ATMASphere_July_2014

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To be continued (In the next issue will discuss continuation patternsand the role volume plays in them)Ananth Madhav, A CMT aspirant, is a full timetrader having 6 years of experience, teachesTA .You can reach him onananthmadhav@live.comJULY 2014 ATMASPHERE | 8
INTRA DAY TRADING WITH CUPSGAP UP/DOWN REVERSAL Long and shortGaps are common and in a trending market they occur on a regularbasis. The first strategy which I am going to discuss is the GapUp/down strategy for long and short trades. Usually when a gaphappens market stays above the low of the first 2 candles and thenmove towards the gap up trend, if after a while market stalls a littleand makes a cup type reversal on the up or downside, that is the firstsign of a temporary reversal, the trade will come when the pricebreaks the low made of the first candle.In the chart of Nifty on 18 th of July, the index made a gap down andthen started reversing after making a cup low, from there thebreakout of the day’s high was a buy signal with a target of theprevious day’s close that got fulfilled during the day.In the same chart market gapped up on July 21 st and made aconsolidation cup pattern and finally broke down below the low, thatwas a sell signal for a target of previous day’s close, although pricedid not reach that level, but went close to that point.Gap plays are for experienced traders only, a stop and reversestrategy need to be used if the trade goes against your trend. Thesetrades are difficult to master; one should wait until one has alreadysuccessfully mastered breakout trading.TWO DAY HIGH PATTERN AFTER CUP BREAKOUTThis pattern too involve a cup formation , the difference is that it isnot about gaps , in this pattern we have to first look at previous day’shigh or low , after that we have to see the consolidation , if theconsolidation takes the form of a cup , then we can buy or sell at thebreak of previous days hi or low , this is a very reliable pattern , thetarget for the move usually is the depth of the cup from high to lowbut traders can use different strategies for target.JULY 2014 ATMASPHERE | 9
Page 2 and 3: CONTENTS Letter from the President
Page 4 and 5: EDITOR’S NOTEIn this issue -1. Su
Page 6 and 7: Measuring trades with VolumeI am ta
Page 10 and 11: Rajat Dutta is a system designer an
Page 12 and 13: Profitability of Various Style Inde
Page 14 and 15: BOOK REVIEWBOOK: Fibonacci Analysis
Page 16 and 17: World's FIRST E-Library of Technica
Page 18 and 19: FUTURE EVENT UPDATEDr C.K. Narayan
Page 20 and 21: JULY 2014 ATMASPHERE | 20
Page 22: JULY 2014 ATMASPHERE | 22

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