Sideways Price Action Area

Let’s dive into what is Sideways Price Action Area and how to spot on the chart.

1. The biggest differences between retail traders (us) and institutions is
   • The amount of the trading capital that we manage.
2. Institutions have extreme amounts of capital, and because of this, they have a problem that we will never have.
   • The problem is simply having too much money.
3. If they want to open a large trade unnoticed,
   • They need a lot of time to enter their position.
   • They intend to do it slowly, unnoticed, so nobody realizes what they are doing.
4. If they succeed, they can enter their large position without alerting other market participants and without moving the price too much.

If for example a large Mutual Funds institution started buying vast amounts of the Bank Nifty instruments quickly and aggressively, it would start a lot of excitement and a trend would start.

• In this case, the trend wouldn’t be their friend because

  • They would not be able to fully enter their large trading position.
  • At least not for the prices they would like.

• For this reason, institutions need a lot of time to enter their big positions unnoticed.

  • They try to appear as small investors who are randomly placing a lot of relatively small positions in the market.
  • The only way they can slowly and discreetly accumulate their positions is in Sideways Price Action Area.
  • There they can hide their activity perfectly.

So, next time you see a Sideways Price Action Area/Channel don’t assume that it is boring and that nothing is going on there. You would be most likely wrong.

A Sideways Price Action is a place where big institutions are getting ready for action.

That’s why it is so important and why it is among the first things we look for when we analyze any chart. Lets spot the sideways price action in the following image.

The below image has 6 rectangle area spotting sideways area.

As you can see below heavy volumes (shown at right side)have accumulated at every sideways price area which is institution accumulating their huge position.

• Sideways Price Action is a very significant place on all timeframes.
• It doesn’t matter if you use a
  • 1-minute chart,
  • 30-minute chart,
  • Daily chart or
  • a Weekly chart.
• The logic is always the same, and that‘s why it works so well with all timeframes.
• We analyze charts most often on the 30-minute timeframe (intraday trades) and 4H or daily timeframe (swing trades).

Summary: Look for Sideways Price Action areas. Those are very significant places because institutions are accumulating their positions there**.**

Always watch for such areas, no matter which timeframe you use. In the next article will continue with Aggressive Initiation.