Structure – Previous Close to Current Close

PRICE, MOMENTUM, & SENTIMENT HIGH.

NEUTRAL TO BEARISH 25% BEARS GETTING CONTROL & BULLSS GETTING

BEARISH 0% PRICE, MOMENTUM, AND SENTIMENT LOW.

PRICE MOVES IN TRENDS

Two Types of Price Movements:

Our job is to identify the dominant force in the market –

Markets always move in waves-like patterns – Dow

➢ Learning from Dow Theory:

➢ Higher Timeframe – Direction of market

➢ Trading Timeframe – decision dynamics & RR potential

➢ Lower Timeframe – Precision Entries & Exits.

The Market Is Always In One Of 4 Stages, Irrespective Of Timeframes

However, the same market can be in

Method: Market Structure

DATLA KMS RAJU

Trading against the stage a market is

Throughout The All 4 Stages, A Market Can…

When A Market Goes Sideways, It Can Move In

Declines At Least 50-60% From The Top

➢ Definitive pattern - Back into rhythm

EXPANSIONS are always larger than CONTRACTIONS

➢ Low Volume on Pattern Formation BUY SET-UP:

Continuation Signal In The Spike Phase

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