In a daily chart of BGRIM above, I show an example of locating the money hiding in the market. If we read the market from left to right, the story begins with a price rally along sma5 (aqua) line. The price rally ends with a double top structure near 30 THB. During this rally, the buyers set their stop losses slightly under this aqua line. After the double top structure stop hunting begins so that those who do not take profit will be forced to stop their losses by selling the shares out while the market makers happily keep buying those shares. we can roughly see in the chart that the stop hunting takes place in the region where the sma5 line is below the sma20 (white) which is the center line of bollinger band (20,2) or bb202. In the view of rsi(14) indicator, this period covers the zone where the rsi14 is at or slightly below 50%. Investors who wait for rsi signal to come near the popular oversold level of 30% will surely miss the big price rally shortly follows this period! Once the market makers collect enough shares in their hands, they drive the price up until the sma5 crosses above sma20. Now it is obvious to the public that the uptrend has begun. More buyings from the public drive the share price even higher until it passes over the previous double top highs. The price heads further north to complete the text book bullish [ ABCD pattern ] at the market maker's taking profit (TP) 33 THB level where they dump out their shares for huge profits.
We surely can imagine that the buyers who enter the market during this second price rally will set their stop losses slighly under the sma5 (aqua) line again. These stop-loss points are the place that the money lie for the market makers to happlily pick up in their next stop hunting. After the TP shown in the photo, no more aggressive buyers enter the market so the share price slowly slip down and those buyers who still hold the shares will start cutting their losses while the market makers slowly pick up those soldout shares. This time the stop hunting goes down deeper than the previous one which ends at 24.50 THB to get those stop losses at the very beginning of the first rally (left most edge of the photo). This stop hunting ends when the sma5 (aqua) line crosses above the sma20 (white) line. Then the profit taking period follows as it is clear to the public that this stock is in an uptrend again. Currently the share price is at 29 THB. The market makers who buy the share from those stopped-out traders below 24.50 THB now have at least 29.00/24.50 = +18.37% profits in their hands. If they start dripping out the shares at the previous TP (33 THB), the profits will be at least 33.00/24.50 = +34.70%.
We can see from story analysis in this daily chart that ploting rsi(14) indicator does not actually help on planing the profitable investment due to its lagging nature.
Investors who want to learn how to read market stories from the charts can consult me (Dr. Nimit Chomnawang) at [ m.me/nimit.chomnawang ].
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