Key Levels Algorithm & Bull Bear Control Range - Explained

What are Key Levels (Blue Levels)?

The Key Levels (Blue Levels) indicate the change in control from the hands of Bulls to Bears or vice versa.

If you look at the graph below, we have plotted levels in 3 different colors. Blue, Red & Green. Out of these 3 colors, the Blue ones are of very high importance.

Bulls are likely to remain in control above 2503.65 (Upper Blue Level) and Bears are likely to get control back when the price moves below 2260.35 (Lower Blue Level). This is how it is interpreted. Let us see how we got here.


How are the Key Levels derived?

Our Algorithm derives these levels based on 4 key inputs.

  1. Price Action - How price behaves around certain levels?

  2. Open Interest Build-Up - The number of CALL & PUT contracts that have been built at different strikes.

  3. Volume

  4. Institutional Buying & Selling (FII/DII behavior)

We have put together an Algorithm that interprets all these 4 elements together. You might think - “What is the Big Deal?”.

Here it is. We track these across multiple timeframes (Days, Weeks, Months, Years). Anyone can access the current Charts (Price Action), Open Interest (OI) Build Up, Volume & FII Data on a daily basis. But, it becomes difficult to track the info across weeks, months & years. Even more difficult to process and compute the levels based on the info. We solve this problem for you.

  • How was the Price Action 4 weeks back or 10 weeks back when the price was at a certain level?

  • At which strikes were the maximum CALLs and PUTs built the last time price visited a particular level?

  • Is the market moving with higher volumes compared to last time? Is the volume higher than average?

  • Did FIIs buy or sell on that particular day? How did institutions respond when the price reached 15400?

We store and track these data over several time periods. We give weightage to levels based on Price Action, OI, Volume & Institutional Buying/Selling. The ones with the highest weightage based on the 4 parameters become the Key levels. This is how we arrive at them.


How to use Key Levels?

There are multiple ways to use Key Levels (Blue Levels).

In the chart below, you can see that we have plotted 2 Blue levels. One above (2503.65) and one below (2260.35).

Way 1 - Going Long or Buying on every Dip

If the price trades above the top Blue level (2503.65), then the Bulls are under control. So, we will always look to go long or buy. We will wait for any dips above the level (2503.65) to enter. We will never short as long as the price is trading above 2503.65.

Way 2 - Going Short or Selling on every Rise

Similarly, if the price trades below the bottom Blue Level (2260.35) the Bears are under control. We will look to exit our long positions and go short on every rise. We will never buy or go long from a trading point of view. If there is a big fall in any quality stock, we might look to invest at those levels. But, we don’t trade long positions when the price is below the lower Blue level.

Way 3 - Hold on to positions or Capture premium decay

If the price is between the Blue Levels (2260 and 2503), then it is likely to remain range-bound. Bulls and Bears will continue to fight for control. During this time, we look to Sell options to capture premium decay.

There are several ways in which these levels could be used. We have discussed only a few in this post.


What are the Green & Red Levels?

Those levels act as the Support (Green) & Resistance (Red) above and below the Blue levels. Those are areas for profit booking as historically price has witnessed significant buying/selling around those levels.


Advantages of the Key Levels System

  • Extremely Robust system. Calculated based on current and historic Price action, OI, Volume & Institutional Data.

  • It helps us stay with the trend. By buying above the area where Bulls are in Control and selling below the area where Bears regain control, we always go along with the trend & momentum.

  • It helps us stay prepared. By knowing the key levels, you exactly know what to do during the trading hours. You are never lost.

  • You know when your view is wrong. If you are long the market and you see that price has gone below the lower blue level, then it is an alert that your view has gone wrong and you might have to cut your losses short.

Note: This system is not for predicting the market. It is to understand what is going on and who is under control (Bulls or Bears) and estimate the likelihood (probability) of price movement. This is a plan and not a prediction. The 4 parameters Price Action, Open Interest, Volume & Institutional Behaviour are dynamic and keep changing in the live market. As these parameters change, the risk associated with a particular trade also changes. Appropriate Position Sizing, Risk Management & Hedging will continue to be the differentiators.


Finvezto Toolkit® - Key Levels

  • The Key Levels for Nifty are provided as part of the daily market analysis in the community.

  • If you require access to Key levels for BankNifty & Top Stocks (Reliance, Infosys, etc) you can check out Finvezto Toolkit®. There are many more features that come along with the toolkit that enables you to make wise trading and investing decisions.

2 Likes
Analysis & Key Levels for July 20, 2021
Analysis & Key Levels for July 28, 2021
Analysis & Key Levels for July 27, 2021
Analysis & Key Levels for July 26, 2021
Analysis & Key Levels for July 22, 2021
Analysis & Key Levels for July 30, 2021
Analysis & Key Levels for Sep 27, 2021
Analysis & Key Levels for Aug 13, 2021
Analysis & Key Levels for Aug 06, 2021
Analysis & Key Levels for Aug 02, 2021
Analysis & Key Levels for Sep 06, 2021
Analysis & Key Levels for Sep 03, 2021
Analysis & Key Levels for August 05, 2021
Analysis & Key Levels for August 04, 2021
Analysis & Key Levels for Sep 20, 2021
Analysis & Key Levels for Sep 23, 2021
Analysis & Key Levels for Sep 28, 2021
Analysis & Key Levels for Aug 18, 2021
Analysis & Key Levels for Aug 20, 2021
Analysis & Key Levels for Aug 23, 2021
Analysis & Key Levels for Aug 24, 2021
Analysis & Key Levels for Aug 25, 2021
Analysis & Key Levels for Aug 26, 2021
Analysis & Key Levels for Aug 27, 2021
Analysis & Key Levels for Aug 30, 2021
Analysis & Key Levels for Aug 31, 2021
Analysis & Key Levels for Sep 01, 2021
Analysis & Key Levels for Sep 02, 2021
Analysis & Key Levels for Sep 07, 2021
Analysis & Key Levels for Sep 08, 2021
Analysis & Key Levels for Sep 09, 2021
Analysis & Key Levels for Oct 22, 2021
Analysis & Key Levels for Oct 22, 2021
Analysis & Key Levels for Sep 29, 2021
Analysis & Key Levels for Sep 30, 2021
Analysis & Key Levels for Oct 1, 2021
Analysis & Key Levels for Oct 4, 2021
ITC Stock Analysis with Key Levels || Elephant Waking up? || Finvezto Top 100
Analysis & Key Levels for Oct 05, 2021
Analysis & Key Levels for Oct 06, 2021
Analysis & Key Levels for Oct 07, 2021
Analysis & Key Levels for Oct 08, 2021
Analysis & Key Levels for Oct 11, 2021
Analysis & Key Levels for Oct 21, 2021
Analysis & Key Levels for Oct 12, 2021
Analysis & Key Levels for Oct 13, 2021
Analysis & Key Levels for Oct 14, 2021
Analysis & Key Levels for Oct 18, 2021
Analysis & Key Levels for Oct 19, 2021
Analysis & Key Levels for Oct 20, 2021
Analysis & Key Levels for July 29, 2021
Analysis & Key Levels for Aug 03, 2021
Analysis & Key Levels for Aug 09, 2021
Analysis & Key Levels for Aug 10, 2021
Analysis & Key Levels for Aug 11, 2021
Analysis & Key Levels for Aug 12, 2021
Analysis & Key Levels for Sep 13, 2021
Analysis & Key Levels for Sep 14, 2021
Analysis & Key Levels for Sep 21, 2021
Analysis & Key Levels for Sep 22, 2021
Analysis & Key Levels for Sep 24, 2021
Analysis & Key Levels for Aug 17, 2021
Analysis & Key Levels for Sep 15, 2021
Analysis & Key Levels for Sep 16, 2021
Analysis & Key Levels for Sep 17, 2021

Bro please make a separate tamil video about this topic… Because we understand much clearly on that way…

2 Likes

Hello Anand, I am new to Toolkit. In Key Levels & Bull Bear Control Range for 8 October, 2021
only Reliance and Infosys are selected. Where can I look for the levels for other stocks?

@Ram

Currently, we cover Nifty, Banknifty, Reliance & Infosys. Limiting it to the most actively traded instruments only. Will be adding SBI to the list soon.

Finding the levels requires additional computational power and storage. We will be scaling as and when more resources are available. Till then we will stick to 5 Stocks.

Hi Anand,

Thanks for the reply. I really appreciate your response in this regard.

I regret very much for this delayed acknowledgement from my end.

Kindly accept my compliments……

……Every voice has its own distinguished timbre. And yours is something special.

I always like your YouTube channel and the way you narrate the subject matter.

I am quite a newbie to trading though I opened a demat account in ICICI Direct eons ago.

Only for the last couple of years I am trading that too like a novice.

Your videos are really interesting and highly educational.

Best wishes for your future endeavors.

Have a nice day!

Regards

Ramalingam

1 Like

@Ram Thanks for your Kind Words Ramalingam. Glad you find Finvezto useful in your Journey. Many more videos, tools, and updates to come in the future. Thank you for your support.