NIFTY_2MIN_CVD_short_Strategy

Summary

This strategy is an intraday system designed for the Nifty index on a 2-minute timeframe, focusing exclusively on identifying high-probability short (sell) entries. It utilizes a combination of rapid price action and Cumulative Volume Delta (CVD) to detect "Buying Absorption" at local peaks.

Concept & Core Logic

The strategy is engineered to identify "Inverted V-shaped" reversals where aggressive buying pressure is exhausted and absorbed by large-scale limit orders from sellers.

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

Sudden Bullish Movement: A rapid upward move that often traps late buyers or triggers short-covering.

Sudden Reversal: Immediately followed by a strong, high-momentum bearish (red) candle, signaling a swift rejection of the higher prices.

CVD Absorption Filter: To confirm the validity of the reversal, the strategy analyzes the Cumulative Volume Delta (CVD). It identifies instances where the relative movement of the CVD is significantly higher than the corresponding price movement. This specific divergence highlights "Buying Absorption"—a market condition where aggressive market buy orders are being filled by passive limit sell orders, preventing further price appreciation and creating a heavy ceiling for the reversal.

Risk Management

To maintain a disciplined approach, the strategy employs fixed exit parameters based on the underlying Nifty price:

Take Profit: 25 points.

Stop Loss: 30 points.

Intended Use

This tool is intended for traders who study mechanical, rule-based systems and order flow dynamics. It provides a structured framework for observing how volume delta divergence (CVD) and rapid price rejections interact at potential market turning points.

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.