Pivot Call Ebook
Pivot Call Ebook
DAY TRADING
With
PIVOT POINTS & PRICE ACTION
VIKRAM PRABHU
Full-Time Trader, Trainer, Blogger, YouTuber
pivotcall.com
PRICE RS 2500
DISCLAIMER
Trading the financial market has a large potential risk, you must be aware of the
risks and be willing to accept them in order to invest or trade in stocks, future,
currency or commodities, don't trade with the money you can’t afford to lose.
The author doesn’t guarantee or represent that members acting upon any
suggestion mentioned in this material will result in a guaranteed profit.
Before investing or trading on the basis of this material, the author encourages
you to first SEEK PROFESSIONAL ADVICE with regard to whether or not
Trading in the financial market is appropriate for you.
My first exposure to the stock market was in the year 2004, I quit my full-time job
and started as a novice Day trader in Stock Market and lost all my savings in no
time, but somehow, I realized that I had a passion for trading.
After my failure in the first attempt, I came back to my sales profession worked
for many MNC’s over a period of years at different levels, but deep inside me,
the stock market was always my first love.
In these last 15 years, I had developed many strategies, but they were not giving
me any confidence, but, when I started working on the pivot point strategy, I was
totally amazed by its accuracy when I tested it in the last 5 years historical data.
After that, I solely focused only on the pivot point and price action and developed
my own strategy for Day trading.
I was so confident with my Pivot Point & Price Action strategy that I decided to
take up trading as a full-time profession, I knew that I got a system which has an
edge and will perform well in almost all kind of markets.
I quit my job in the year 2018, I am a full-time Day trader now, I trade on a 5-
minute chart of Nifty and Bank nifty for a living.
After many requests from my followers to conduct online training to train them
on day Trading, I started my first Day Trading webinar in June 2019 and by now
(at the time of writing this book in November 2019) I have trained almost 800
students.
The objective to write this eBook is to make my 15 Day Trading pattern and
strategies available to even small retail traders who can’t afford to attend my
webinar, and they can gain knowledge by reading this eBook where I have
discussed all my 15 patterns and strategies with historical charts.
Table of Contents
Chapter 1.
Basics of pivot points, Important Pivot Points in Day Trading……………….. 8
Chapter 2.
Pivots and CPR secrets in Day Trading……………………………................. 13
Chapter 3.
Basics of Price action and powerful candlestick patterns in day trading……. 24
Chapter 4.
How to prepare your chart before market opening……………………………. 26
Chapter 5
15 Day Trading Patterns and Strategies.……………………………………….. 37
Chapter 1.
Basics of pivot points, Important Pivot Points in Day
Trading.
“Welcome to my eBook “Day Trading with Pivot Points & Price Action”
Before I start with my first Chapter I would like give credit and acknowledgement to
some of Successful and Renowned Traders where I learned Trading from, when I
was new to Technical Analysis I also gone through thousands of YouTube videos
and tons of Trading books to find one perfect System or Strategy which I can master
and become profitable Trader…
My search ended the day I came to know about Frank Ochoa, Successful American
Trader and Author of “Secret of pivot Boss” I gained a lot of knowledge after reading
his book and it really helped me in finding that Trading edge and building my own
strategies based on Pivot points and CPR.
My knowledge of candlestick patterns and the moving average comes from Oliver
Velez undoubtedly one of the most successful Day Traders in Today's time, I learned
candlesticks patterns and how to take trades based on candlestick patterns learned
after watching Oliver Velez YouTube Videos.
Though I have not met any of them personally or taken any mentorship or coaching,
just by reading their books or watching their knowledgeable YouTube videos helped
me immensely to finally come with my own 15 strategies combining Pivot Points and
Price Action which I am sharing in this eBook.
Pivots are simple Support Resistance lines on your chart (figure 1.1)
2) Pivots mark boundaries on your chart where price likely to have
support/resistance which offers you a framework to trade on.
By plotting Pivot Points on your chart, it will show you boundaries, where price
likely to face Support/Resistance (figure 1.1)
4) Pivots are purely derived by price, pivots are leading Indicators and not
lagging Indicators. Unlike RSI, MACD, Stochastic, etc, Pivots are leading
indicators (Figure 1.2)
As mentioned earlier, Pivots are most powerful in trading but most underrated,
also it is believed to be used by big players for their Trading.
Figure 1.1 (PP is the central pivot, R1 R2 R3 are Resistance Lines, S1 S2 S3 are
support lines which acts like boundaries on your chart where price likely to face
Support/Resistance)
Figure 1.2 (Pivots are plotted on 5 min chart of Bank nifty on 19th September, Pivots
are leading indicators and stagnant till market close, look at the indicators RSI,
MACD, Stochastic below the chart these are lagging so it will show only till where
price is trading at that specific time, and all 3 indicators are giving different signals
which only confuses the Trader)
Figure 1.3 (Pivots are plotted on 15 min chart on same Bank nifty 19th September
chart, Pivots are staying same on 15 min chart also, it is not changing because you
changed your time frame, but look at the indicators below the chart, now it's showing
different signals then what was showing in 5 min chart, So, Pivots are stagnant but
Indicators are not)
My answer is, all Pivots are powerful, but If I have to prioritize then nearest pivots are
more powerful than farther pivots…. So, it’s like these
Daily pivots are powerful than weekly pivots…. Weekly are powerful than monthly
pivots…and monthly pivots powerful than yearly pivots….
So, in short, you need to give more weightage to nearest pivots, i.e. Daily Pivots
compared to any other pivots.
Chapter 2
Pivots and CPR secrets in Day Trading
Now you know the basics of Pivot Points but what is that CPR in your chart?
I came to know about the CPR concept after reading the book “Secret of Pivot boss”
by Frank Ochoa and “The Logical Trader” by Mark Fischer…Until then I knew only
about Pivot Points, but not CPR.
After reading these both books I decided to try CPR on my historical charts and see
its effectiveness, and I was totally amazed by its power…..unarguably CPR is the
most important level on the chart compared to anything else…I don’t look any chart if
I don’t see CPR on it….So you can see how much I am dependent on it.
CPR is nothing but a range of 3 lines, one each above and below the central
pivot, the line above central pivot called TOP CPR(TCPR) and the line
underneath is BOTTOM CPR (BCPR).
The entire range of those 3 lines becomes CPR (Central Pivot Range)
CPR
Figure 2.1 Three Lines in the center is CPR (Central Pivot Range)
Here I am giving away some of the secrets of pivot points which I observed by my
experience and screen time and trading only based on pivots points CPR for the last
2 years.
In the below points, In the bracket, I have mentioned “most of the time but not
always”, the reason is, you should not take it as something true 100% of the time….
Trading is a probability, not a certainty, many new traders come to Trading thinking
that once they learn some strategy it should work each and every time, but it's not
possible, one should have probability mindset before taking a trade.
a) If weekly/monthly pivots near to CPR, then they are not much powerful,
if weekly/monthly pivots are away from CPR then they are more
powerful (most of the time but not always) (figure 2.2)
Figure 2.2
It doesn’t mean if you see price Trading above CPR means you will go and
buy it, same time you will not go and sell it just because it is trading below
CPR… it’s just a guideline…
Figure 2.3
c) Wider the CPR, more difficult for price to penetrate its CPR, so wider
CPR has more powerful than narrow width CPR (most of the time but not
always)(figure 2.4)
Figure 2.4
d) If CPR is too narrow it's easy for price to penetrate and narrow CPR has
a high rate of trending days (most of the time but not always)
Whenever is CPR is too narrow I don’t pay much importance if the price
comes near its CPR it can easily pierce it and break it, narrow CPR doesn’t
offer much support/resistance (figure 2.5)
e) Whenever CPR is wider, one can assume that such days could be range
day (most often but not always) where price moves from one range to
another throughout the day, so one can build a strategy accordingly (like
short strange strategy if you are an options trader) (figure 2.5)
f) Narrow CPR can lead to Big Trending Day and Wide CPR can lead to
quite and angebound Day. (Most of the time, but not always) (figure 2.5)
Figure 2.5
Figure 2.6
If any given Day price did not touch its CPR it will be considered as
Virgin CPR for next coming Days (preferably 4-5 Trading days)
Sometime No candlestciks inside the CPR, but only one or two wicks
enters inside its CPR, still you can consider as Virgin CPR and still very
powerful as support/resistance.
Price respects Virgin CPR at opening compared to mid to late afternoon. That
means if previous day was a virgin CPR, and today at the opening itself price
approaches that level then that Virgin CPR works as a strong support
resistance (figure 2.7)
If price approaches previous day Virgin CPR in the late afternoon then most of
the time it won’t work as strong support/Resistance and price can easily break
it(Virgin CPR)
Nearest virgin CPR is more powerful than CPR is farther (most often but not
always), that means if there was a virgin CPR previous day to one week back
then I consider it, if there was Virgin CPR 15 days or 1 month back and if
price approaches that level then I don’t consider it as a strong
support/resistance.
VIRGIN CPR
Next day at opening itself price
approached previous day Virgin CPR
and reversed
Figure 2.7
In figure 2.8, there was back to back Virgin CPR on chart, both 12 th and 13th had
Virgin CPR, on 14th market opened between both virgin CPR, first it touched 12th
virgin CPR and it acted as resistance and immadietely Nifty reversed, late
afternoon it came in to 13th Virgin CPR but that Virgin CPR did not offer support,
and price easily broken it….So Virgin VCPR works as strong support/resistance
at opening and less powerful at late afternoon(most of the time,not always)
Figure 2.8
Knowing where is current day CPR can give you Edge in Trading.
Plotting just CPR on your chart can give you a great edge in your Trading, CPR is
also known as “heartbeat” of the market where price likely to change its direction
most of the time.
By now you know CPR is one of powerful support and resistance on your chart, So,
it is not a good idea to go Long when CPR is just above the candle and not a good
idea to short the candle if there is CPR is just below the candle (see figure 2.9)
Figure 2.9
Having a CPR on your chart, compared to having just conventional pivots can
make a big difference in your Trading.
Look at the below image(figure 2.10), Trader with just conventional pivots on his
chart would have taken a long trade on the first candle thinking candle closing above
the central pivot and there is no resistance above that candle till R1 pivot.
But next candles faced resistance and it reversed and hit his SL.
On the next image(2.11), there is a chart with CPR, Trader who has CPR on his
chart would not have taken that Long Trade on the first candle because above the
first candle there is TCPR and that would have stopped him from taking long Trade.
Candle faced resistance (at TCPR) and it reversed and hit his SL.
Figure 2.10
Figure 2.11
CPR Formula
Though Pivots are freely available in almost all charting software Indicator sections,
CPR is unknown to many traders and it’s not freely available in many charting
software.
CPR can be plotted on the chart by 2 ways, if you have an account in Tradingview
charting software you can get it from the indicator section or you can even manually
plot it on the chart by using the below formula.
(some times BCPR (Bottom CPR) can be above TCPR (Top CPR) and vice versa)
Chapter 3.
Basics of Price action and powerful candlestick patterns in
day trading.
Price action is a method where a Trader makes a decision based on actual price
action by candle by candle movement on the chart, not based on any lagging
indicators like RSI/Bollinger bands/MACD/Stochastic, etc.
Trader analyzes and takes the trade based on the support and resistance and
aggressiveness of buyers and sellers at important levels with the candlestick
patterns.
The decision to buy or sell is taken based on price behavior at important locations on
the chart.
Candlesticks are one of the powerful tools to know the emotion of buyers and sellers
in the market. I am a very big fan of candlestick chart; I don’t use any other tools like
heikin ashi or Renko charts or Point Figure charts or market profile etc.
If you buy a book on candlestick patterns you will see there are hundreds of
candlesticks with names like bearish harami, bullish harami, dragonfly doji,
gravestone doji, etc etc….Many new traders make the mistake of just remembering
this bullish and bearish candlestick and just taking trades based on candlestick
patterns….So, I keep telling it to my webinar students, it’s not just candlesticks
are important, it is the location which is more important in Trading.
(What all those important locations? We are going to see that in chapter 4)
Candlesticks patterns at right location is more important, if you see big Bullish
GREEN candle or big Bearish RED candle at some random location on chart then
most of the time it is a trap, so avoid taking trades just based on size of candlesticks,
one should know important locations on the chart, then watch for candlestick
patterns and take the trade.
Even though I am a big fan of candlesticks there are only 3 candlesticks out of
hundreds of candlesticks I pay importance to, and I take trades if those candlesticks
happen at some important locations.
As I always says Candlesticks alone not a criteria to take long or short calls, it
is location most important in trading, cabdlesticks at right location most
important in trading.
B) Kind of maribozu candle but will have small wocks on either side but
still powerful Bullish/Bearish candle(most commonly happens near
breakout)
C) Pin bar candles, bullish pin bar most commonly seen near some
support, bearish pin bar commonly seen near some resistance.
Chapter 4.
How to prepare your chart before the market opening.
One thing which really separates professional Traders from a Novice Trader is
preparaing the chart before market opens.
If you are one among those Trader who just opens Trading laptop right at the market
open and starts thinking whether should I go long today or should I go short? Or just
switch to the business channel and go with what is your favorite analysist is saying
on the business channel?
Prepare your own charts, start preparing your charts at least 30-45 minutes before
market opens, and once the market opens you should be ready with your chart with
important locations are already marked.
When we are Trading in the Indian market why should we watch the US market?
US market is like big brother for all Global markets, most of the global market takes a
cue from the US market close and opens accordingly.
If previous night US stock market down with - 500 points due to some bad news,
then you are most likely to see entire Asian markets trading in deep RED.
That will give you a hint on how our market likely to open.
SGX Nifty is traded on Singapore stock market, I have seen most of the time Nifty
takes a cue from SGX Nifty and opens accordingly(most of the time,nt always)
That’s why you see all those business channel anchors keep referring to SGX Nifty
before our market opens.
Though it will only give you an idea of how our market likely to open whether gap
up/gap down or flat, but it will also help you in planning your opening trades
accordingly.
You can get all these Global indices and SGX Nifty data by downloading the
moneycontrol.com app on your mobile.
Apart from these data I also advise all traders to keep track of any upcoming
events for that particular day.
Election result, Exit poll result, FM Press conference, RBI Policy, Quarterly
result (for stocks) etc.
5 Min. Time Frame chart is more ideal for Day Trading (According to me 5 Min
Time frame is more ideal for Day Trading)
All my charts which you see in this eBook are 5 min spot chart of Nifty/Bank Nifty (if
it is higher Time frame chart then I would have mentioned in the chart)
1)Mark previous day high/low (PDH/PDL), mark previous day turning points on
the chart (Refer 5 min TF) (figure 4.1)
PDH/PDL becomes much more powerful in case price opens above/below the
previous day range.
The turning point is nothing but where price reversed from sideways to
bullish/bearish, or breakout one, or support/resistance which was broken (This level
also works as strong support/resistance for next day)
Demand/Supply zones are nothing but extreme zones where sell-off started (supply
zone) Demand Zone is an extreme zone where buyers pushed prices up.
3)Mark important previous swing highs/lows and GAPS on daily TF. (Refer
Daily TF) (figure 4.3 & 4.4)
4) Also mark current Day High and current Day low, because at these levels
most of the retail Traders have their SL.
5)If you trade only Index (like me) then better have both Nifty & Bank Nifty in
one screen (split screen) because both these index moves in tandem (most of
the time, not always). (figure 4.7)
Most of the time either nifty follows Bank Nifty or Bank Nifty follows Nifty (Vice versa)
I have seen hundreds of Trading Books and thousands of YouTube trading videos
but no one talks about co-relation between Nifty and Bank nifty in Day Trading.
I have observed Nifty and Bank Nifty moves in tandem (most of the time), suppose
Nifty making breakout pattern but Bank Nifty at some strong resistance than most
often Nifty Breakout fails (it’s difficult to say Nifty follows Bank Nifty or Bank Nifty
follow Nifty, so its vice versa)
If you are trading in foreign indices then you need to see which instruments
moves in tandem in your market.
I highly recommend all Index traders to watch both Nifty and Bank Nifty chart
simultaneously for your Trades (either through a split-screen or dual monitor)
CPR
Virgin CPR
Pivot points-daily/weekly/monthly
Figure 4.1
Chart what you are seeing above(figure 4.1) is of August 27th chart, this chart was
prepared before market opened, that is why you see candlesticks only till 26th
August.
I marked important levels on my chart before market opened(figure 4.1), and in the
next chart(figure 4.2) , I will show you 27th Chart after the market closed, and you
yourself will see how important these levels are and how price reacts to those levels.
A D
VIRGIN CPR
B C
Figure 4.2
A) As you can see price opened gap up on 27th morning and faced
resistance right at Virgin CPR.
B) Price reversed and took support right at PDH (Previous Day High).
This chart is an example of how marking important levels on your chart can help you
in taking high probability trades and knowing important support resistances well in
advance.
Figure 4.3 , Swing Highs are the one which has spikes at the extreme end of the
charts, checked only on higher time frame like daily time frame(same for swing lows)
Supply demand zones slightly diffrent than Swing high/swing low, it’s checked on
smaller time frame, preferably 30 min/1 hour time frame if it happened many days
back(5 min TF if it was recent one, like happened just previous day etc) (Figure 4.3A)
Figure 4.3 A
In Figure 4.4 (above) that Gap what you see in the image is the result of Exit
poll in the month of May, the market opened Gap up after Exit Poll result and
made a big GAP of around 500 points
In Technical analysis they say markets don’t like Gaps, that means if there is a GAP
on the chart then eventually those Gaps gets filled (most of the time, but sometime
Gaps can remain forever)
So, next time there is a gap up and you see a Gap on your chart, then remember
that most of the time Gaps get filled, so chances of price reversing and filling those
Gap is higher (sooner or later)
Borderline of Gaps works as one of the strongest supports and Resistance on the
chart, always look for gaps border, and whenever price comes close to that border, I
have seen(most of the time) price bouncing at least once or twice before Gaps
getting filled.
(we will see in the next image whether that Gap was filled or No?)(figure 4.5)
Figure 4.5
Yes, eventually that May month Gap was filled after 2 months, in the month of
July.
Figure 4.6
Eventhough most of the time Gap can get filled, but Gap borders works as strong
support/resistance most of the time(in this chart marked in Black dotted line in Figure
4.6)
On 9th Bank Nifty opened gap up above PDH, so 9th Open and 8th High is gap
borders, On 9th Bank Nfty made a big trending day and gap remained un filled on
that day.
On 15th, see what happned it came exactly at gap border(upper border) it worked as
a support and there was a bounce, see what happened on 17th, first candle on 17th
had a gap down and see where exactly it took support? right at lower border of Gap.
Thst is the beauty of price action see how accurate sometimes this levels can be…
That is how gap borders are one of powerful support/resistances on the chart.
Though many times gap can get filled but most of the time I have seen gap borders
acting as trong support/resistance.
NIFTY
BANK NIFTY
Figure 4.7
Look at both the chart(figure 4.7), for a moment it is difficult to identify whether both
are the same instrument or different instrument?
Yes, Nifty and Bank Nifty most of the time move in tandem, look like twins, so it is
not a good idea to short Nifty if Bank nifty is in bullish mode or vice versa.
I am a trader who believes in taking only high probability trades, even if it's just 1
trade per day, I ignore low probability trades.
For me, high probability is when both Nifty and Bank Nifty are showing a bullish
pattern or both showing a bearish pattern(or one showing bullishness and another
not showing bullish pattern but doesn’t have any resistance above it)
Sometime it may happen Nifty showing bullish pattern but Bank Nifty facing
resistance at CPR, I avoid such trades.
Sometime Nifty showing bullishness, but Bank nifty is flat but it doesn’t have any
resistance above it, in such cases I take the trade in Nifty because Bank Nifty
doesn’t have any resistance above it (it can be vice versa also)
Chapter 5.
As a practice, before I reveal all my15 patterns and strategies I make a point to show
below points to all traders (especially new traders because when someone is new to
stock market he comes with the hope of “Holy Grail Strategy” which gives him profit
in each and every trade he takes)
But is there any strategy that can give 100% success rate?? NO…. So, you need to
keep that in mind…. Trading is a probability Game, Not Certainty…. Have a
probability mindset before starting your Trading Journey.
Points to Remember….
➢ These 15-day trading patterns are not holy grails patterns, just it is high
probability patterns (no guarantee that every time it works, so SL is a must)
➢ In Trading, there are only high probability and low probability setups, so it’s
best to avoid low probability setups and trade only high probability setups with
a strict SL.
➢ In Trading, there is nothing like 100% sure shot patterns or 100% sure shot
set up, any patterns can fail on any given day.
➢ It is highly recommended to start with paper-trading for a few days until you
get consistency in trading with these15 day trading patterns.
Figure 5.1
In Market profile, if the market opens gap up or gap down then it is generally known
as OD (open drive) but in my OD Pattern, I consider it as OD Pattern only if the first
candle is bullish and first candle close above PDH or first candle bearish and first
candle close below PDL.
Opening (first 5 min candle of the day) candle should be either gap up/gap down
candle, or first candle can open within previous day range but eventually first candle
close above PDH or close below PDL (Preferably pin bar/bullish/bearish candle)
Just a note:
All my charts that you are going to see from here are either Nifty or Bank Nifty
chart and the time frame is 5 Minutes.
3 Lines with blue on top and below and pink in the center is CPR
Figure 5.2
A) In figure 5.2, First 5 min candle closed above PDH, made a bullish pattern,
closed above PDH and daily pivot, go long on candle close,
Many people believe in keeping SL below entry candle, though it’s not a
wrong method but if the entry candle is too big then SL also becomes too big.
So always keep SL at a place where it should have some support or
resistance before coming and taking your SL(in this trade(figure 5.2) there
was PDH and R1 pivot resistance above the SL)
If you take a trade and it reverses and hits your SL, that’s fine because you
are wrong and it saved you from big loss…but if you are right with your
analysis but the price comes and takes your SL and then moves in your
direction it is very frustrating.
So, SL should be always below support line (if you are long), or above
resistance (if you are short)
In this above chart, keeping SL below entry candle would have been too big
SL, so keeping it below PDH would have given you better SL, because there
are R1 pivot and PDH which price has to break to take your SL.
Another thing, before taking your trades, look at the risk-reward if you see
your reward is bigger and risk is small then only take that trade.
In simple language, if you take a long trade, your SL is 20 points and you see
there is no resistance for the next 40-50 points that mean price has room to
move until 40-50 points, so that is a good risk-reward trade.
Figure 5.3
A) In figure 5.3, In the above chart, first 5 min candle is a bullish Green candle,
closed above PDH and above daily pivot plus monthly pivot (pink dotted line), a
good candidate for OD (Open Drive) trade, go long on first candle close.
Another good trade with good SL, above your SL there is Daily pivot+PDH+Monthly
pivot, keeping SL below the confluence of support is a good place to keep SL.
In the first 2 charts which you have seen, after booking profit at the next resistance
market reversed, but not necessarily it reverses every time from next pivot,
sometimes it can break resistance and make a strong uptrend and close at day’s
high.
So, you have to take that call, whether you want to book your profit at the next
resistance, or trail your SL and try to capture a big move if it’s a trend day.
Figure 5.4
OD pattern can happen below PDL also, like in the above chart (5.4), as I said
earlier, not always price hits pivot support/resistance and then reverses, like in this
chart price took support initially at S1 pivot then later part of the day broke that pivot
support and ended at day’s low, and if you took profit at S1 pivot then you missed a
big opportunity to make big profit by late afternoon on that big day.
So, that’s why I emphasize on mainitaining risk Reawrd in each trdae, because its
really difficult to say how big that day could be.
A) In figure 5.4, First 5 min candle is bearish Red candle, closed below PDL…short
on candle close
D) Keeping SL above S1 pivot would have given better SL but not very good risk-
reward trade because SL is too big.
Figure 5.5
ODR (Open Drive Rejection) is the opposite of the Open drive pattern, In Open Drive
we take a trade if the candle is a gap up and it has some support below the first
candle-like PDH or some pivots(ODR applicable only on above PDH)
In ODR also it will start with a gap up bullish first candle but the candle will face
resistance just above its close.
ODR is high probability and works well most of the time if there was ODR on gap up
compared to gap down.
Such patterns most of the time reverse from its resistance, and once the first candle
low is broken you can expect a Hugh movement on the downside.
Psychology behind these patterns is most of the retail traders go long once they see
gap up bullish candle, they feel it is bullish pattern and market is going to go up, and
they jump in to first bullish candle and take long entry, and their SL are below first
candle, most retail traders have tendency to keep SL below entry candle, so once
first candle low is broken, all their SL(Sell order) gets triggered leads to big move on
downside.
Figure 5.6
A) In figure 5.6, Bullish pin bar gap up candle but no support below it, it has a
resistance above its close, there is daily and weekly pivot resistance, don’t go
long, just wait and see whether it's low gets broken.
B) SL below the first candle, all retail traders who saw that gap up candle got
excited and went long thinking the market is going to go up, their SL below
that entry candle.
C) 5th candle reversed and closed below the first candle triggering all SL below
the first candle, all sell orders triggered which lead to big down move.
F) If you missed shorting at 5th candle then sometimes you get the second
opportunity to short, support becomes resistance, support was first candle low
when price retested that level you get another shorting opportunity because
that level will act as resistance now.
Figure 5.7
A) In figure 5.7, Bullish gap up candle with PDH support below it, it has weekly
and daily pivot resistance above its close, it’s an OD pattern as well.
B) All long traders have SL below first candle low, all retail traders who saw that
gap up candle got excited and went long thinking market is going to go up,
their SL below that entry candle.
C) 16th candle finally and closed below the first candle triggering all SL(sell
orders) below the first candle, all sell orders triggered which lead to big down
move.
Figure 5.8
A) In figure 5.8, Bullish gap up pin bar candle with PDH & weekly pivot below it,
that Red horizontal line overhead is supply zone resistance from the higher
time frame.
B) All long traders have SL below first candle low, they did not notice there was a
supply zone above it, all retail traders who saw that gap up candle got excited
and went long thinking market is going to go up, their SL below that entry
candle.
C) Candles faced resistance at swing high and reversed, 7th candle closed below
first candle low triggering all SL leads to big sell off….
F) If you missed shorting at 7th candle then next opportunity at the retest of
previous support, another opportunity to short at that level(support became
resistance now)
Figure 5.9
If the previous 2 patterns(OD and ODR) were purely based on PDH/PDL, then this
pattern(PPT) based on CPR.
In this pattern, figure 5.9, if the first candle of the day is bullish and engulfs one side
of CPR and closing above it then it is PPT pattern, the same holds true if the first
candle is a bearish candle and engulfs one side of CPR and closed another side of
CPR.
The first candle has to be a bullish or bearish plus if Nifty makes PPT pattern but
Bank nifty facing some resistance or vice versa then better not to take the trade or
wait and watch.
If both Nifty and Bank nifty shows bullish PPT pattern or at least say, Bank Nifty PPT
pattern and Nifty not PPT but trading above CPR so you can take that trade.
In this PPT Pattern,most of the time I have seen price touching PDH/PDL, so better
to take profit at PDH/PDL for good risk reward trade or at 2R.
Figure 5.10
A) In figure 5.10, The first candle is bullish candle engulfed one side of CPR and
close above CPR, go long on candle close.
B) Book profit at PDH, even though there is a weekly pivot just above the candle
better to ignore it. (as mentioned in the first chapter, if weekly and monthly
pivots near to CPR then they are not much powerful)
Figure 5.11
A) Figure 5.11, The first candle is bullish candle engulfed one side of CPR and
close above CPR, go long on candle close.
Figure 5.12
A) In figure 5.12, The first candle is bullish candle engulfed one side of CPR and
close above CPR, go long on candle close.
B) SL was too big here, CPR was wide so SL is also big when SL was big your
reward also should big.
Figure 5.13
In the Evening start set up, the first candle opens the gap up but makes a bearish
candle(or first candle is doji and next candle makes beaish), unlike OD Pattern
where the first candle makes a bullish candle.
Figure 5.14
A) In figure 5.14, Gap up candle but a bearish candle, the first candle could not
close below PDH, so wait, don’t short.
B) Third candle finally closed below PDH, that is the candle to short.
C) SL above that Red horizontal line (supply zone from higher time frame)
Figure 5.15
A) In figure 5.15, first candle is Gap up candle and bearish candle, the first
candle itself closed below PDH, so enter short on first candle close.
B) SL above R1 pivot.
Figure 5.16
A) In figure 5.16, Started with Gap up candle and bearish candle, but coud
not close below PDH, first 5 candles took support at PDH….till 5th candle
all were taking support above PDH… wait patiently… once 6th candle
cracked below PDH, short there.
D) If you missed to short 6th candle then the next short opportunity when price
retested earlier support.
Figure 5.17
It’s opposite of evening star, in the Evening star, if there is a gap up opening and
candle is bearish(or first doji the bearish candle) then look for the Evening star
pattern.
In Morning star, Gap down opening but the first candle is bullish(or first candle is doji
then bullish cande) then it is Morning star pattern.
Even though Morning star somewhat similar to Evening star pattern but I like
Evening star more than Morning star pattern,and Evening star happens more
frequently and market falls faster then going up.
Figure 5.18
A) In figure 5.18, The first candle was a gap down candle but turned bullish
and closed above PDL, Go long at the first candle close
Figure 5.19
A) In figure 5.19, The first candle was a gap down candle but turned bullish
and closed above PDL, Go long at the candle close
Figure 5.20
By now you know what is Virgin CPR, it was explained in the third chapter in the
power of CPR section (If the previous day price did not enter inside its CPR then it
becomes Virgin CPR)
If there was Virgin CPR in the last 5-6 days such Virgin CPR more powerful than
Virgin CPR which was there around a 2 weeks or a month back.
As Virgin CPR gets older and older its power also diminishes.
Just don’t just take trade at virgin CPR, wait for confirmation like bullish pattern or
bearish pattern inside virgin CPR.
Figure 5.21
A) In figure 5.21, Mark Virgin CPR on your chart based on the the previous
session, wait for the price to come to that level, once you see price is taking
support near Virgin CPR to go short, First candle only made bearish candle at
Virggin CPR, short that first acdnle.
Figure 5.22
A) In figure 5.22, First Candle opened right at Virgin CPR but could not close
above Virgin CPR.
Figure 5.23
As mentioned earlier even if there is only one or two wicks inside CPR, but no full
candle, still it can be consideres as Virgin CPR(as you can see on 23rd only first
candle wick was inside the CPR so still it can be Virgin CPR)
A) In figure 5.23, on 24th fourth candle came at Virgin CPR level and reversed
and made bullish pin bar candle, go log on that candle.
D) Previous day first candle wick touched CPR but not full candle inside CPR, so
still can be Virgin CPR
Figure 5.24
This pattern based on the Size of the first candle of the Day(first 5 min candle)
If Day's first candle is a big Red candle(or average size also will do) then watch it
closely, if price bounces back to the high of that Red candle(or near to it) and makes
bearish patterns then sell it.
Even if previous day had a big Red candle and next day price reches that level and
makes bearish pattern then also it can be shorted(applicable on previous day first
RED candle also)
This pattern works well at the opening to mid-afternoon compared to late afternoon,
and high probability if First Red candle high inside wide CPR.
The reason is these kinds of big Read candle has aggressive sellers in that candle,
sometimes they will be successful in pulling the market down which leads to big
bearish trending day.
But sometime there will not be any follow up from first candle and market starts
bouncing from the first candle low, in that case you should watch high of that candle
closely, if you see candles are showing bearishness at the high of the candle then
you can short it.
If high of the Red candle and there is wide CPR at the same level then it is a high
probability pattern.
The psychology here is, sellers in that big Bearish candle have their SL at high of
that Red candle and they will not easily allow their SL to get hit, so they aggressively
sell again if the price comes near their SL (Red candle high) and selling pressure
takes the market down again from high of Red candle.
Figure 5.25
B) Short when price touches high of that candle and when you see bearish
candle, high probability if CPR also at the same level as high of Red candle.
C) SL above CPR
These patterns are not breakout kind of trades, these are high probability trades but
any time can reverse its direction, so I prefer to book my profit before even touching
previous swing low, if reward is already more than 2R, if someone looking for big
reward then they can wait and see if it touches the previous swing low and can take
profit there.
Figure 5.26
A) In figure, 5.26, The opening candle is a big Red candle (aggressive sellers)
B) Short when price touches near high of that candle and when you see a
bearish candle, high probability if CPR also at the same level as high of Red
candle.
C) SL above CPR
Figure 5.27
B) Short when price touches high of that candle and when you see bearish
candle, high probability if CPR also at same level as high of Red candle.
C) SL above CPR
Figure 5.28
This pattern based on the Size of the first candle of the Day.
If Day's first candle is big Green candle(or average size/or bulish pin bar also will do)
then watch closely if the price retraces to low (or near to low) of that Green candle.
This pattern works well at the opening to mid-afternoon compared to late afternoon.
Even if previous day had a big GREEN candle and next day price reches that level
and makes bullish pattern then also one can go long (applicable on previous day first
GREEN candle also)
The reason is these kinds of big Green candle candles have aggressive buyers in
that candle, sometimes they will be successful in taking the market up which leads to
big bullish trending day.
But sometime there will not be any follow up and the market starts retracing back to
first candle low, you should watch low of that candle closely, if you see candles are
showing bullishness at low or below first Green candle then you can go long there.
The psychology here is, Buyers in that big Bullish candle have their SL at low of that
Green candle and they will not easily allow their SL to get hit, so they aggressive buy
again if the price comes near their SL (Green candle low) and buying pressure takes
the market up again.
Figure 5.29
A) In figure 5.29, Big Greencandle at the opening, no follow up after that candle,
look at its low for entry.
B) Candle tested the first candle low and made a bullish pin bar, enter long on
that candle.
Figure 5.30
A) In figure 5.30, Big Green candle at the opening, no follow up after that candle,
look at its low for entry.
B) Candle tested near first candle low and made a bullish pin bar, enter long on
that candle.
Figure 5.31
A) I figure 5.31, Big Green candle at the opening, no much follow up after that
candle, reversed from R1 pivot, look at first candle low for entry.
B) Candle tested the first candle low and made a base near the central pivot,
enter long near CPR or central pivot.
C) SL below CPR.
Figure 5.32
Gap up and Gap down kind of patterns are one of my favorite patterns but it happens
very rarely, because gap up, gap down doesn’t happen every second day, most of
the time market opens flat or within previous day range.
GAP –from previous day high and next day open in Gap up pattern.
GAP –from the previous day low and next day open in Gap down pattern.
In Gap up pattern, first look at how big is the Gap? And what’s the candlestick
pattern? Bullish or Bearish?
If you remember in the fourth chapter we discussed GAPS? Market usually doesn’t
like GAPS, and Gaps eventually gets filled (most of the time)
If first candle big gap up and bearish, then short that candle, only if the candle has
some pivot or resistance above its high.
Keep SL above that resistance and wait for the gap to get filled, Gap is previous day
High where you can book your profit on your short trade.
Figure 5.33
A) In figure 5.33, Big Gap up opening and candle is bearish with R2 pivot
resistance above it, short that first candle.
(Green dotted line is the daily pivot, earlier I used to plot Green dotted line as a daily
pivot, now I changed daily pivot color to brown)
Figure 5.34
A) In figure 5.34 , Gap up opening and candle is bearish with R2 pivot resistance
above it, short that first candle.
Figure 5.35
We already discussed Gap Up rejection, now let’s discuss Gap Down Rejection
Pattern.
If in Gap Up Rejection I take short trade and book profit once Gap is filled(works well
at late afternoon most of the time)
In Gap Down Rejection, I wait for Gap to be filled, and once it's filled, I take the trade
if there is a breakout candle above that Gap and I have seen it gives massive moves
most of the time after Gap gets filled(if there is big breakout candle).
For Price Action Trader PDH/PDL are one of most important levels, where most of
the action happens.
When price approached PDH from a gap up opening or PDL from the gap down
opening most of the time it acts as strong support resistance, once it's(PDH/PDL)
broken then you can expect a one-sided parabolic move.
Figure 5.36
A) In figure 5.36, Gap down opening in Bank Nifty on 25th,Gap of 24th to 25th did
not get filled on 25th, Bank Nifty remained rangebound (Yes, not necessary
that Gaps need to be filled on the same day itself)
B) On 26th , Bank Nifty opened and the first thing was, it went uni directional till
the gap and that Gap was filled, and then reversed.
C) After 3 hours, Bank Nifty retested that level where Gap was filled earlier and
tried to make a breakout but could not succeed and started making a base
around that level.
Just look at the chart and price action, look at the candle size after breakouts and
look at candle sizes before breakouts, that tell the story, once Gap is filled moves
can be massive and its more powerful if it happens in the late afternoon because all
short sellers need to square off their position(they have to place buy orders) in hurry
because market is going to be closed.
If you see these kinds of moves then its more of the short-covering rally, which
means all short sellers in a panic to cover their short position leading to that rally.
Figure 5.37
A) In figure 5.38, Gap down opening in Nifty on 13th, Gap did not fill on 13th, Nifty
almost went till Gap, but reversed from S1 pivot, still small gap remained to
be filled which was filled on next day on 14th, so Gap was finally filled.
B) Long entry on Breakout cande which broken the Gap and closed above that
gap.
Figure 5.38
A) In figure 5.38, Gap down opening in Nifty on 26th, Nifty initially went down and
then reversed.
B) Gap was filled and breakout happened, enter that breakout candle.
Figure 5.39
This is a breakout pattern; breakout pattern tends to give good Risk-Reward trade if
breakout is really strong.
Whenever candle comes near CPR, I keep a close watch on price action inside
CPR, Sometimes price bounces again from the CPR or sometimes breakout
happens from CPR.
If CPR breakout happens when CPR is average size to slightly wider, they are most
often powerful.
Breakout from narrow CPR or very wide CPR is not that powerful.
CPR Breakout (either side) in late afternoon most often very powerful.
If Nifty and Bank Nifty have CPRBO pattern at the same time very high probability.
CPRBO pattern applicable only if same day there were no candles on its left.
Figure 5.40
A) In figure 5.40, Price falling from the top and then making a base at CPR,
CPR is of average size, wait for the breakout.
C) SL above the central pivot, in this trade SL is big so Reward also should be
Big.
You may think that there is a daily S1 pivot just below breakout candle(B) from CPR,
is it a good trade because price could have bounced from that daily pivot.
If I am taking a breakout trade especially in the afternoon and if I see some pivot like
daily/weekly or monthly, still I don’t stop from taking that trade, because breakouts
are very strong and it can break everything except CPR (most of the time)
If I am taking breakout trade and just above/below breakout there is CPR (wide
CPR) then only I avoid taking that trade.
Figure 5.41
A) In figure 5.41, Price coming from top and there is a breakout from CPR, but
not much consolidation before the breakout, but still I take this trade because
I know I have a good place to keep my SL, which is another side of CPR, So I
take this trade even though there was no much consolidation before
breakout.
B) After shorting that breakout candle keep SL above CPR, SL is at good place
and it is not big, so it is a good risk-reward trade.
Figure 5.42
A) In figure 5.42, After consolidating inside CPR for almost 4-5 hours finally
breakout on the upside.
C) SL below entry candle, but SL was big so go with half position, whenever SL
is big then go with half position, say you normally trade around 4 lots in Nifty,
if SL is big then reduce your lot size and trade as per position sizing.
M REVERSAL PATTERN
Figure 5.43
The psychology behind these patterns is Buyers who entered at the high of the day
thinking it is going to be a trend day, once market reversed they are trapped and if
they don’t have their SL then they are in big pain(loss).
When they were buyers at the high of the day their emotion was Greed to make big
money but when price going against their direction now they are fearful.
If suppose prices bounce back to the high of the day, all those trapped traders got
the opportunity to square off their position at breakeven, where they square off their
position (sell their position) leads to another sell-off.
Same time, traders who remember those levels from where market crashed, they
also take a new short position, all these lead to another selloff.
And it is also supply zone concept on lower time frame, high of the day from where
market crashed is supply zone and likely to act as resisatnce.
Figure 5.44
A) In figure 5.44, Price opened and going in the upward direction, suddenly price
reversed, all long traders trapped.
C) Once price touched high of the day, Sell there at the place where market
reversed from……all trapped traders got the opportunity to square off their
position leads to another round off selloff.
Figure 5.45
A) In figure 5.45, Price opened above pivot and going in an upward direction,
suddenly price reversed near R2 pivot, all long traders trapped.
C) Once price touched high of the day, you can take a Short position there at the
place where market reversed from……all trapped traders got the opportunity
to square off their position leads to another round off selloff.
Figure 5.46
A) In figure 5.46, Price opened and going in the upward direction, suddenly price
reversed, all long traders trapped.
C) Once price touched high of the day Sell there at the place where market
reversed from……all trapped traders got the opportunity to square off their
position leads to another round off selloff.
W REVERSAL PATTERN
Figure 5.47
The psychology behind these patterns is, Sellers who shorted at low of the day
thinking it is going to go down and its going to to be a trend day, once market
bounced they are trapped and if they don’t have their SL then they are in big pain.
When they were sellers at low of the day their emotion was they were Greedy to
make big money but when price going against their direction they are now fearful.
If prices again come back to low of the day, all those trapped traders got the
opportunity to square off their position at breakeven, where they square off (buy)
their position leads to another bounce.
Same time, traders who remember those levels from where market bounced they
also take a new long position at those levels, all these lead to another bounce.
And it is also demand zone concept on lower time frame, low of the day from where
market bounced is demand zone and likely to act as support.
Figure 5.48
A) In figure 5.48, Price opened and going in the downward direction, suddenly
price reversed, all short sellers trapped.
B) Price touched almost near the high of the day and crashed again.
C) Once price touched low of the day, Buy there at the place where market
bounced from……all trapped traders got the opportunity to square off their
position leads to another round of bounce.
E) Book profit at the 2R or previous swing high, but in this day the market closed
before price touching the profit Target.
Figure 5.49
B) Price touched almost near the high of the day and crashed again.
C) Once price touched low of the day, Buy there at the place where market
bounced from……all trapped traders got the opportunity to square off their
position leads to another round of bounce.
D) SL below S1 pivot.
Figure 5.50
B) Price even crossed above the high of the day and crashed again.
C) Once price came near low of the day, Go long there at the place where
market bounced from……all trapped traders got the opportunity to square
off their position(buy) leads to another round of bounce.
Figure 5.51
This is a Breakout pattern which tends to give big profits and happens very
frequently.This pattern is nothing but SL hunting pattern.
If a Day opens with Big Red candle(or average size also will do) then 3 things can
happen, either it can lead to a big bearish Trend day, second is RCR Pattern or third
is, this pattern, RCBO Pattern.
The psychology behind this pattern is when the market opens with big Red candle
most retail traders assumption is it’s a bearish day and it’s going to go down, and
they start shorting on every level, keeping SL above that Red candle.
Big players know these places where retailers have their SL, and if they can hunt
that SL then that can lead to big short-covering rally helps them to make a big profit.
These patterns most common in the mid to late afternoon, but can happen at the
opening as well, once market reverses and breaks the first candle high all SL(buy
order) gets triggered and all short sellers in a panic to cover their shorts leads to that
big rally.
So one can take a long position if First Read candle high gets broken.
Point to be noted that if RCBO happens at CPR then batter not to take the breakout
trade because most of the time its fails.
This pattern applicable even if previous day had big RED candle and its high gets
broken next day(applicable on previous day first candle also)
Figure 5.52
B) Above Red candle is the place place where retailers have SL, Looking at that
Big Rad candle most of the retailers are short in the market with SL above
that first Read candle.
C) Finally, in late afternoon big players are successful in hunting all retailer’s SL
and big short-covering rally after that, Go long on that breakout candle.
E) Book profit at 2R or next pivot or ride your winner with trailing your SL.
These patterns generally lead to big massive move because of the short-covering
rally and breakout traders enter that rally to take advantage of that move leads to big
rally on one side.
Figure 5.53
B) Place where retailers have kept there SL, Looking at that big red candle
most of the retailers are short in the market with SL above that first red
candle.
C) Here, big players successful in hunting all retailer’s SL within first one hour
only, short-covering rally after that, Go long on that breakout candle.
D) Keeping SL below entry candle would have been too big, so keep SL below
PDH.
E) Book profit at 2R or more or ride your winner with trailing your SL.
Figure 5.54
A) In figure 5.54, This pattern is applicable even there was a red candle on the
previous day which was not broken, in these chart previous day had a big
Red candle at the opening.
B) Place where retailers have kept their SL, looking at that Big Rad candle
most of the retailers are short in the market with SL above that first Read
candle.
C) Here, big players successful in hunting all retailer’s SL within first one hour
only, short-covering rally after that, Go long on that breakout candle.
E) Book profit at 2R or more or ride your winner with trailing your SL.
Figure 5.55
This is a Breakout pattern which tends to give big profits and happens very
frequently.
If Day opens with Big Green candle(or average size/or bullish pin bar also will do)
then 3 things can happen, either it can lead to a big Trend day, second, GCR Pattern
or third is this pattern, GCBO Pattern.
The psychology behind this pattern is when the market opens with big Green candle
most of the retail trader’s assumption is it’s a bullish day and it’s going to go up, and
they start taking long trades on every level, keeping SL below that Green candle.
Big players know these places where retailers have their SL, and if they can hunt
their SL then they know it can lead to a big sell-off since all long trader’s SL gets
triggered.
This pattern applicable even if previous day had big GREEN candle and its low gets
broken next day(applicable on previous day first candle also)
These patterns most common in the late afternoon, but can happen at the opening
as well, once market reverses and breaks the first candle low, all SL(sell orders) gets
triggered and all long traders in panic to square off (sell) their long position.
So, one can take a short position if first bullish Green candle low gets broken.
Figure 5.56
A) In figure 5.56, Nifty opens gap up with a bullish candle,after some upmove its
facing resistance at R2 pivot.
C) Sudden sell-off from the top, all SL (sell order) below the first candle is
triggered, short that breakout candle.
D) SL above R1 pivot.
Figure 5.57
A) In figure 5.57, Nifty opens with a bullish candle facing resistance at CPR.
B) Traders are long looking at Green bullish candle with SL below the first candle.
C) Sudden reversal, all SL (sell order) below the first candle is triggered, short
that breakout candle once the candle is closed.
Figure 5.58
A) In figure 5.58, Bank Nifty opens the gap down with a bullish candle, and
immediate reversal after a small move.
C) 4th candle closed below the first candle triggering all SL (sell orders) resulting
in big Sell off, short that candle once it is closed.
D) SL above S1 pivot.
Look at the similarity in both this chart(figure 5.58) and previous chart (figure 5.57)
how similar pattern looks like, the only difference here is price reversed before hitting
CPR and in the previous chart, price reversed after hitting CPR.
That’s what I said in the beginning in the chapter 3, Price action and patterns keep
repeating because it is created by human beings, and we all are creators of
habits, so they say patterns repeat again and again because human emotions
never change.
Finally, always watch both Nifty and Bank Nifty chart before taking the trade,
because sometime one of them show breakout and another one inside the
CPR resistance then eventhough one was having breakout , still it can fail
because another one was inside the CPR resistance.
Watch this chart below(figure 5.60) Nifty had RCBO pattern(based on previous day
red candle) but Bank nifty was facing resistance at wide CPR(marked in Black circle)
Eventually Bank Nifty reversed from CPR and Nifty RCBO pattern also failed.
So, it was not a good trade to go long in Nifty until CPR resistance was broken in
Bank Nifty.
Figure 5.59
Conclusion
My eBook ends with these 15 Day Trading Patterns and Strategies, but in my
Webinar, I discuss beyond these pattern and strategies, like I discuss How to use
moving averages,using Options in Day Trading, Risk Management, Position Sizing,
Trading Psychology etc.
Many students ask me whether these 15 patterns and strategies work in Stocks?
Commodities? Forex?
My answer is, as of now, I trade only Index in the Indian market, like Nifty and Bank
Nifty only, so I have backtested charts on only these 2 instruments(Nifty & Bank
Nifty)
So my suggestion is, If you are a Trader who trades only in stocks or commodities
then please go through the historical charts and do some backtesting and see
whether these patterns work in Stocks or Commodities.
But please ensure that whatever instruments you try, it has to have good liquidity,
not on small caps or penny stocks.
Trading, just like any other profession, it can’t be mastered by attending just one
seminar/webinar/workshop or just by reading a book.
Like any other profession, you learn it by doing it, only it can be mastered with some
experience and practice.
Trading has a high failure rate, the reason for this failure rate is lack of chart reading
skills, lack of discipline, not following risk management rules, not able to control
emotion during live trading (biggest reason).
So strategy is not only thing in trading, one has to master other things like Risk
management and Trading psychology also to become a good tarder.
Trading is only for those who have passion, discipline, patience and ready to work
hard to master this Art.
Wrap up
I really enjoyed writing this eBook and I hope you have enjoyed reading it too; and of
course, I hope you have learned many new concepts after reading this eBook.
Email me [email protected]
Resources
Blog: https://pivotcall.com/
YouTube: https://www.youtube.com/channel/UCoFSwfRGHru5K82atxgsLGA
Twitter : https://twitter.com/aquariantrader
Facebook: https://www.facebook.com/profile.php?id=100024733031405
LinkedIn: https://www.linkedin.com/in/vikram-p-197a9917a/