{"id":1679,"date":"2013-03-13T11:06:14","date_gmt":"2013-03-13T05:36:14","guid":{"rendered":"https:\/\/blog.fundsindia.com\/blog\/?p=1679"},"modified":"2013-03-13T11:13:16","modified_gmt":"2013-03-13T05:43:16","slug":"how-to-trade-when-price-is-at-a-turn-zone","status":"publish","type":"post","link":"https:\/\/fundsindia.com\/blog\/equities\/how-to-trade-when-price-is-at-a-turn-zone\/1679","title":{"rendered":"How To Trade When Price is at a Turn-Zone?"},"content":{"rendered":"<p style=\"text-align: justify;\">Quite often I am confronted with this question from traders about how should they frame a trade when the price reaches a Turn-Zone or an area of support or resistance from where price is likely to resume its primary trend.\u00a0 Let me address this question with a practical example. Kindly direct your attention to the daily chart of the Nifty featured below.<\/p>\n<a href=\"https:\/\/www.fundsindia.com\/blog\/wp-content\/uploads\/2013\/03\/Nifty1.png\"><img loading=\"lazy\" class=\"alignleft size-full wp-image-1680\" alt=\"Nifty\" src=\"https:\/\/www.fundsindia.com\/blog\/wp-content\/uploads\/2013\/03\/Nifty1.png\" width=\"1340\" height=\"586\" \/><\/a>\n<p style=\"text-align: justify;\">When price fell to the support at 5,650 on the Budget-day, we said, in our FREE WEEKLY WEBINAR held every Friday, that there was a case to go long at current levels. Why did we say that? Price was at an area of support and more importantly, there was a logical level to place stop loss which was the prior swing low at 5,545. Hence, I was not keen to wait for confirmation as the risk was clearly defined and affordable and there was enough room to the upside as the logical resistance\/target was at 5,950-5,970.<\/p>\n<p style=\"text-align: justify;\">Let&#8217;s consider the other side of the spectrum. Those who are relatively risk-averse may await confirmation to see how price behaves at the support or resistance area. There is nothing wrong in waiting for the confirmation, but this would lead to a relatively lower or higher entry compared to the first approach. But, this is price one has to pay for more information. I typically use this approach while taking a counter-trend trade and\/or in the absence of a logical level for stop loss placement.<\/p>\n<p style=\"text-align: justify;\">It&#8217;s apparent from the chart that the 5,950-5,970 zone is a area of resistance for the Nifty. When price approached this zone on Friday, there were a few options for a trader. An aggressive trader could have considered short position as price approached the resistance area, provided there was a logical level for placing stop loss. In this case, the logical stop loss had to be above the major high at 6,111.<\/p>\n<p style=\"text-align: justify;\">We have been cautioning investors to stay on the sidelines since Friday when the Nifty approached the resistance level at 5,950-5,970.\u00a0 It is apparent that there was no clue until Monday regarding how the price would behave at this resistance level. The completion of a Key Reversal Day pattern on Monday was an early sign that price is respecting this resistance level. Those comfortable with candlestick charts would have identified a Doji pattern on Monday, suggesting indecision and a probable change in direction.<\/p>\n<p style=\"text-align: justify;\">Aggressive traders may have shorted towards the close of Monday&#8217;s trading if they had spotted the Reversal Day pattern. The logical stop would have been\u00a0 above the day&#8217;s high in this case. The fall yesterday confirms that price is respecting the resistance level. Those who are risk-averse may now await a pull back to short the Nifty with a stop loss above 5,970.<\/p>\n<p style=\"text-align: justify;\">The objective of this post is not to dish out a trading idea, but to address the question about how to frame a trade as price approaches a Turn-Zone. There is nothing right or wrong about any approach. It ultimately boils down to risk management and making money consistently.<\/p>\n<p>Trade Safe and Don&#8217;t Get Hurt.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Quite often I am confronted with this question from traders about how should they frame a trade when the price reaches a Turn-Zone or an area of support or resistance from where price is likely to resume its primary trend.\u00a0 Let me address this question with a practical example. Kindly direct your attention to the [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[59],"tags":[67,89],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How To Trade When Price is at a Turn-Zone?<\/title>\n<meta name=\"description\" content=\"Quite often, traders have this confusion if they should take a trade as soon as price reaches a Turn-Zone or if they should wait for confirmation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fundsindia.com\/blog\/equities\/how-to-trade-when-price-is-at-a-turn-zone\/1679\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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