Here's is a case study I add to journal articles. The stock in consideration is Axis Bank. Below is a 5-minute chart of the same. The stock opened with a bearish candle that had huge wick downside. Can we conclude that bears are weak? We need confirmations to say that. A strong reason not to conclude so is price open below a strong confluence area formed by 'R1', 200-MA, rising trend line and a resistance. At such times exercise patience.
Price couldn't push above weekly pivot 'R1' in the first two hours. I continued to watch price action and found that a triangle pattern was emerging. Triangles are tricky to trade. I had tough time pulling the trigger to go short. So, I drew a short trade box.
The details are as follows. Entry is @ 687.2, stop is @ 690, and target is @ 682. Just favorable Risk-Rewards ratio was present. Because of the sideways price action I closed the trade box manually for 2 points profit after an hour or so. But later price plummeted down exactly to an area of earlier resistance marked by horizontal box.
RSI sideways around 40:
Take note of RSI from the middle of the Triangle pattern to trade box closure. RSI slithered around floor of bullish region. RSI was not able to go above 45 level. On the other hand price though sideways fell down by 2 points during RSI puzzle.
Please follow through my morning price action story. Below are explanations for price junctures I have marked on the chart.
1 - Bulls tried their best to pull price higher. No confirmation candle formed.
2 - This candle tells that bears won over bulls.
3 - A Pullback short opportunity. It looked scary. Look at the RSI poke above 40 level. Conviction is needed in your version of story.
What about Nifty 50?
Nifty 50 opened with a Doji family candle which is marked in the 5-minute chart below. Continuing on last session note Nifty moved range all through the day. From the chart we see that Nifty found stiff resistance near 17530. Weekly pivot 'R1', current daily pivots 'p', and 's1' acted as important junctures throughout today's session.
