Stock and Forex Trading with Price Action Technical Analysis

Rajesh Sethi was a hotelier now a full time investor/trader.

Identifying the largest power packed candle to find the energy points on the charts.

Nifty Daily Chart attached herewith

US30 Dow Jones Chart is attached herewith

Identifying the largest power packed candle to find the energy points on the charts. Now focus on supportive candles also. Just before the largest candle. Both candles are important. Just by 2 candles can build the future road map.

May 19th '20

Akshay Nampalliwar

About Aurora Candle

Hello sir, First of all thank you for sharing such a wonderful knowledge. Sir, I have notice in Bharti Airtel found 2 Aurora Candle 13th & 19th March on daily candle of same size. can you pls tell which candle to be consider to draw support & resistance line.

Rajinder Kumar Arora

Dear Student

On May 21st when I revisited the chart of Bharti Airtel, found that both equal size Aurora Candles have performed very well. Chart of Bharti Airtel is attached herewith.   

Thanks a lot for participation. Lots of love and blessings.

May, 27th

Bharti Airtel dropped from 603 only to 553 today.

Learn to Find targets after the breakouts with the help of the largest and supportive candles

September 19, 2020

Just check the attached chart of Nifty 50. On June 19th, 2020 price breached the top of the Aurora Candle and formed the top on August 31st, 2020 dot on the price indicated by Aurora Candle.

Let's do the mathematics. 

Top of Aurora Candle 10159 Bottom of Aurora Candle 8555 = Difference 1604 (size of aurora Candle)

Top 10159 + complete length of Aurora Candle 1604 = 11763 - Target and High formed 11794  

One of the super results.

December 8th '20:-

Performance Check: Nifty managed to hit the target of 13367 a clean move of 1600 points. Nifty managed to discover 3 big successful moves of 1600 plus points on the basis of the concept of Aurora Candle in the last 9 to 10 months. The chart attached herewith. 

This lesson is added on the demand of a student. In this lesson currency pair of AUD/INR is used for case study on one hour chart. You can try on USD/INR, GBP/USD, EUR/USD and even on USDX. 

Contributed by a students - Thanks and Love - Dear Student Shivaprashanth HireMath

Shivaprashanth Hiremath2 hours ago

USDINR-15min chart analysis

I dont know if its a good idea to discuss charts here. Please let me know if there is a forum for discussion.

"Larger image" - available in "Resources"

please see above chart of today's USD/INR may futures.
i want to confirm if my understanding is correct.
1. yellow strip is marking the gap down range. it acted as days support.
2. candle + top wick range is telling me that its the resistance (red line)
3. body range is giving me the support for sideways trend (green line)

my question is, all of this holds good only when i consider the gap down strip and on top of it draw the ranges. is my understanding correct?

Gaps represent an event and a force of swiftness. Let’s learn to play with gaps. Opening gaps are created with a force of comprehensible and clear opinions of masses. Which gaps will establish a move or the trend and which will retrace back to fill the gaps?

When price drop with a gap on opening and later when price try to retest the gap area gets the resistance. That gap work as a supply zone. Same is the case when price jump with a gap at the time of opening and fall back to gap area gets the support. Here gap works as demand zone.   

Understanding different types of Gaps: Common Gaps - Breakaway Gap - Runaway Gaps - Exhaustion Gap - Island Cluster. Common Gaps are the ones formed in the sideways markets which are supposed to be filled same day or in a day or 2

Island Cluster is the strongest formation in the study of gaps. Mostly we find Island Cluster either at top or at bottom, but not a rule. If you initiate trade after the formation of Island Cluster on the charts, will be able to get quick and large money most of the times.

May 18, '20

"Island Cluster" formed on Nifty Index NSE chart between May 12 and May 13 '20, @9282 (Chart attached in Resource) and from that point Price of Nifty tanked to 8800 by today May 18th '20 (chart till May 18 is also attached herewith). Just a month back only you studied this chapter / subject and you got the opportunity to apply the same. It was not only the Nifty but some other stocks like HDFC bank managed to provide same opportunity by forming Island Cluster 910 to 830 (8% return) (chart attached herewith), Alert: Mostly this formation will yield huge profits but remember sometimes may fail also, don’t forget to place your stop loss in the case when formation of Island cluster fail to perform in desired direction.

May 22, '20

Hang Seng Index of Hong Kong stock exchange formed island cluster and dropped by 800 points recovered filled the gap and again formed the island cluster formation (very clear big and loud)and dropped by 1500 points. (Chart of Hang Seng attached herewith.   

June 06,

Double Island Cluster formed in Nifty 50 Index NSE, India on June 1 and thereafter its up by 400-500 points. Chart attached herewith 

September 7

Updates of June 6 chart:- Nifty chart attached herewith. April 30 gap down; June 1 gap up from same area leaving the same gap unfilled. Gap filled on June 12th and big rally initiated thereafter from 9550 to 11700   

Gaps are one of the best studies of price action in Technical analysis. The island cluster gap pattern is a technical analysis pattern observed in stock price charts, especially in candlestick or bar charts. It's a rare but strong reversal signal, involving two price gaps that form what appears to be an "island" of price activity.

✅ Structure of the Island Cluster Gap Pattern.

It consists of: First Gap (Breakaway Gap): Occurs in the current trend's direction (e.g., upward in an uptrend or downward in a downtrend). Separates the "island" from previous price action.

Island Cluster: A group of candlesticks (it can be one or several days) that appear isolated from the surrounding price action. The volume is often higher than usual, indicating indecision or exhaustion. Second Gap (Exhaustion or Breakaway Gap in opposite direction): Occurs in the opposite direction of the first gap. Closes the original gap but leaves the island of prices stranded.

? Bearish Island Cluster Reversal

A downtrend is expected after the pattern. Price gaps upward, consolidate (form the island), and then gaps downward below the previous range.

? Bullish Island Cluster Reversal Uptrend expected after the pattern. Price gaps downward, consolidates (island), then gaps upward above the previous range.

? Why It Matters: Indicates a strong market sentiment shift. Traps traders who entered during the "island" period. Often accompanied by volume spikes, showing institutional interest

After the exhaustion gap possibility is current move is over and price may go the sideways or take reversal at least temporarily. Later you need to find the aurora candle at that point and set the future support and resistances plus the targets if find the breakout. Here in this lesson reference given of lecture no. 6, please mark it as lecture no. 9  

I believe strongly that trading can’t be learned with theoretic equations. You need to spend too many hours be on charts to understand the patterns and behavior of the price movements. More you practice on hundreds of the charts, start getting the sense of the market price behavior and the day comes when you start forecasting the next move. So my advice to all my students is to study as many charts you can. Do it, but not as a learner but as a critic. Happy Trading To All My Students.

I have taken an example of weekly Aurora candle of 2008 and surprised to see how the top and the bottom of the candle worked as support and resistances for years almost 6 years. Nifty managed to take breakout in the second month of 2014 and thereafter it zoomed. It’s not the conclusion. Nifty index when corrected after a good rally in year 2016 managed to hold at support level resulting out of the top of the one complete aurora candle size placed on the top of the weekly Aurora candle of 2008. Fall of the year 2020 could also manage to take support on the demand zone produced by Aurora candle. Here in 2020 fall a new fresh weekly Aurora candle is formed and this candle will take the charge for future navigation or the road map – support and resistances plus the targets after the breakout.

Update: May 23 '20

This is the age of discoveries and inventions. I want you to be the part of my research. Try Aurora Candle on different charts with different time frames.

1. Chart of Crude Oil is attached herewith. I got surprised to look at the chart. One big large candle and when price breach the top the Aurora Candle after few days, no stop loss price of Crude Oil jumped from $18 to $35 and it was not expected by the market. That's the power of Aurora Candle.

2. Chart of Nikkei 225 Index Japan (NI225) is attached herewith. Look at the chart it looks like presentation of a march of the army, but not a price movement.

3. 2 charts of Silver are attached herewith. One is the 6 months chart and second one is of a shorter period. After looking at these 2 charts, I could sense that it not that Aurora Candle only navigate the future price movement but historical data give the birth to Aurora Candle. In this six months chart of Silver, I have just put the identical candle of Aurora Candle on the Aurora Candle. Check the support and resistance.

Nifty levels generated by Aurora Candle 9100 - 9965 worked like rock. It's power of Aurora Candle. From 9100 to resistance of 9900 no breaks.

1 QUESTION

Rangarajan Krishnamoorthya day ago

Identifying the Aurora Candle

Dear Sir,

I purchased your course yesterday and I am watching it with great interest. The Aurora candle is a powerful idea! I have two questions:

1) How far back should I search for the large Aurora candle? Is it 50 bars, 100 bars, 200 bars, etc.? In one of the examples, you talked about a candle formed in 2008, which was valid even recently. So how far back should we look?

2) Let us assume that as of today I found an Aurora candle formed one year ago and I draw the appropriate zones based on it. Suppose another large candle (almost the same size or even larger) forms a week from today, then at that point, which should be taken as the correct Aurora candle?

Thanks,

Rangarajan

1 ANSWER

Rajinder Kumar Aroraa day ago

Dear Student

I am so glad you have asked a very relevant question. Few students have asked same question on Twitter and YouTube. You can fix few rules

First Step: You need to check when last the volatility was very high. When I write volatility means risk but not the fluctuation. At those times you will find the right Aurora Candle. As in the month of Feb. March ’20 volatility increased in a big way and very easily can identify Aurora Candles. I have mentioned a Aurora Candle of 2008 in weekly chart and was valid till now before the current fall of year 20. This time Aurora candle is much bigger than that of 2008. Current candle may work for years now as a reference candle.

Now question is what about daily hourly and 15 minutes candle. After testing set of many charts find that you can search for Aurora candle on following matrix:

on daily time frame 2 years chart, on hourly time frame 4 months chart, on 15 minutes time frame 2 months and on 5 minutes time frame 10 days chart.

In last am going to write the secret “when stocks are very active you should not go back for more than few months on daily charts. Key to decide the time frame is volatility. Start the daily chart with breakout candle from the sideways markets.”

With best & kindest regards

R K Arora

Note: May/4/2020

Today I tried the same concept of Aurora Candle on Nifty 5 minutes chart and you will be surprised to know levels generated by 5 minutes Aurora Candle worked too good.

Today 5 minutes Aurora Candle 9521.95 - 9437.5     One solid candle of 84.45 points Next supports 9353 - 9268.6 Low made 9267.4 and closed at 9305. First 2 hours hold above 9353 and once breached the level slid to 9267.4 and bounced by 40-50 points.

I am amazed. Please check the chart of the day. 

May/6/2020

Today Nifty managed to touch 9100   first move from 9100 to 9900 and 9900 to 9100 in few days 1600 points. All Mathematics. Now to watch 9100. 

Are you a disciplined trader?

This session is to help you to understand in stock trading is you will win and lose. It’s game of probabilities. It’s game of emotions. There is no other business where emotions are so sky-scraping. Let’s work on some rules of trading

These rules apply on all the trading systems

1. You will not use your skills. You will work on system.

2. System says buy – BUY / system tells stop loss – Stop loss / system says book profit – book profit. System says trail – trail your stop loss

3. You will not seek guidance from anyone. You will go by your system.

4. You will keep your quantity (same Value of the trade) in all trades.

5. You will not increase quantity after series of winning and will not reduce after series of losing trades.

6. You will not risk more than 10% of total trading corpus.

7. Your stop loss should not disturb your pocket or the mind.

8. Risk reward should be 1:3 or better.

9. Cut the losses as early as possible. Let the profit run till targets.

10. You will not trade just for the sake of trading.

11. You will trade when system will show trigger to trade.

12. You know trading is a game of patience and disciplined.

13. It’s very easy to lose but very difficult to win.

14. Only disciplined traders win in the market.

15. It’s best profession of the world but needs too much of practice.

16. It’s as easy as car driving and as difficult as conquering the Everest.

17. First thing you should understand that there is risk in trading. If you know there is risk you will keep stop loss. Second thing you should understand is that there is money. If so you will learn the techniques and follow it religiously to make money.

18. At last 3Cs cool, calm, courageous pay in the stock trading.

This lesson will help you to understand how to use body and the wick of the Aurora candle and the supportive candle of the Aurora candle. How you can save your trade from stop losses and how to find the targets or supports or the resistances. What I suggest as an instructor of the course please re-visits all the lectures again after watching and studying this presentation. Why it’s so? This time when you re-visit will be able to correlate many more arrangement of price action which you may have missed earlier when watching the videos first time and not only that you can come out with your own new ideas. Wish you happy trading and happy investing. 

Dear Student

An excellent question:-

Our system should be predefined as well as well-defined. Question is which portion of Aurora Candle or the any other candle can be used as supportive candle? Answer to it is

1. When Aurora Candle has near to 18 to 50% wick that’s supportive candle

2. When body is 18 to 50% body of Aurora Candle is the supportive candle

3. If first 2 conditions are not there means Aurora Candle is a solid candle without a wick (shadow) OR Aurora Candle is a doji without the sizable body, look at the candle formed just before the Aurora Candle and use it as supportive candle.

4. Last if candle just before the Aurora Candle is also very small compare to Aurora Candle can select the largest out of the set of last 5 candles.

Sir! Work on few charts, you will love it.

With best & Kind Regards

Love and Blessings

R K Arora

Lectures with the title "Aurora Candle Simplified" and "Dynamic Aurora Candle" are the soul of this course.

Principles of Dow Theory will help you to understand “how the each and every move is planned well in advance” and how you can understand the same much before the any event take place. This chapter will help you to understand a basic structure of the price movement. Dow Theory is useful for a larger picture of a complete cycle of many years but you will be surprised to know that same structure explained by different articles of Dow Theory hold good in shorter time frames also. Try in Daily, Hourly and even 15 minutes charts also and you will be able to identify the repetition of the same formations again and again. Out of the six principles of the Dow Theory 2 are explained in this lesson and these 2 principles are the heart of price Action. This lesson is the foundation of the price action. Once this concept is clear it will be easier for me to explain more related topics effortlessly to you. Don’t hesitate to raise your query, I am here to satisfy all your doubts.

Maruti Chart Updated on May 21st '20 attached herewith

BREAKOUT Strategy is one the strongest techniques of price action.

When you are working on breakout strategy first step is to identify support and resistance levels formed by sideways markets and opportunity is there when price moves out of the band formed by the supports and resistances. Normal behavior of the price pattern is that after the breakout from the sideways zone price fall back or pulls back to the zone again (demand or supply zone) that’s the real opportunity to trade. Initiate the trade when odds are in your favor with small stop loss.

Breakout from the defined support and resistances normally from a channel offers an opportunity at early stage of the move and it works repeatedly in all kind of the markets and most of the asset classes. But never forget to keep the small stop loss in case of whipsaw.

In this lesson have worked on Nifty daily chart as well as on WTI Crude Oil 5 minute charts just for the reason to make a point that breakout strategy work in all time frames.   

Next lecture on "Dynamic Aurora Candle" will be published after 10 days.

Note: - New updates have been added in the write-up of Lecture No. 14 with 4 new charts.

We can set the following rules as investors:

First, understand the risk:-

1. Government bonds – Risk-free instrument

2. Private bonds AAA or AA rated – Riskier than Government bonds.

3. Equity Markets – Very high-risk product.

4. Future and Options (Derivatives) is a dreadfully risky product.

5. Trading in Future and Options with borrowed money is a disaster

My advice to all students is to invest in the equity market for a longer period and that also in a diversified portfolio to mitigate the risk. Money Management plays a very important tool while investing beats it’s for the short term or long term. So why even mutual fund professionals write a disclaimer “Please read the offer document carefully before investing,” needs to be taken into consideration before taking a step further while making investments in various fund houses.

Trading is a very easy job but when money gets involved emotions go very high. This is the only business where emotions cross the roof of high rise buildings also and also touch the sky.

Disclaimer: Using any strategies or any educational information in the live market depends on students/client/viewer’s own understanding/discretion and is responsible for his/her own risk. JMC is an educational Institution and all the contents covered under the course "Stock Trading with Price Action" are for educational purpose only and is the part of a research paper.

Those who have studied Gann Square of 9 are very much familiar with the concept of Static and Dynamic Square of 9 levels. Same concept I have applied on Aurora Candle. In the chart of Hand Seng (Hong Kong Index) could find the perfect resistance as explained in lecture on the same concept. Very next day price of Hang Seng made the low on just at the bottom of the Aurora Candle and bounced. Picture of the chart is attached with the assignment 2.

Same concept of dynamic Aurora Candle is applied on Dow Jones chart and price landed just on Aurora dynamic level from the top of 27636. Chart attached herewith.

In the attached chart of Maruti Suzuki India, different colors are fixed to the body - the upper wick and the lower wick.

Additional: On the same technique, 3 more charts are added

1) Dow Jones Daily Chart

2) NSE Nifty 50 Daily Chart

3) Look at the power of ICICI Bank - 4 times corrected from supply zone only. Today nose dived by 7% in a single day from the resistance/supply zone of Aurora Candle.

4) Power of the chart of Amazon Com - Yesterday hit the top of the upper band and today tested the same level and dropped. Why that level only? Chart attached herewith   

5) Chart of NSE - Bank Nifty Index - pure and clean move respecting the levels of Aurora Candle.

June 25th : Bank Nifty has taken support at the Aurora Level and moved up by 500 points. Chart attached herewith 

December 18 '20

Performance check: Chart of Nifty of last 9 to 10 months: 3 big successful moves of 1600 plus points. The chart attached herewith.

Bank Nifty also proved to have 10 rounds of 4000 plus points in the last 9 to 10 months. The chart attached herewith. 

Bank Nifty support and resistance levels were uploaded today as on Feb. 12, 2023. available in downloadable materials with the title "nifty bank support and resistances levels"

2nd picture is posted today on 20th May 2023 with the title "bank nifty"  Just check how wonderfully the support and resistances worked in the last 3 months. That is the power of Aurora Candle. 

Thank You Students

Love and Blessings

The more you practice, the more confident you will be.

The feedback from my students and my experience boosted my zeal to devote more time to research and analysis.

Thank you, my students

Lots of love and blessings

I started with all 12 following questions:

1. What is the mathematical definition?

2. Why should market psychology produce this behavior?

3. Can it be tested objectively?

4. Where does it fail?

5. Why dos it work?

6. Will this help traders?

7. Can this still be respected ten years from now?

8. Probability of revisiting the range

9. Breakout behavior

10. Relationship with trend continuation

11. Asset-class comparison

12. Optimal look back period

Today, after 5 years Aurora Candle answered all the questions and passed all the tests.

Love and blessings