Here's is an account of a loss trade that occurred in Axis Bank scrip. Please refer the 5-minute chart of the stock below. The opening candle was a candle with an up wick which indicated that bulls are weak in the morning. Price continued to descent on bearish strength in the first hour of today's session. In its fall price breached a significant support area in confluence with 'R1' to move little lower towards 's1' pivot as seen in the chart below.
I planned a short trade at a bargain price and waited for the price to offer entry point. The details are as follows. Entry is @ 690.80, stop is @ 692.5, and the target fixed @ 686.15. Target was set considering 200-MA in the vicinity lower and a support area. But my stop was taken off.
I had all pointers indicating change of trade scenario. RSI started taking support near the 40 levels floor area. Price was taking support at 's1' cleanly. At this point even Nifty 50 index was about to move higher. I could have closed the trade for a small profit even. But a dominating thought of 'stick to the plan' took over the mind and didn't allow me to close the trade. Overall, I lost 2.7 points.
In the hindsight I drew trend lines that formed a leading wedge pattern in the morning. Whenever price moves out of wedge pattern, it explodes. That's what happened after my stop was taken off.
Lessons:
Try looking at patterns if any are forming in 5-minute or 15-minute chart.
If evidence is emerging challenging the very supposition of the trade after entry, be open-minded to call it quits.
I must have waited for a 3-legged correction to the morning fall.
What about Nifty 50 index?
Nifty opened Gap up by about 60 points near a confluence formed by pivots 'R1' and 'r1'. Price fell in a 3-legged fashion in first hour. Bulls in all their effort brought price back higher only to find stiff resistance near confluence of 'R1' and 'r1'. Please refer the 5-minute chart of below.
Including the open candle, Nifty bumped to 'r1' and 'R1' ceiling 3 times. Nifty closed 0.27% higher for the day. It was a sideways day overall.
Here's a screenshot of before and after movements in Axis Bank scrip.
