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Chart Patterns

Trading is like Kids Playing with ABC:Ducon Infratech Trade PlanDear all, The above chart presents a simplicity of trading, its the heart and soul of trading, let it be a trend following system or investor or day trader or scalper -its as easy as kids ABC Let me explain my points with the simple yet powerful setup with above chart and more examples: Points to consider in every setup(conservative) - Consolidation - Breakout(A) - Consolidation - Retest(B) - Continuation(C) - Breakout - As we all know every tick in the market is a confirmation of fight between bulls and bear as bulls want to take prices higher and bears hammer the prices lower, breakout can be understood as a winning the battle and taking the prices higher. And we just have to join the WINNING SIDE in this case its BULLS - Consolidation - Consolidation can be understood as a laying the foundation for a strong building. In stock market we know it as Flag, triangle, rectangle etc - Retest - Its like price reversing back to the breakout level & consolidates again and forms patterns as flag, triangle, rectangle etc - Continuation - Price again breaks out of the consolidation zone and continues some of the live Nifty examples are mentioned below for better understanding Some of the Bank Nifty charts for ready reference Breakdown - retest from bottom & continued lower Breakout and twice retest Views are for ‘’EDUCATIONAL PURPOSE ONLY’’ trade at your own risk. "Always Respect Risk" Happy Trading Jai Hind
NSE:DUCONEducation
by DhirajSinghBais
10
Double Bottom- Full ExplanationA Double Bottom is considered a bullish signal, indicating a possible reversal of the current downtrend to a new uptrend. Sometimes called an "W" formation because of the pattern it creates on the chart, the Double Bottom is one of the most frequently seen and common of the patterns. The Double Bottom is a reversal pattern of an downtrend trend in a financial instrument's price. The Double Bottom marks an downtrend in the process of becoming a uptrend. A Double Bottom consists of two well-defined, sharp bottoms at approximately the same price level. The two bottoms are distinct and sharp . The pattern is complete when prices rise above the highest high in the formation. The highest high is called the "confirmation point". The bullish momentum may be evidenced through a higher bottom on an oscillator like RSI . Though not required, the market may break below the first low, even if briefly. A slight and temporary break below the first bottom is preferred as it may excite the bears only to reverse and trend higher. The neckline is formed between the price low of the valley between the two bottoms. A break above this neckline will confirm the double bottom pattern. The bullish confirmation is specified by a break in the key price resistance level (neckline) situated at the high point between the ‘bottoms’. Important Characteristics Following are important characteristics for a Double Top . Downtrend Preceding Double Top The Double Bottom is a reversal formation. It begins with prices in an downtrend. The trend downwards should be fairly long and healthy. Time between Bottoms Generally, the longer the time between the two bottoms, the more important the pattern is as a good reversal signal. Volume Volume tends to be heaviest during the first bottom and lighter on the second. It is common to see volume pick up again at the time of breakout. Pullback after Breakout A pullback after the breakout is usual for a Double Bottom. The higher the volume on the breakout, the higher the likelihood is for a pullback. Two Peaks at Different Levels Sometimes the two comprising a Double Bottom are not at exactly the same price level. This does not necessarily render the pattern invalid. Trading with Double Top: There are certain rules when trading with Double Bottom chart patterns. Firstly one should see the market phase whether it is up or down. As the double bottom is formed at the end of a downtrend , the prior trend should be an downtrend. Traders should spot if two rounding bottoms are forming and also note the size of the bottoms. Traders should only enter the long position when the price break out from the resistance level or the neckline. Example: From the below example of the 15 Min chart of BANKNIFTY we can see how bullish reversal takes places after the formation of the double bottom Stop Loss & Target : In the case of a Double Bottom chart pattern, the stop loss should be placed at the second bottom of the pattern and can be trailed at the pullback low as price moves higher but this will be a bit aggressive. The price target should be equal to the distance between the neckline and the bottoms. The False Break: How to trade the Double Bottom Pattern and profit from “trapped” traders Now… When you trade the Double Bottom, you must pay attention to the time and space between the lows — the larger the “gap”, the better. Why? Because when the lows are far apart, it gets the attention of more traders who could push the price higher. And with this concept, you can use it to profit from “trapped” traders. Here’s how… The first and second lows should have time and space between them Let the price break below the first low Wait for a rejection of lower prices and then go long The idea is simple. As the price breaks below the first low, bearish traders will short the markets and have their stops above the lows. But if the price quickly reverses higher, the short traders are “trapped”. And you can take advantage of it by going long, anticipating if the price moves higher, it’ll trigger their stops and push the market in your favor. Hope you all learnt from this post. Share with the community if you liked it. Regards Omahto
NSE:BANKNIFTYEducation
by Omahto
17
HOW TO AVOID FAKEOUTS AND PROTECT YOUR CAPITALTaking A Right Breakout Trade Can Be Really Benifical, But What If It Is A Fake Breakout , Than It Will Be A Real Pain .... There Is No Way One Can Completely Avoid All The False Breakout , But It Is Possible To Avoid Most Of Them With Certain Strategies ,Which We Are Going To Talk About In This Post . . So, Lets See How To Not Trade A Breakout And Avoid Fake Breakouts... . . . Types Of Breakout :- Trendline Breakouts Pattern Breakouts (Parallel Channel ,Triangle.....) All Time High Breakouts Support And Resistance Breakout These Are The Basic Types Of Breakouts That Are Majorily Traded Around The World .So We Will Countine Our Discussion Taking Above Types Into Consideration . Breakout :- When The Price Of A Particular Stocks Closes Above A Price Zone (Support & Resistance ) Which Is Previously Tested By The Stocks Many Times . Fake-Breakout :-When The Price Of A Particular Stocks Fails To Sustain Its Position Above The Support Or Resistance Level And A End Up With A Reversal .A False Breakout Happens When There Are Not Enough Buyers To Continue The Trend In Breakout Direction. **************************** Look For These Things To Make Your Breakout Successful Candlestick Pattern Volume RSI Indices Support And Resistance . . . Candle Stick Assuming that you already know about the bacis of candle , look if there is bullish or bearish candles at the time of breakout . . . Rsi check the levels of rsi , check wheather if it is in the overbought(>80) region or oversold(<20) region . RSI below 40 a good for breakout , and above 70 is unhealthy for a breakout . Also check for the divergence RSI indicating . . . . Volume Look for volume buildup at the time of breakout Indices You Can Also Look For Nifty Or Bank Nifty Index Or Particular Sectoral Index Like If You Are Planning To Take A Breakout Trade In Hdfc Than Look At The Charts Of Banknifty Also , Like If It Bullish Or Not , If It Bearish Than Dont Take Trade With Your Full Capital Instead Trade With 50% And Add Another 50% At The Of Retest Or Look For Pullback At Lower Timeframe , Assuming All Above Factors Candlestick, Rsi, Volume Are Favouring The Breakout . Support And Resistance Instead of drawing a suppport and resistance a single flat line always draw a price zone indicating support and resistance zone covering the shadows of the candle You Can Also Use Ema And Couple It With The Above Factor To Add A Extra Confidence To Your Analysis . . Some Other Key Factors ... 1)Market Will Give You Infinte Oppourtunities So Dont Take Trade Based On Emotions . 2)Dont Enter A Trade If Your Price Is Already Went High . 3)If Price Is Moving Rapidly In One Direction And Then Breakout Happens Than Wait For A Reversal And If The Price Consolidate On Lower Time Frame Berfore The Breakout And Then Gives A Breakout There Are Less Chances That It Will Retest The Breakout Levels So Enter As Soon As You Got The Opppourtunity 4) Last but not least never stop learning and keep grinding HOPE YOU HAVE ENJOYED THE POST , WISH YOU A HAPPY TRADING JOURNEY AHEAD
NSE:HDFCBANKEducation
by himanxu_yadav
117
Double Top - Full ExplanationA Double Top is considered a bearish signal, indicating a possible reversal of the current uptrend to a new downtrend. Sometimes called an "M" formation because of the pattern it creates on the chart, the Double Top is one of the most frequently seen and common of the patterns. The Double Top is a reversal pattern of an upward trend in a financial instrument's price. The Double Top marks an uptrend in the process of becoming a downtrend. A Double Top consists of two well-defined, sharp peaks at approximately the same price level. The two tops are distinct and sharp. The pattern is complete when prices decline below the lowest low in the formation. The lowest low is called the "confirmation point". The slowing momentum may be evidenced through a lagging peak on an oscillator like RSI. Though not required, the market may break above the first peak, even if briefly. A slight and temporary break above the first peak is preferred as it may excite the bulls only to reverse and trend lower. The neckline is formed between the price low of the valley between the two peaks. A break below this neckline will confirm the double top pattern. The bearish confirmation is specified by a break in the key price support level (neckline) situated at the low point between the ‘tops’. Important Characteristics Following are important characteristics for a Double Top. Uptrend Preceding Double Top The Double Top is a reversal formation. It begins with prices in an uptrend. The trend upwards should be fairly long and healthy. Time between Tops Generally, the longer the time between the two tops, the more important the pattern is as a good reversal signal. Decline from First Top The deeper the trough between the two tops, the better the performance of the pattern. Volume Volume tends to be heaviest during the first peak and lighter on the second. It is common to see volume pick up again at the time of breakout. Pullback after Breakout A pullback after the breakout is usual for a Double Top. The higher the volume on the breakout, the higher the likelihood is for a pullback. Two Peaks at Different Levels Sometimes the two peaks comprising a Double Top are not at exactly the same price level. This does not necessarily render the pattern invalid. Some analysts point out that investors should be less concerned if the second peak does not hit the high of the first peak. Trading with Double Top: There are certain rules when trading with Double Top chart patterns. Firstly one should see the market phase whether it is up or down. As the double top is formed at the end of an uptrend, the prior trend should be an uptrend. Traders should spot if two rounding tops are forming and also note the size of the tops. Traders should only enter the short position when the price break out from the support level or the neckline. Example: From the below example of the 15 Min chart of NIFTY we can see how bearish reversal takes places after the formation of the double Stop Loss & Target : In the case of a Double Top chart pattern, the stop loss should be placed at the second top of the pattern and can be trailed at the pullback high as price moves lower but this will be a bit aggressive. The price target should be equal to the distance between the neckline and the tops. Hope you all learnt from this post. Share with the community if you liked it. Regards Omahto
NSE:NIFTYEducation
by Omahto
17
The Types of Market Days - Handbook for a laymanHi all, today we are going to see one of the most important concepts for day trading. This is an updated version with better illustrations and more exhibits. I have taken all the content from the book “Secrets of a Pivot Boss” and added illustrations and charts so that you don’t have to read the complete book. I am merely a presenter of the concepts written by Franklin Ochoa. The charts and illustrations are all done by me. So, without further ado, let’s delve right into the topic. There are six types of market days that we will cover. Remember, these days are crucial for a day trader. These types of days are repeatedly seen in the market, but no two days are ever identical. As such, these categories should be used more as guidelines, rather than seeing them as etched in stone. Again, your ability to recognize the pattern of the day accurately will be a huge step toward successfully engaging the market 1. Trend Day Illustration: Trend Day is the most aggressive type of market day. On a bullish Trend Day, the open usually mark the day's low, while the close usually mark the day's high, with a few ticks of tolerance in either direction. On a bearish Trend Day, the open will usually mark the day's high, while the market will usually close near the session's low. The market will typically start fast on this type of day and the farther price moves away from value, the more participants will enter the market, creating sustained price movement on increased volume. Initiative buying or selling is the culprit on this type of market day, as these participants are confident they can move price to a new area of established value. Price conviction is strongest during a Trend Day. The market will start strong right out of the gate and will usually maintain a unidirectional stance throughout the day, never calling into question the day's direction or conviction. This type of day has the highest price range (high price minus low price), meaning it can be quite costly if you are positioned against the market or if you fail to recognize the pattern early enough to enter alongside the market. These types of days only occur a few times a month, but catching these moves can certainly make your month, in terms of profits. Trend Day is usually preceded by a quiet day of market activity, which is usually a day with a small range of movement. Coincidentally, this type of market behavior will usually follow a Trend Day as well. Exhibit 1: Exhibit 2: 2. Double-Distribution Trend Day Illustration: While this day is a trending day, it in no way has the confidence or conviction of a Trend Day. Instead, this type of day is characterized by its indecisive nature at the outset of the session. During this type of day, the market will usually open the session in a quiet manner, trading within a fairly tight range for the first hour or two of the session, thereby creating an initial balance that is narrow. The initial balance is traditionally defined as the price range of the first hour of the day. If the initial balance is too narrow, the price will break free from the range and auction toward new value, creating range extension, which is any movement outside the initial balance. After the initial balance of the Double-Distribution Trend Day has been defined, the price will break out from the range and auction toward new value, where it will form a second distribution of price. This is the market's attempt at confirming whether a new value has indeed been established. Double-Distribution Trend Day opens the session quietly, trading within a tight range that can be viewed as the day's "warm-up" period. Eventually, price breaks free of the range and begins trending toward new value, igniting initiative buying or selling. Once the market finds new value, it then builds out another range before ending the day. The ranges formed at both the beginning and end of the day is where the term "double-distribution" comes from, as the bulk of the day's volume resides at one of these extremes, essentially forming a double distribution of trading activity. The initial balance is the base for any day's trading and is extremely important to the Double-Distribution Trend Day. A narrow initial balance is easily broken, while a wide initial balance is harder to break. The fact that the initial balance is narrow on this type of day indicates that there is a good possibility of a breakout from the initial range, indicating that you will likely see a move toward a new value. The narrow initial balance at the beginning of the Double-Distribution Trend Day indicates that either buyers or sellers will eventually overwhelm one side or the other. Once the direction is decided, the price will freely move toward a new area of value since it is being driven by initiative market participants. Exhibit 1: Exhibit 2: 3. Typical Day Illustration: The Typical Day is characterized by a wide initial balance that is established at the outset of the day. On this type of day, price rallies or drops sharply to begin the session and moves far enough away from value to entice responsive participants to enter the market. The responsive players push prices back in the opposite direction, essentially establishing the day's trading extremes. The market then trades quietly within the day's extremes for the remainder of the session. The opening rally or sell-off is usually sparked by reactions to economic news that hits the market early in the day. This opening push creates a wide initial balance, which means the day's "base" is wide and will likely go unbroken. A wide base during the first hour of the market will likely mean that the day's extremes will also remain intact, or unbroken. During this type of day, you will usually see price trade back and forth within the boundaries of the opening range, as fair trade is easily being facilitated. Exhibit 1: Exhibit 2: 4. Expanded Typical Day Illustration: Similar to the Typical Day in that it usually begins the session with early directional conviction. However, price movement at the open is not as strong as that seen during a Typical Day. The initial balance is wider than that of a Double-Distribution Trend Day but not as wide as that of the Typical Day. Hence, it is susceptible to a violation later in the session. Eventually, one of the day's extremes is violated and price movement is seen in the direction of the break, which is usually caused by initiative buying or selling behavior. During an Expanded Typical Day, both the upper and lower boundaries of the initial balance are susceptible to violations. On any given day, you will see one, or both, of the boundaries, violated, as buyers and sellers attempt to push the price toward their own perceived levels of value. Exhibit 1: Exhibit 2: 5. Trading Range Day Illustration: Both the buyers and sellers are actively auctioning prices back and forth within the day's range, which is usually established by the day's initial balance. On this day, the initial balance is about as wide as that of a Typical Day, but instead of quietly trading within these two extremes throughout the day, buyers and sellers are actively pushing prices back and forth. This type of day is basically like a game of tennis. The players stand on opposite sides of the court and take turns volleying the ball to one another throughout the match. Likewise, buyers and sellers will stand at the extremes of the day and will enter the market in a responsive manner when the price reaches the outer limits of the day's range. Responsive sellers will enter shorts at the top of the range, which essentially pushes price back toward the day's lows, while responsive buyers will enter longs at the bottom of the range, which pushes price back toward the day's highs. This type of market day offers easy facilitation of trade and gives traders amazing opportunities to time their entries. Exhibit 1: Exhibit 2: 6. Sideways Day Illustration: On this type of day, price is stagnant, as both buyers and sellers refrain from trading. This type of session usually occurs ahead of the release of a major economic report or news event, or in advance of a trading holiday. There is no trade facilitation and no directional conviction. The initial balance is rather narrow, which at first indicates the potential for a Double-Distribution Trend Day. However, the initiative buying or selling required for a Double-Distribution Trend Day never enters the fray, which leaves the market terribly quiet the rest of the session. The Trading Range Day and the Sideways Day sound similar, but the difference lies within the participation levels of both buyers and sellers. Exhibit 1: Exhibit 2: So, with this, we are done with all types of trading days. Remember, each of these types of days is not set in stone. While every market day is similar to a day from the past, similar does not mean "exactly." You must be able to snuff out the subtleties of each new day as it relates to a day from the past. Steadfast practice creates a valuable experience. Disclaimer : This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk. Happy learning. Cheers! Rajat Kumar Singh (@johntradingwick) Community Manager (India), TradingView What type of trader are you? A day trader, or a swing trader? Let me know in the comments. Also, if you need a PDF of this post with all the charts and illustrations, check out the links in the signature section (under the post).
NSE:NIFTYEducation
by johntradingwick
25
BREAKOUT vs FAKEOUTTrading breakouts is a most profitable trading strategy that involves buying or selling an asset after a long period of consolidation. Confirming breakouts before jumping into a trade is the key task to become a successful breakout trader. Now lets see about the important key points to consider to confirm such valid breakouts TYPES There are different types of breakouts including 1)Trend line breakouts (diagonal form of S&R) , 2)Horizontal price breakouts, 3)Pattern breakouts (double top, double bottom & other) 4)All time highs/lows breakouts, 5)Fib level breakouts etc., The support and resistance lines that are drawn at potential breakout points "should be seen as area/zones instead of fixed lines" . BREAKOUT : A breakout is when the price of the stock breaches a support or resistance levels that has previously formed followed by a strong candle close. FAKEOUT : A false break or fakeout, as the name implies, is any move above a resistance or below a support followed by a reversal that fails to close above or below the broken level. WHEN THE FALSE BREAKOUT HAPPENS : A false breakout happens when there are no enough buyers or sellers to continue supporting the stock towards the breakout direction. In the examples above,the upper false breakouts happened because there were no enough buyers to continue pushing the price higher & tends to reverse similarly viceversa for the lower false breakout. VARIOUS SCENARIOS OF FALSE BREAKOUT POINTS TO REMEMBER 1)False breakouts can be avoided by waiting for strong candle closure above or below the levels to confirm the breakout strength. 2)Avoid the breakouts with non-stop parabolic movement (without pullback or retest). 3)Instead of using a single line as support or resistance, it is better to have an area/zone that covers all shadows in previous touches. 4)To take entry, always wait for the zone to breach by the candle closing confirmation combined with price action. Hope it was helpful to you, Happy Learning & Profit making :) Thanks & Regards Divyaapugal
NSE:NIFTYEducation
by Divyaapugal
29
Railway Track Pattern Railway track pattern Don't know how many are known to this pattern but in my trading years i have noticed that Morning star/Evening star and railway track patterns are the most seen candle stick patterns at reversals i personally trade this pattern in all the markets. Some even call this as order block. It doesn't matter what you name this pattern ... it works phenomenally 1. What's so special about this pattern : This is a confluence pattern, If you get to see bullish RT in 1hr TF if could be morning star pattern in lower TF and could be a bullish pin bar in higher TF, which means you are literally covering 3 time frames in just one pattern 2. Where to identify and consider the pattern: Majorly at support for bullish RT(Railway Track) and resistance for bearish RT could be any sort of Support Resistance and/or Pivots, look for the volumes for better confirmation. 3. Entry and Exit with SL : One can take entry with two different ways. Aggressive and Safe entry. If you notice the chart above there is a line drawn on the RT candle mid which will act as your entry for safe entry and SL will be the low of the candle in bullish RT and high of the candle in bearish RT Exit will be according to your trading style and timeframe used or take confluence from other indicators/price action These RT candle mid will be working as Support and Resistance in future. You can see the above chart for reference. Cons of the pattern : The pattern works well in all the time frames yet it has its pros and cons just like any other pattern yet they seem to be more informative. once you see Bullish/Bearish RT being failed there is 70% possibility That you will get to see a move on the other side. Concept is very similar to Block order / fulfilling left over orders. Lower timeframe signals are not that reliable in some markets but can be considered if used with confluence If the concept looks vague look at the chart above, This is just an idea, workout on the pattern and its probabilities before going live. Note : Just for educational purpose and not a recommendation.
NSE:BANKNIFTYEducation
by TeamTaurus
4
How to better time your entry and exit in Swing Trading?This charts shows the possible areas where one can look for trading opportunities (through Price Action Strategy) and be profitable from it. Swing Trading is better for beginners in Stock Market and Price Action is one of the ways to approach Stock Market. Through Price Action, one can identify the current market structure (uptrend/downtrend/sideways) and so better trading decisions can be made, which will pave way to better time entry and exit. Drawing trendlines, patterns, support and resistance and reading candlestick patterns are some of the ways in Price Action Trading. A good price volatility of a stock is essential especially from the traders perspective, as traders tend to make profit from the market using its volatility. Another important thing in taking up a trade is choosing the right Time Frame because in terms of volatility many of the stocks would fit into 1 Day time frame, some stocks would fit into 1 hour time frame, 4 hour time frame or 30 mins time frame etc. With all this in consideration, one can be expected to make entry in breakouts and shorting in breakdown. One should manually go through as much charts as possible and add to their watchlist that fits into their strategy. This roadmap is one of many ways to approach trading in Stock Market. This is just for Educational purpose. Thank You
NSE:HDFCAMCEducation
by Sivabharathi03
Simple candle stick patternInverted hammer candle is candle stick pattern which shows a price rejection area on upper side. We can go for sell a stock with the help of inv. Hammer candle by confirmation of next bearish candle move. Today in the morning we got the inverted hammer candle (with the last two day's double top pattern)on the steps of previous day which was telling us sharp price rejection. Next candle break the low of first candle and price moving down. You can see how beautifully, a single candle stick pattern work today.
NSE:ULTRACEMCOEducation
by TradeAXN
Accumulation and DistributionThis is how a typical accumulation and distribution phase works in stocks Usually, we are thought about how to trade moving average cross overs, but actual cinema runs behind the picture is that there is a whole lot of accumulation that goes on by big boys, and a typical breakout scenario is created by distributing which is reflected in chart patterns please go through public and others holdings to understand more, Retailers lack patience and capital and this is the only key for big players to accumulate for long periods
NSE:HGINFRAEducation
by Solivagant_Trader
Descending Triangle - Full ExpanationWhat is descending triangle ?? The descending triangle is one of the top continuation patterns that appears mid-trend. Traders anticipate the market to continue in the direction of the larger trend and develop trading setups accordingly. The descending triangle is a bearish pattern that is characterized by a descending upper trendline and a flat lower trendline that acts as support. This pattern indicates that sellers are more aggressive than buyers as price continues to make lower highs. The pattern completes itself when price breaks out of the triangle in the direction of the overall trend. Element Of Descending Triangle The descending triangle is fairly easy to spot once traders know what to look for. The below method can be applied to all financial markets. 1.)Downtrend: The market must be in a downtrend before the descending triangle pattern appears. This is important and emphasises that traders should not simply trade the pattern whenever the descending triangle appears. 2.)Consolidation: The descending triangle then appears while the market enters the consolidation phase. 3.Flat Lows Or Flat Line Lower trendline: The lower trendline acts as support. Price often approaches this level and bounces off until the breakout eventually occurs. 4.)Decsending or Lower Highs: While the market is consolidating, a downward sloping trendline can be drawn by connecting the highs. This downward sloping trendline shows that sellers are slowly pulling the price down – which provides further support for a bearish trading bias. 5.)Breakdown & Trend Continuation: After price posts a strong break below the lower trendline, traders will look for confirmation of the pattern via continued downward momentum. Calculating Target The descending triangle, often referred to as the ‘falling triangle’, has an inherent measuring technique that can be applied to the pattern to gauge likely take profit targets. For the descending triangle, traders can measure the distance from the start of the pattern, at the highest point of the descending triangle to the flat support line. That same distance can be transposed later on, starting from the breakout point and ending at the potential take profit level. The illustration below shows the distance from A to B can be transferred lower down, from C to D, in order to project a possible take profit level. How to trade Descending triangle When trading the descending triangle, traders need to identify the downtrend and this can be seen in the BANKNIFTY 15 Min chart below. Thereafter, the descending triangle appears as the candlesticks start to consolidate. The measuring technique can be applied once the triangle forms, as traders anticipate the breakout. After viewing a strong break below support, traders can enter a short position, setting a stop at the recent swing high and take profit target in line with the measuring technique.
NSE:BANKNIFTYEducation
by Omahto
19
Role of Support Resistance in Breakout tradingWhat is Breakout Trading ? A breakout is a potential trading opportunity that occurs when a share price moves above a resistance zone or moves below a support zone on increasing volume . For trading breakouts one should be aware of support and resistance . It acts as the backbone of Price Action trading. What is Support & Resistance ? Support is a place where a stock price stop moving downwards. It is a horizontal area on a chart, where price experience buying pressure and tends to move up. Resistance is a place where a stock price stop moving upwards. It is a horizontal area on a chart, where price experience selling pressure and tends to move down Why are these support and resistance formed? Support and resistance are formed only due to our own emotions at points around high supply or demand zone . For instance, if a price falls from high 100 to 50 then in and around that price (50) there will be lots of buyers ready to buy assuming it to be very cheap price and same goes for resistance where lot of traders would like to offload their positions considering that price to be too high for the stock and good time to book profit. Why do we need Support and Resistance? Support and Resistance often helps to set 1)Target, 2)Entry and 3)Stop loss. Guidelines for Drawing Support and Resistance: For the same chart if we ask 10 traders to draw support and resistance area, we will get 10 different result. So, what are the important things to consider ? I always prefer drawing rectangular zone instead of drawing single line to make chart look clean and easy to understand the area of supply and demand . *Always Use Higher Time frame to draw Support and resistance area. * Draw a zone using rectangle which shows multiple touches. While, this zone act as great support and resistance area compare to few touches which was due to volatility . * While drawing zone make sure to cover shadows in all previous touches Things to know: * The more times the S&R zones are tested in a short period of time, the weaker they become & the greater the likelihood it will break. Rules for Positional breakout : 1)Candle closing is mandatory to trade breakouts. 2)Wait for the retest, if the price closes too far from the breakout level. 3)There should not be HTF support/resistance near the breakout level. Types of breakout Patterns : 1)Rising & Falling Trendline 2)Rising & Falling Channel 3)Rectangular Channel 4)Ascending , Descending & Symmetrical Triangle 5)Head & Shoulder 6)Support & Resistance Breakout Hope it was helpful to you, Happy Learning & Profit making :) Thanks & Regards Divyaapugal
NSE:NIFTYEducation
by Divyaapugal
77
How to use Chart Patterns indicators Tradingview has recently introduced new Technical Indicators that can be used to identify chart patterns that can be used to predict future price movements and determine the entry point to a position. These indicators can be used to find the following chart patterns: Bullish Flag, Pennant, Double Top, Triple Top, Head and Shoulders, Triangle, Rectangle, and Wedge Wedge is one such pattern that I discussed in this video. After watching this video, you will be able to apply and use this indicator on your charts. A wedge is a price pattern on a price chart that is defined by converging trend lines. Technical analysts regard wedge-shaped trend lines as useful indicators of a potential price reversal. The best part about these indicators is that you do not have to manually look for these patterns, the alagorithm will do that job for you. I believe this will greatly help beginners in anaysing charts as a lot of manual work is now off your shoulders. Try experimenting with these indicators and I'm very sure it will make a positive impact on the trades you take. Do let me know of any other stocks where you've discovered similar patterns using these technical indicators.
NSE:SRFEducation
by Kapil-Mittal
3
How to use macd indicator in daily tradePreface Macd indicator use to help them to make trading decisions postional trade. Every trader most of the use macd indicator .Because trader favourite indicator and what is your favourite indicator ? Write it in the comment. Speciality of Macd indicator? Macd Negative area(zone,cross) see nifty 50 chart this date 21 jan 2022 macd move down side negative(zone,area) Macd Postive area(zone,cross) see nifty 50 chart this date 27 dec 2021 macd move up side postive(zone,area) Alright, the operation start after creating an high 18604.45 date 19 oct 2021. Macd indicator indicate negative cross 22 oct 2021 and price consolidation three four candle and next candle breakdown. Most of the case macd indicator indicate price direction .This reason most of the people use this indicator . Case Price move up direction 29 oct 2021 to 15 Nov 2021 this case Macd indicator negative zone move up side and again reverse down side 16 nov 2021 and price go down 18150 to 16855
NSE:NIFTYEducation
by HARISHRAO99
11