Unlock the secrets of the stock market with effective chart analysis techniques. Learn how to interpret candlestick patterns, technical indicators, and trends to make informed trading and investment decisions. Whether you're a beginner or an experienced trader, this guide will help you enhance your market analysis skills.
Let’s break this down with an example using stock options:
1. Calculating Buy-Side SMC Fear:
Before entering a trade, you should calculate the support and resistance levels (SMC = Support and Market Conditions). This helps in assessing the potential risk of the position. For example, if you're buying a stock and it's approaching a major resistance level, you should be cautious as the stock might reverse from that point.
2. Checking OI Data When Buying:
When you're placing a buy order, it's essential to look at the Open Interest (OI) data to gauge market sentiment. For example, if you’re buying options, check whether the OI of call options is increasing or decreasing. An increase in OI might suggest that the market is bullish on that stock.
3. Observing PUT Writers in OI Data:
In the OI data, specifically for PUT options, if you notice that the number of PUT writers is increasing, it could indicate a bullish sentiment, as writers are betting the price will stay above the strike price. For instance, if the number of PUT options being written is rising, it could suggest that traders believe the stock won’t fall below a certain price.
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