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Price Action Guide – Part 8: Five Minute Candle Day Trading Strategy

price action trading strategy on 5 minute candles
Price Action Guide – Part 8: Five Minute Candle Day Trading Strategy
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It is now well known that:

1. The market opens at 9.15 AM and takes about 45 minutes to stabilize and show its true colors (say at about 10 AM).

2. Serious players get in after 2 PM and set the trend for the coming days.

This strategy will help you figure out:

1. Which way the market will trend in the first half

2. How the market will possibly behave between 2 PM and the close (3.30 PM).

To play this strategy all you have to do is:

1. Watch the charts continuously

2. Know how to draw a straight line on the carts

5 Minute Candle Price Action Strategy at 10 AM

Mark the highs and lows between 9.15 AM and 10 AM by drawing straight lines.

Let’s take an example:

how to trade 5 minute candles

Lupin’s started the day at around 896 and ht about 908 by 10 AM.

This range was marked on the chart above.

The higher price becomes the resistance and the lower price is the support.

At around 10.15 AM or so, the price broke convincingly above the higher range at 910.

This was a buy signal. The price went on to hit 940.

Let’s take another example – of Indraprastha Gas:

price action trading strategy

In Indraprastha Gas, using the same technique as above, we get 292 as the resistance and 289 as the support.

The price broke below 289 at 10.05 AM and fell to 185.80, from where it started rising.

Had you shorted at 10.05 AM, you could have made 1+% gains.

Rules of this Strategy

1. Buy when the price breaks above the resistance

2. Sell when the price breaks below the support

3. Expect gains up to 2%

4. Set stop losses at about 0.75%

5. Pay attention to the length and number of candles crossing above or below the ranges – the longer, the better.

EXERCISE:

5 Minute Candle Price Action Strategy at 2 PM

2 PM is when it is said that the serious players get in.

And now, this is the part where you learn to rely on your own.

Draw ranges as per the previous strategy between 1.30 PM and 2 PM on any FNO stock and observe the price action after 2 PM.

Remember that the serious players get in after 2 PM and therefore you can get many BTST (or even longer) signals by marking ranges at 2 PM.

This exercise will help you draw basic chart patterns and eventually become a better chart reader.

35 Comments on "Price Action Guide – Part 8: Five Minute Candle Day Trading Strategy"

  1. Sir, Instead of Coal India,it should be Indraprastha in above example may be typo? always very well explained . Thank you.

  2. 2-3 candles may take it to 2 percent target or nearby.

  3. How to identify stocks for 2nd half of the day or btst

  4. excellent strategy .i wiil try

  5. Interesting post Sunil ji. However, you seem to have marked low/high of 9:15-9:20 candle and 9:55-10:00 candles and not the high/low for the period.

    The above post mentions: “Mark the highs and lows between 9.15 AM and 10 AM by drawing straight lines”

    So, what would be the right approach – What you have done vs the text of the above post ?

    Thank you for your kind help and clarification

    • Thanks Sourabh. Please mark the highs and the lows. I’ll post another graphic later because in any case, the fluctuations weren’t much on each 5m candle.

    • Anish Chandrasekaran | September 5, 2018 at 3:15 am | Reply

      He has probably drawn the line on the Close it to include as many candles as possible.

  6. Expect gains up to 2%
    Set stop losses at about 0.75%

    % of What?

  7. Hi Sunil,

    For the above strategy how do you suggest that I select stocks for the same. I cannot possibly open up the charts for 100-120 FNO stocks to look for morning and afternoon range breakouts.

    thanks,
    Aravind

  8. How to select stocks for this strategy?can pick any fno stock for the day which break the trend or any analysis needed to pick the stocks?

  9. Hi SUNIL
    As per this strategy we need to mark high/ low for considering all candles between 9.15 and 10 am or high / low for only two candles – one at 9.15 am and second at 10 am. Because in case of IgL there are two more lows than ur marked one @10 am.

    • OK, mark the highest and the lowest in the 45 minute period.

      But you can be flexible depending on the kind of candles and volumes you encounter.

  10. Anish Chandrasekaran | September 5, 2018 at 3:10 am | Reply

    I face problem with exiting a trade. Even here if we keep on waiting, reversal takes place and we lose the profits. How do we trail the stops? keep trailing SL to previous candle high/low ? What is the preferred method?

  11. Anish Chandrasekaran | September 5, 2018 at 4:52 am | Reply

    Should the full body of the candle be formed above the support/resistance for me to enter?

  12. Sunilji, can you suggest a good screener? Thanks

  13. Kathula Santhosh Yadav | September 10, 2018 at 7:16 am | Reply

    I tried this strategy today in axis bank. Sold at 666(500 shares – equity) and position closed at 660(buyed). Booked profit RS. 3,000 in intraday.

    Thank you sir,

  14. Do we need to take high and low of the 9:15 to 10 or high and low of first and last candle

  15. 5. Pay attention to the length and number of candles crossing above or below the ranges – the longer, the better.
    Sir,
    Length of candles signify increase in price. In some cases I have noticed that the candles are extremely long between 9:15 to 10:00. Should we still enter after cross above resistance as it has already gone up enough (2% up)?
    what does number of candles signify? Some stocks take many candles before It crosses above/below resistance/support.

  16. DR. SONDARVA PRAKASH CHHAGANLAL | September 27, 2018 at 5:44 pm | Reply

    It’s simply great strategy …well experienced teacher Sunil sir.thanks to you

  17. RAMKUMAR SRINIVASAN | October 5, 2018 at 3:44 am | Reply

    Sir, if we are using dual super trend to filter whipsaws, what would be the 2 parameters that would work for shorter time frame 5 – 15 min. Thanks in advance

  18. Good Afternoon Sunil Sir,

    Any single place where we can access all the Price Action Guide parts i.e. from 1 – 11 that you have published.

    Pls share location.

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