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Old 22-12-2014, 10:35 PM
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Default price action to derive sentiment

Hi

I would like to know,how to derive sentiment from price action?
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Old 23-12-2014, 12:23 AM
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Candlestick formations are a good start for that.
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Old 23-12-2014, 12:32 AM
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Originally Posted by JJ View Post
Candlestick formations are a good start for that.

Any example or important candlestick formations
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Old 23-12-2014, 10:41 AM
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Old 23-12-2014, 12:03 PM
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2 questions any form of PA analysis should answer:

1) Who are the participants?
2) What are they doing/intend to do?

If you find answers to these, the third and the most important question:

3) Why are they doing so?

All these answers are "Good to know" informations. But it leads you to an actionable information, "how long will they continue doing so?".

Next Step: Trade or Keep Calm & Watch.

They could be programs, investors buying at cycle low since they see value there, momentum traders lifting price on low volume or something else. No point in labelling them, point is to track the behaviour.

Find PA models to answer these questions, and you have the micro sentiment.

Now dont ask me, which PA model i use. Thats left to your discretion & analytical skills.

Candlesticks are not bad for "Good To Know" info to begin with.
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Old 23-12-2014, 07:37 PM
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Originally Posted by Trademaniac View Post
2 questions any form of PA analysis should answer:

1) Who are the participants?
2) What are they doing/intend to do?

I am the participant.

[QUOTE]
Quote:
If you find answers to these, the third and the most important question:

Quote:
3) Why are they doing so?

being more profitable.

Quote:
All these answers are "Good to know" informations. But it leads you to an actionable information, "how long will they continue doing so?".

Next Step: Trade or Keep Calm & Watch.

They could be programs, investors buying at cycle low since they see value there, momentum traders lifting price on low volume or something else. No point in labelling them, point is to track the behaviour.

Find PA models to answer these questions, and you have the micro sentiment.

Now dont ask me, which PA model i use. Thats left to your discretion & analytical skills.

Candlesticks are not bad for "Good To Know" info to begin with.

naver made good money when hammer came and i sold a future.
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Disclaimer: I am not a Research Analyst and not registered with any regulating authority. All posts are for educational purpose only.

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Last edited by nTP; 24-12-2014 at 12:42 PM.
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Old 23-12-2014, 10:55 PM
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Originally Posted by nTuple View Post
naver made good money when hammer came and i sold a future.

That's understandable. Someone tries to help you with your doubts & you troll back with lame one liners.

Btw, "good to know" bookish info's are seldom actionable. Its an open secret now, almost every retail trader knows it.

So stop scanning hammers, doji's or any harami out there. Had told you in CB once, try learning cross asset PA, that's what i saw many insti guys using during my previous gig with one of them.
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Old 24-12-2014, 08:41 AM
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Originally Posted by Trademaniac View Post
That's understandable. Someone tries to help you with your doubts & you troll back with lame one liners.

Btw, "good to know" bookish info's are seldom actionable. Its an open secret now, almost every retail trader knows it.

So stop scanning hammers, doji's or any harami out there. Had told you in CB once, try learning cross asset PA, that's what i saw many insti guys using during my previous gig with one of them.

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nTuple

Disclaimer: I am not a Research Analyst and not registered with any regulating authority. All posts are for educational purpose only.

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Old 02-08-2015, 04:17 PM
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Hi,

As we all know that charts are nothing but represents the footprints of various emotions such as greed, fear, confusion, panic, anger and impulsive behaviour. All of these have profound impact on the movement of stock price.

Candlestick charts are a great tool to derive the sentiment from the price. Let's understand it by example:

Suppose there is a stock 'X' single chart for a day. If it opens at some price and then at the end of the day it closes 5% higher than the opening price.

It clearly signifies that bulls were in complete control of the market that they and they believed that prices will go higher. They kept bidding at higher prices and ultimately at the the end of the day bulls were in complete control of the market.

Therefore the body of the candlestick is remarkebly long. Vice versa is true if there is a marked fall in the price of stock.

Now, what happens during the bull rally is that it goes high to higher till market participants believe that they can push it.

Then some of them want to book profit. Some participants are confused whether they should sustain bidding for long.

And, some of them have no money to invest further and they want to liquidate their positions.

It results in the possible start of a further downtrend which may be long or may not be long.
The formation of Doji or Morning star are result of such price actions. Now, see the attached picture.

Watch carefully the portion of candlestick chart in the March 2015:

Bulls were in complete control at the initial period of March and it resulted in gap up opening every day. The price of the Nifty Future kept increasing four consecutive days which is evident from the for upward moving white candles.

However, at the end of the trading session, on the 5th day, the steam of bulls lost. It indicated that the current rally may not sustain and the downtrend is imminent. But, a seasoned trader will wait to be more convinced.

And, it actually comes. When market opens on Monday, there was a wild swing. But the price closed lower. Next day, there was a similar event. Now, the situation becomes more transparent. You can be sure that the end of the rally is imminent and you can create a short position.
Read the following link:
http://priceactiontradingsystem.com/...-price-action/

Thanks
Vikash Kumar
(Tradersbuddy)
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File Type: png Nifty Daily Chart_31 July_2015.png (87.1 KB, 11 views)
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