NIFTY_2MIN_CVD_Absorption_long_Strategy

Summary

This strategy is an intraday system designed for the Nifty index on a 2-minute timeframe, focusing on high-probability reversal entries. It utilizes price action patterns and Cumulative Volume Delta (CVD) to identify market turning points.

Long Strategy: Concept & Core Logic

The long strategy is engineered to identify "V-shaped" recoveries where selling pressure is exhausted and absorbed by aggressive buyers.

Price Action Trigger: The strategy looks for a specific two-part sequence:

Sudden Bearish Movement: A rapid downward move representing a final flush of sellers.

Sudden Reversal: Immediately followed by a strong, high-momentum bullish (green) candle, indicating a swift change in market sentiment.

CVD Absorption Filter: To confirm the validity of the reversal, the strategy analyzes the Cumulative Volume Delta (CVD). It specifically looks for instances where the relative movement of CVD is significantly higher than the corresponding price movement. This divergence suggests "selling absorption"—where large buy orders are soaking up sell-side liquidity, creating a floor for the reversal.

Risk Management (Long)

The strategy utilizes fixed exit parameters based on the underlying Nifty price points:

Take Profit: 25 points.

Stop Loss: 30 points.

Intended Use

This tool is intended for traders who study mechanical, rule-based systems. It demonstrates how price action, volume delta divergence (CVD), and trend filters can be combined to time entries in both trending and reversal market conditions.

Disclaimer: This script is for educational and informational purposes only. It is not financial advice. All trading involves risk, and past performance is not indicative of future results. Please conduct your own research and backtesting before making any trading decisions.