DBR (Drop-Base-Rally) : Forms when Market Changes Direc

RBD (Rally-Base-Drop) : Forms when Market Changes Direc

RBR (Rally-Base-Rally) : Forms in Trending Markets
DBD (Drop-Base-Drop) : Forms in Trending Markets
hen Market Changes Direction

The drop -base-rally is a structure which always forms

a demand zone in the market.
These zones form when the market reverses from
moving lower to moving higher.

If the market was to return to the drop-base-rally

demand zone it should push the market in the
direction opposite to the rally which created the zone.

When their construction is complete a demand zone

will have formed in the market which if returned to
should cause the market to rise.

hen Market Changes Direction

 The rally -base-drop is a structure which always forms
a supply zone in the market.

These zones form when the market reverses from

moving higher to moving lower.
If the market was to return to the drop-base-rally
demand zone it should push the market in the
direction opposite to the drop which created the zone.

When their construction is complete a supply zone

will have formed in the market which if returned to
should cause the market to fall.

rms in Trending Markets

 Rally-base-Rally structure will always form a demand
zone in the market
The rally-base-rally is a type of demand zone which
forms during an up-move.
They get their name from the market structure which
creates the demand zone.

Here first we have a rally, then a consolidation, (called

base ) and finally another rally which creates the
demand zone itself.

Here a rally upward created the demand zone so if

the market was to return to this zone it should push
the market even more upward.
A rally-base-rally will always form a demand zone,
they never create a supply zone.

rms in Trending Markets

Drop-base-drop will always form a supply zone in the
market.
The drop-base-drop is a type of supply zone which
forms during a down-move.
They get their name from the market structure which
creates the Supply zone.

Here first we have a drop, then a consolidation ,

(called base ) and finally another drop which creates
the supply zone itself.

Here a drop lower created the supply zone so if the

market was to return to this zone it should push the
market even lower.
A drop-base-drop will always form a supply zone,
they never create a demand zone.
 Types of Demand and Supply Z
These zones are classified based on where they form in the market:
1: CONTINUATION Type--- If a supply or demand zone forms during a trending move then it’s either a drop-base-drop or rally-base-rally.
2: REVERSAL Type----------- If a supply or demand zone forms at a trend reversal is either a rally-base-drop or a drop-base-rally.
Sr.No Type Name

DBR (Drop-Base-Rally)
Demand
1 or
Zone Demand Breakout from Range
 RBD (Rally-Base-Drop)
Supply
3 or
Zone Rally Breakdown from Demand

RBR (Rally-Base-Rally)
Demand
2 or
Zone Rally Breakout from Range
 DBD (Drop-Base-Drop)
Supply
4 or
Zone Demand Breakdown from Demand

BASE means a small pause or consolidation, we do not need to see the same thing when looking for rally-base-drop/ drop-base-rally zones. For example, as long
in between the up and do
nd and Supply Zone Setups Summary:
lly.

Picture Advantage Action

Entry further out Buy

on the curve.
Entry further out Sell
on the curve.

Low Risk entry

into a trending Buy
market.
 Low Risk entry
into a trending Sell
market.

ones. For example, as long as the market makes a move up then drops the zone is still considered a rally-base-drop even though a pause or consolidation has not taken plac
in between the up and down moves.
 Description

The drop -base-rally is a structure which always forms a demand zone in the
market.

These zones differ from what we have just looked at mainly because of their
location in the market, whereas both rally-base-rally and drop-base-drop zones only
form during trending movements drop-base-rally zones will only be found when the
market changes from moving down to moving up.

If the market was to return to the drop-base-rally demand zone it should push the
market in the direction of the rally which created the zone.
On the opposite side of the scale we have rally-base-drop zones.

These zones form when the market reverses from moving higher to moving lower,
when their construction is complete a supply zone will have formed in the market
which if returned to should cause the market to fall.

The rally-base-rally is a type of demand zone which forms during an up-move.

They get their name from the market structure which creates the demand zone. In
the example above you can see first we have a rally, then a consolidation, ( which
Sam calls the base ) and finally another rally which creates the demand zone itself.

A rally-base-rally will always form a demand zone, they never create a supply zone.
 The drop-base-drop is the exact opposite of a rally-base-rally, with the only
similarity being they both form during trending movements.

Whereas a rally-base-rally structure will always form a demand zone in the market,
a drop-base-drop will always form a supply zone.

Both the drop-base-drop and rally-base-rally supply and demand zones are
categorically the same, they both only form when the market is trending and they
are zones which if the market returns to should push the price back in the direction
of the movement which created the zone.

Here in the image a drop lower created the supply zone so if the market was to
return to this zone it should push the market lower.

e is still considered a rally-base-drop even though a pause or consolidation has not taken place
1 Start with current PRICE on the chart 1 Start with current PRICE

2 Look LEFT and DOWN till you find origin of a very STRONG RALLY in price 2 Look LEFT and UP untill

3 Draw Proximal and Distal lines from origin of rally and extend them forward 3 Draw Proximal and Dista

4 Look for large GREEN candles (we want a strong move) 4 Look for large RED candl

5 Four Candles or less for Demand (any time frame) 5 Four Candles or less for D

6 Make sure the ZONE is fresh and has not been usedbefore 6 Make sure the ZONE is fr
Start with current PRICE on the chart

Look LEFT and UP untill you find origin of a very STRONG DROP in price

Draw Proximal and Distal lines from origin of rally and extend them forward

Look for large RED candles (we want a strong move)

Four Candles or less for Demand (any time frame)

Make sure the ZONE is fresh and has not been usedbefore
Sr.No 1 2 3 4
Type Demand Zone Demand Zone Supply Zone Supply Zone
DBR RBR RBD DBD
(Drop-Base-Rally) (Rally-Base-Rally) (Rally-Base-Drop) (Drop-Base-Drop)
Name or or or or
Demand Breakout Rally Breakout Rally Breakdown Demand Breakdown
from Range from Range from Demand from Demand

Picture

Advantage Entry further out on the Low Risk entry into a Entry further out on the Low Risk entry into a
curve. trending market. curve. trending market.
Action Buy Buy Sell Sell
 The drop -base-rally is a The rally-base-rally is a On the opposite side of the The drop-base-drop is the
structure which always type of demand zone scale we have rally-base- exact opposite of a rally-
forms a demand zone in which forms during an up- drop zones. base-rally, with the only
the market. move. similarity being they both
form during trending
These zones differ from They get their name from These zones form when movements.
what we have just looked the market structure the market reverses from
at mainly because of their which creates the demand moving higher to moving Whereas a rally-base-rally
location in the market, zone. In the example above lower, when their structure will always form
whereas both rally-base- you can see first we have a construction is complete a a demand zone in the
rally and drop-base-drop rally, then a consolidation, supply zone will have market, a drop-base-drop
zones only form during ( which is called the base ) formed in the market will always form a supply
trending movements drop- and finally another rally which if returned to zone.
base-rally zones will only which creates the demand should cause the market to
be found when the market zone itself. fall. Both the drop-base-drop
changes from moving and rally-base-rally supply
down to moving up. A rally-base-rally will and demand zones are
always form a demand categorically the same,
If the market was to return zone, they never create a they both only form when
to the drop-base-rally supply zone. the market is trending and
demand zone it should they are zones which if the
push the market in the market returns to should
Description direction of the rally which push the price back in the
created the zone. direction of the movement
which created the zone.
Here in the image a drop
lower created the supply
zone so if the market was
to return to this zone it
should push the market
lower.
 Underlying Underlying Log Previous Day
Underlying Previous Day Returns (C) = Underlying
Date Symbol Close Price (A) Close Price (B) LN(A/B) Volatility (D)
5-Jul-19 YESBANK 88.15 96.25 -0.0879 0.0466
8-Jul-19 YESBANK 93.15 88.15 0.0552 0.05
9-Jul-19 YESBANK 91.35 93.15 -0.0195 0.0503
10-Jul-19 YESBANK 93 91.35 0.0179 0.049
11-Jul-19 YESBANK 92.45 93 -0.0059 0.0477
12-Jul-19 YESBANK 94.2 92.45 0.0188 0.0463

-0.48
 Underlying
Current Day Underlying Daily Annualised
Volatility (E) = Sqrt(0.94*D*D Volatility (F) =
+ 0.06*C*C) E*Sqrt(365)
0.05 0.9552 id 1d 1 0.16 9.6
0.0503 0.961 4h 1 0.25 15
0.049 0.9361 15min 1 0.33 19.8
0.0477 0.9113 1 0.3 18
0.0463 0.8846 #DIV/0!
0.0451 0.8616

Corr Value Between Relation

-1 to -0.8 Strongly Negative(Both in reverse)
-0.8 to-0.5 Negative
-0.5 to 0.5 Weak
0.8 to 0.5 Positive
1 to 0.8 Strong Positive(Both in same)
 Odds Enhancers
The Pattern
1 (Where is the real institutional demand and supply ie 8
FII / DII / Banks / MF / Operators / Inv. Firms)
2 How did price leave the level? 9
3 Profit margin (risk/reward)? 10
4 How much time did price spend at the level? 11

5 Over Arching Trend? & Trendline Breakout/Breakdown 12

6 Retracements? 13
7 Larger time frame levels? 14

News Type:
Earnings reports Increase in Debt /
Earnings warnings/pre-announcements Default on Payments/R
Earnings surprises (Better/Worse than expected) NCLT
Trade War Indications Rate Changes by Reserve Bank of In
Analyst Report Govt Relief/Impetus t
Broker Tip/Suggestion Budget/
Terrorist/War-Attack or Threat Stock splits/buyba
Ratings Upgrade-Downgrade Restructurings/layoffs/man
Sales Rise-Drop Alliances/partnerships/Me
Major contract wins/losses---Execution of Orders Majo
Crude/Energy Price Fluctuation FDA appro
Gold Prices Price Fluctuation Status of Monsoons/A
Foreign Currency Rates/Prices Fluctuation Commodity Price Fluctuation eg Cotton/O
ds Enhancers
Levels on top of levels?
This helps in mitigating risk while placing trades.

Stock/Bond relationship?
Time of day? (Morning Levels Are Best)
Bollinger Bands (All Star Entry)
Global Indexes/Local Indexes(NIFTY)
or the index of which the stock is a part is high and low?
News:
Gap's (Gap Ups and Gap Downs)

News Type:
Increase in Debt / Pleding of Shares
Default on Payments/Repayment of Debt
NCLT-Bankruptcy Case
Rate Changes by Reserve Bank of India(Central Bank)
Govt Relief/Impetus to a Specific Sector
Budget/Economic Survey/
Stock splits/buybacks/debt offerings
Restructurings/layoffs/management changes
Alliances/partnerships/Mergers/acquisitions
Major product releases
FDA approvals/disapprovals
Status of Monsoons/Agricultural Output
Commodity Price Fluctuation eg Cotton/Oilseed/Grains etc
 Logic - Rules

Rules of The Sell Setup

1) Identify demand, supply, trend, and determine profit zone,
2) Limit opportunities to the first (or second") pullback in price to Supply.
3) Once price rises into demand, buy.
4) Once entry occurs, a protective stop loss is placed just below Supply.
5) Enter first and second profit target sell orders.
* Initial profit zone must offer 3:1 rewar
* Percent winning trades/investments are higher when on
 Logic - Rules

Rules of The Buy Setup

1) Identify demand, supply, trend, and determine profit zone,
2) Limit opportunities to the first (or second") pullback in price to Demand.
3) Once price declines into demand, buy.
4) Once entry occurs, a protective stop loss is placed just below Demand.
5) Enter first and second profit target sell orders.
t zone must offer 3:1 reward to risk.
tments are higher when only first pullbacks are used.