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Decoding IV (Fresh Institutional Volume) Setups

Before you read further, please read the blog on Fresh Institutional Volume (IV) here: “What is Fresh Institutional Buying, and how can you Profit from it?

 

Now that you know what’s an IV, the next step is to find setups that you can trade with it. There can be 3 possible setups that you can make out of IV:


A) Setups that do not stop after making an IV










B) IV-Pause-Move, setups those that pause a little after making an IV









C) IV as support












 

Let’s have a look at each of these setups closely and also understand how to scan for them using the Pro-Setups Dashboard.


A) Setups that do not stop after making an IV


These will be the setups that will not stop after an IV. For them to show a continuous rise, there has to be a good trigger, like terrific results or an extremely positive news such as order win, commencement of a new factory, new initiative, drug approval, management change, etc. Without such a positive trigger, it is difficult to decipher whether the continuous move will happen or not. On technical charts, the IV candle can also be resulting in a breakout from a long base.


Consider the example of Datamatics below. The stock made an IV on 2th April. Results were due the next day. The stock didn’t stop on the day of results, even though the results were declared around 3PM. The company reported good numbers, and the stock gave a good 50% rise. The trigger here was the expectation of good quarterly numbers.



How to find such stocks in the Dashboard?

Well, you just have to see which stocks made an IV on the last trading day. For this, you will have to enter 0 in both the input fields of “# Days since last IV”.



This will give you names that have made an IV volume today. If you’re scanning on a weekend or a holiday, make sure to enter 1 or 2 in the fields (since this input is based on dates and not the number of bars).


Rest of the analysis involves other qualitative factors (i.e. positive triggers), which you will have to do individually for each stock.


B) IV-Pause-Move: those that pause a little after making an IV


This is my favorite setup since it gives a fair understanding of how much can be the risk if you go wrong. These are setups which develop after an IV is made but instead of making an immediate move, the stock takes a pause. The pause can be anywhere up to 2-10 days. The entry should ideally be taken when the price closes above the IV day’s high.


Have a look at the example of Kokuyo Camlin below. After making an IV on a gap up, the stock took 3 days of pause, before moving up again.



If it stays there for over a week, the 10EMA also catches up to the price and we look to trade the bounce off it. Cholafin, NLC India, GE T&D and Emudhra are good examples of this kind of a setup.


C) IV as Support


These are setups where price makes a move subsequent to IV but falls back and settles around IV high. Look for price action - some kind of compression or a sort of tight range around here - and take an entry when price starts to move up again.


Aptech and Harsha Engineers are good examples of such trade setups.



To find setups mentioned in points B and C above, all you need to do is go to the Dashboard, and under the Fresh Institutional Volume filters, choose the required option.


You can also use the slider filters to scan stocks near IV, along with other filters such as Rising 50EMA, Mark Minervini's VCP, High-Tight Flags, Bull Flags etc., depending on how you want to use them.


If you would like to see the charts with Fresh Institutional Volume and use a scanner for finding these opportunities, use the Pro-Setups script and its Dashboard.

 

I thank my fellow trader friends - Srinivas Eluri and Deekshith - who checked & tested the IV concept with me in its initial stages.


If you have any comments or feedback, please feel free to post them below. I can be reached at puneet@pro-setups.com if you have any queries. Happy Trading!





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