Here's a beautiful case study I log to journal articles. The scrip in consideration is Bharti Artl Ltd. Below is a 5-minute chart of the same. I have marked the open candle in the chart. Price opened below the strong support zone from last session marked by a horizontal box. Open candle also has a huge wick upside indicating weak bulls.
But the 3rd bullish candle looked bulls’ assertiveness as it closed above the high of open. Interestingly, the very next candle was big bearish candle engulfing the 3rd and it closed below the low of 3rd candle and last session support area. Additionally, price was below 200-MA. Bears asserted their strength.
All a trader needed was a pullback to the support area. It came. I quickly scanned 2-minute chart and I drew a short trade box. The details are as follows. Entry is @ 717, stop is @ 719 (above the previous candle wick), and target is @ 711.75. The target was fixed by pivot 's1'.
Price plummeted in clear fashion. From analyzing higher time frame charts I could make out further descent. Throughout the fall to confluence area of pivots 's2' and 'S1' please also note how price respects the pivot in its path downwards.
What about Nifty 50 index?
Please refer the 5-minute chart of Nifty 50 index below. Nifty 50 opened near the previous close. The open candle is big bearish candle engulfing last 30 minutes of previous session completely. In the process, previous day low was taken off.
For some time in the morning Nifty found stiff resistance near current weekly pivot 'P'. But bears were strong and took the index lower and lower. Notice that Nifty is comfortably below moving averages. The shorter moving average acted as pullback opportunity points twice.
A pullback short opportunity near 's1' manifested with
favorable Risk-Rewards ratio. Nifty crossed pivot 's2' to reach demand zone
from earlier session marked in horizontal box. Nifty 50 closed 1.65% down for
the day.