This post is dedicated to the sixth and final Bullish Setup - Strong Green on C1 with Low Below Support, a single candlestick reversal pattern that triggers a buy signal by opening below support but closing strong above it. Like the previous setup, this one is also traded in the morning.
(Fig 1.1 - Chart example of Strong Green on C1 with Low below Support)
To be considered tradable within our strategy, the setup must meet specific criteria:
Setup Conditions:
Formation Timing: The setup should complete on C1 at 10 AM or C2 at 11 AM.
Trade Selection: The setup must meet the trade selection criteria (refer to the "Trade Selection" section for details).
Key Elements of a Strong Green on C1 with Low below Support:
Scenarios:
Immediate Support Breach:
C1 opens close to or slightly below immediate support, which could be a pivot, a gap, or the previous day's low.
C1's low briefly breaches the support before closing strongly above it.
Significant Gap Down:
C1 opens with a significant gap down, breaching prior horizontal or pivot support.
C1 closes as a significant reversal candle, such as a big green candle or a strong hammer, even if the close is below the support.
This setup is powerful because it traps sellers by dipping below support (or opening gap down below support) and then reversing to close strong, forcing them to liquidate their short positions. The deeper the dip below the support (or the bigger the gap down below support), the stronger the candle. A typical strong candle has a long lower wick resembling a hammer or a big green real body that closes near the high.
The rationale behind taking this morning trade is to capitalize on a strong trap signal that can gather bullish momentum quickly. Waiting for C4 or C5 in the afternoon would be too late in such cases.
By 10AM, you should have decided whether to take the trade or step aside. If you’re unsure, it’s better to step aside. Avoid chasing momentum at unfavourable prices when the market becomes fast.
Chart Examples:
Carefully study the provided chart examples, paying attention to annotations that explain the price action behind the setup. Observe the results after the trade execution.
(Fig 1.2 - Chart example of Strong Green on C1 with Low below Support on Nifty Futures)
(Fig 1.3- Chart example of Strong Green on C1 with Low below Support on Nifty Futures)
Win Ratio: The Win Ratio, a critical input for Trade Selection, is simply the number of successful trades divided by the total trades. The Win Ratio of this setup is 79% based on backtesting past data for the last 2 years.
This concludes our discussion on Bullish Setups on Nifty Futures. Please click on "Next Post" to move to the first Bearish Setup - Bearish Engulfing.
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