Where sellers are waiting?
How to know where the sellers zone?
Once of the best areas or zones to watch, where price is struggling to move upside and take the “U” turn.
This is generally referred to be supply/resistance/sellers zone.
All we need is to draw the zone of the left side wick and extend the zone to the right side.
Now the extended zone can be considered as a supply zone.
When the stock approaches this level, chances are sellers to get activated.
In the above fig, if the wick was created by sellers, now we need to draw the entire wick and extend the zone to the right side.
Sellers are getting activated, whenever the stock approaches the supply zone. Now all need a simple observation from the candlestick. There are multiple bearish engulfing candlestick formations. It’s clearly saying that the sellers are very strong. Now we can sell below the bearish engulfing candle, now the stop loss needs to keep above the supply zone.
*Keeping stop loss is tricky, as the market approaches this resistance zone, it's a zone not a limit price, so keep in mind risk: reward may not be favorable, sometimes, in this situation you have to trade via options( we will cover it in later discussion)
