Intraday & Swing Trading strategy - YouTube

Hello friends. Welcome to Day Trade Telugu

Today, we'll be discussing a swing trading strategy

if we see such a pattern in higher time frames like daily or weekly

the return we can earn monthly can be easily earned from this trade

this chart pattern indicates that the entire trend will be moving downside and the stock will reverse

this is the cup and handle pattern

rounding bottom pattern is also covered in this topic

the various steps in these

how to confirm them, entry, stop loss, target

psychology, everything will be explained step after a step

before starting, if at any point of time

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as this pattern looks like a cup, it is called a cup and handle pattern

before explaining the pattern, let's try to understand the psychology

this forms when the price falls and also when it rallies

when the price falls, the cup and handle pattern formed then will be called a reversal cup and handle pattern

which means, there is a possibility that the downtrend may change to uptrend

if this pattern forms when the price increases or uptrend

then we consider it as a continuation pattern

so, it will be both reversal and continuation pattern

we will consider taking it as both of them

we can observe this mostly at the supports when the price falls downside

if the price falls like this

how can we know that the price will stop falling at a point and starts increasing?

there is an indication for that

while driving, we won't find a right-angle turn suddenly

there will be a curve for sure

that is curve is provided so that the driver would reduce the speed to take the turn

the same goes here. The reliance stock started falling from 2845 to 2370

then, a rounding bottom is formed

if a rounding bottom pattern is formed, a price reversal is expected

rounding bottom pattern is formed before the cup and handle pattern is formed

the price fell

if a rounding bottom forms after the price stops falling

then it is called a rounding bottom pattern

people trade even if this breaks

if a small curve is formed along with this rounding bottom curve

then it will be like a cup and handle

so, this entire pattern is called a cup and handle pattern

we take a buy entry after the upside breakout

let's understand the psychology before understanding entry, target and stop-loss

let's say if we see at this falling point

even if you are here

you'll be sellers even at this point due to the selling mindset

but when the price tried to reach the previous high and rounded at this point

bears lost their momentum and handed over the control to bulls

observe the next formation

sellers tried to take control but failed and again buyers took over the control

the previous

resistance was broken and the close was on the upside

that is our confirmation

the levels at which the market previously fell

the price moved upside breaking that resistance

and most importantly, the lower highs and the lower lows pattern is broken here

and the higher lows and higher highs are formed

so, there will be a reversal of the price fall

and we take these factors under considerations

to trade the cup and handle pattern

okay

where should we plan our entry?

in this cup and handle, after this rounding bottom and the small handle is formed

we draw a line

so, the important breakouts like the recent resistances the price faced

we plan a buy entry when it breaks

we place the stop loss below this handle

target. we measure the height of this cup

like, if you see the info line in the tools section

we can measure this

after drawing this, you can bring that line, at the point of entry

that line usually is taken as a target

but as I said in my previous videos, I don't do that for the target

in that particular trade, I will place my stop loss

and depending upon that stop loss

in Intraday, 1:1.5 is a better ratio

or if you can achieve Rs.2 target for Rs.1 stop loss, like 1:2, it is a super trade

if you are swing trading, after achieving 1:2

I will bring my stop loss to the cost

when the price moves upside, I will revise my stop loss

and I will place my stop loss at recent lows or below important supports

and I will try to execute the trade

but we see these patterns many times

but sometimes, they might fail

if we want to avoid such cases

or after the pattern breaks out, if we have to move in the same direction

then it is necessary to make observations

so, the first one is volume and you should notice it in every pattern

the psychology that we discussed in the price

if the same psychology is represented in the volume

then we can treat it as important

let's try to analyse the volume

the price-volume analysis is particularly treated as important in chart patterns break out

the volume should be observed at breakout candle in this cup and handle pattern

if the volume is more at breakout candle when compared to the previous candle

then we treat that breakout as important

and take a look at this

after the cup is formed, before the breakout, at this handle, if you observe the volumes

when the price moves downside if you observe the respective volumes

when it is moving downside, there may not be a big volume

which means, the direction in which the price moves,

we can see weak volumes in that direction

so, we can understand that there is no sustainability with that price

at that time, as the price is falling, a cup is formed

if we observe these points before the handle forms

as the volumes are low here, we don't sell even if the price is favourable

we will build a conviction that this will form a handle

the volumes formed at these breakouts

we can plan the entry into a trade by confirming that the pattern will sustain

the pattern is formed and it is confirmed by the volume

what about support and resistance then?

this is falling downside

and the pattern is formed in this way

so, in higher time frames like hourly or daily

is there any importance for the line drawn at this neckline of the cup and handle

like is there any importance for this line of the pattern in higher time frames

so, by zooming out, let's try to find any importance for it

let's move to hourly for a better clarity

we can observe the price action or support and resistance are worked out

we do this multiple times and the line drawn for the cup and handle

the line that is drawn at this cup and handle

previously, that was an important support and resistance

why should we check all these?

even the people who don't recognize the cup and handle pattern draw a line there as it is an important zone

they buy when the price moves upside

if they are also added to the buy-side

then the price will have a strong move

so, we try to combine multiple elements

and even the divergence like RSI

you should try to observe the divergence at this particular price

observe here, at this price

the RSI at this point, if it comes back to these levels

the RSI rallied from this point to here

so, the price is at the same level but the RSI moved upside

so, the divergence is formed

I'm not explaining the divergence again because I have already explained this at RSI and MACD

volume, pattern, support and resistance and divergence

it is not mandatory to observe this and you can trade with the pattern and breakout

but if we take these into consideration, then the chances of a fake trade will be less

I will show you some examples now

observe the time frame and the date

then you try to combine these elements on those charts practically

is the volume favourable or the support and resistance in higher time frames?

is there any divergence? try to observe these

If you can, observe RSI and MACD or only RSI

so, if we explain the same topics with other examples, the video will be lengthy

if the cup and handle pattern forms when the price falls, then we consider it bullish reversal

and if it forms when the price rallies, then we consider it as a bullish continuation pattern

so, the cup and handle is a bullish pattern

then inverse or reverse bullish cup and handle pattern is a bearish pattern

this forms when the price moves upside

this is the same theme as earlier

when the price is moving in a direction

as you see

the price that was making higher highs every time

failed to make another higher high here and bore support at the previous low

as the next high is lower than the previous high

and now, when it is making a lower low breaking the previous low

then it is an indication by the inverse cup and handle pattern that the existing uptrend is reversing to a downtrend

if you observe here, there is no big volume activity here

but when there is a breakout

then at that point, we can see some strength in the volumes

so, we plan the sell entry after the breakout

we would have planned the sell entry at this point

but if you see, I'm zooming this

here,

after the breakout on the downside

previously, it bore support multiple times

this time, when the breakout candle closes

the low of this breakout candle

we plan a sell entry after the next candle breaks the low of that breakout candle

the stop-loss will be high of this handle

target, depending upon this height

we expect that height as a target after we take up a trade

that is theoretical

even in reality, if you can achieve 1:1.5 or 1:2 targets

you can exit the trade

so, when the price moves in a direction, if upside, a rounding top

and if it is downside, a rounding bottom is formed

we should be alert when we get a signal that the price will be reversed

and then, if a handle forms confirming it

then if we execute the trade after the breakout

again, we treat volume as an important factor

the neckline which we have drawn

if there is any price activity or support or resistance in the higher time frame for that line

or that level or zone

if we can observe that

if there is any level, then when that level breaks

people who trade solely based on support and resistance will also enter that trade

and as they trade in our direction

there will be some momentum to our view

so, if we observe these and even divergence like RSI and MACD

when a pattern forms, if a volume supports it

and if it acts as a good zone or resistance or support in the previous time zones

these are enough to judge our view if it is right or correct according to price action

when all these confluence

or people who track indicators if track divergences too then it will be a further confirmation

for our view to be right or wrong

so, that's that.

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JAI HIND