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Support and Resistance

INVERSE HEAD & SHOULDERS PATTERN... NIFTY PHARMA!Inverse head and shoulders pattern is considered a bullish reversal pattern. A breakout of the neckline after completion of the right shoulder triggers the rally in the underlying script. In individual scripts, the breakout can be confirmed with good volumes traded. The share price can retrace and take support at the trendline (the resistance line now acts as support). This is the next confirmation of the bullish trend. The distance between the head and the neckline if projected above the neckline can be considered as the target ahead. In nifty pharma, the index has been consolidating for almost 4 months now. A clear breakout of this neckline can be seen. The index also shows a retest of the trendline and looks like the rally has started. The target should be 15550 (calculated from the height of the head to the neckline). Happy trading!
NSE:CNXPHARMAEducation
by Stock-Holmes
What are Falling and Rising Wedge Patterns?What Is the Wedge Pattern and Its Common Characteristics? 1. Wedge patterns have converging trend lines that come to an apex with a distinguishable upside or downside slant. a. Wedge with an upside slant is called a rising wedge b. Wedge with downside slant is called falling wedge 2. It has declining volumes as the pattern progresses 3. It breaks out from one of the trend lines Why We Should Pay Attention to Wedge Patterns? Some studies suggest that a wedge pattern will breakout towards a reversal rather than a continuation more often than two-thirds of the time. Therefore as the rule of thumb, people generally treat a falling wedge as a bullish pattern and a rising wedge as a bearish pattern , especially a falling wedge would be a more reliable reversal indicator than a rising wedge Since we know a wedge pattern has a higher probability to reverse and due to the fact that the price of wedge pattern converges to a smaller area, we can trade the reversal set up with a relatively close stop loss to its entry price, which provides us with a good trading opportunity with a decent Risk:Reward ratio. Examples of a Bullish Rising Wedge and Bearish Falling Wedge Sadly, there is nothing that works 100% in trading. Not every rising or falling wedge will reverse as one might expect. Every trader must properly manage their risk by setting stop losses and not just trading based on price patterns. Below are two examples. Bullish Rising Wedge ( ETHUSDT during 15/NOV/20 - 28/DEC/20) In the early stages of the epic 20-21 bull market, if traders blindly treat the rising wedge as a bearish signal and trade accordingly, they would pay a heavy price. Bearish Falling Wedge ( LTCUSD during 14/AUG/18 - 14/NOV/18) On the contrary, in the late stage of the 2018 bear market, any trader who blindly trades the falling wedge to bet on a reversal would also learn a hard lesson. Comment down your thoughts on Wedge Patterns in the comment section. Disclaimer: This is just an educational post. Never trade just any pattern. And please do your research before making any trades. Happy Trading!
Education
by Coinlog
4
What is Ascending Triangle?What is an Ascending Triangle Pattern? Ascending Triangle Pattern is a continuation pattern that means when it plays out it will continue the preceding trend. It is created by price moves that allow for an upper horizontal line to be drawn along the swing highs, and a lower rising trendline to be drawn along the swing lows. These two lines form an ascending triangle . Traders here usually watch for breakouts from upper resistance in ascending triangle patterns. How does the Ascending Triangle Pattern work? After the prior uptrend when investors try to book profits it creates a resistance that leads to a high supply zone . But due to the prior uptrend investors are still interested in the asset which leads to picking up in demand slowly, resulting in a rising trendline. Time in this phase is also a crucial element. The longer this pattern consolidates, the more chances it has to give a possible breakout to continue the uptrend. Why is the Ascending Triangle Pattern Unique? Ascending triangle patterns usually have a higher breakout success rate than symmetrical triangle patterns. In an ascending triangle , higher lows are constantly being built, which shows there is a strong demand for the asset. Role of Volume: Volume plays a major role in the completion of all major patterns. The horizontal trendline which acts as resistance can give spikes in volume . We will call it a breakout when a candle closes above horizontal resistance level with a great volume spike or rise in average volume . Above Chart Explanation: This is the 4H chart of FTTUSDT with a clear preceding upward trend. After the uptrend, we enter the second phase where the upper horizontal line becomes resistance 4 times in a row and the lower rising trendline becomes support 3 times in a row. As we have observed here FTTUSDT consolidated for nearly 1 month in an ascending triangle pattern, which finally led to a super bullish breakout. Two Possible Entries: Entry 1: On rising support, when the price touches the rising support trendline and if there is rising average volume , it makes a good entry with a stop loss placed below the previous higher low point. Entry 2: On resistance breakout, we should wait for the 4H candle to close above the resistance to confirm the breakout’s validity. Once the breakout is valid, a potential opportunity would be to enter at the close of the 4H candle with a stop loss placed a little below the breakout level. Usually, we should target the height of the triangle after the breakout. Comment down your thoughts on Ascending Triangle Pattern in the comment section. Disclaimer: This is just an educational post. Never trade just any pattern. And please do your research before making any trades. Happy Trading! PS we are posting this again for our Indian Audience.
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Education
by Coinlog
14
Importance of Multiple Confirmations-Indicator Free AnalysisIndicator Free Analysis with Fibonacci Ratio Integration: The above is a daily chart of Alkyl Amine, a quality monopoly stock with clear cut competitive edge in its respective industry. We can observe that a previous resistance was present at 4000 levels which was broken with big bullish harami green candles accompanied with volume. A basic rule of chart analysis is whenever a stock breaks out of its resistance, the resistance is transformed into a support. Thus the stock again comes back to the resistance level in order to check if it has turned into support. This is called retest or throwback. Here the stock has tested the 4000 levels 2-3 times and is now trying to head upwards. In addition, if we draw a fib chart, we can see that the stock is taking support at the 0.618 levels which can be regarded as ultimate support zone. We can also observe that a bullish Flag and Pole is formed which indicates upmove How to trade the stock? The stock can be traded in two ways depending on one's risk appetite and experience. Entry: For risky and experienced traders: They can enter the stock after a bullish candle (such as that of today is formed) is formed with a SL below 3900. For safe traders: They can enter the stock as soon as the stock gives a breakout above the flag i.e. formation of a bullish green candle with closing above flag. Benefits of early trade: By entering early, the experienced or risky traders decrease their stoploss to a great margin. Thus it is possible for them to re-enter if the stock hits the StopLoss and again moves up. Benefits of Confirmed Trade: By entering after the breakout and retest of the Flag pattern, a safe trader increases the probability of success to a great extent. Where should the target be? The target should be the tip of the Flag i.e. 4750. Where should be the Stop Loss? For the early entree, the Stop Loss should be just below the support trendline of 4000 i.e 3900 For the safe trader, the Stop Loss should be placed just below the upper trendline of the Flag i.e. around 4100-4150 Hope you all learnt something..Support me by sending some cheers and liking all my ideas .
NSE:ALKYLAMINEEducation
by tksthathachari
3
How to draw in Support and Resistance - Education1. What is support and resistance? Support - Area on your chart with potential buying pressure Support - Area on your chart with potential buying pressure Most of the text books says the more times support and resistance is tested, it become stronger. But the truth is the more time it tested it becomes weaker. ( Refer the Image). 2. Support and Resistance is not Line in Chart: Most of think support and resistance is line in the chart, where they face 2 problems, a. Price undershoot and you miss the trade or b. Price overshoot and assume Resistance is broken it's become false breakout. How to address this problem? Simple, Treat support and resistance as area on your chart not lines. Why S&R are area on your chart? Because of 2 groups of traders i Traders with fears of missing ii Traders who want to get possible price I will explain in detail: traders with fear of missing out would enter their trades the moment price comes close to support and if there's enough buying pressure the market reverse at the location on other way, there are traders who want to get best possible price so they place orders at the low of support and if enough traders do it the market will reverse near the lows of support. But one thing for sure: We have no idea which group of traders will be in control, whether its FOMO or Cheapo traders. Hence, S&R are areas on our chart not lines. 3. Dynamic Support and Resistance: What we have seen before are Horizontal S&R ( Where the areas are fixed). Now we are going to see Dynamic S&R There are 2 ways to identify Dynamic S&R A. Moving Average B. Trendline How to use Moving Average as Dynamic S&R I here use EMA50 and EMA79 to identify my dynamic SR. But any moving average you can use. (Either SMA, WMA, DMA any number too. Do not blindly follow others) Trendline: Trendlines are diagonal lines on chart to identify the dynamic S&R Notes: Treat S&R as areas on your chart not lines. This is how we can draw a support and resistance . From now we can understand how to draw a support and resistance. If you like our thought press the thumb button and for more learn how contact us undersigned.
NSE:BANDHANBNKEducation
by Caapinves
Trade Using Multiple Trend Lines Important Note:- Very complex and professional techniques I have discussed in the below texts. So my friends read this minimum 3 times, otherwise you will not get the inside what I'm saying about. See how a professional trader using multiple trend lines in a chart and find out opportunities. 1. Here you can see two old trendlines are there and two new trend lines i.e. support & resistance line. 2. Price has been take support and resistance in different different position of the chart and if we join them then we can see a different trend channel in different angle along with previous one. 3. Trend channel already change few months ago i.e. new support line and new resistance line. 4. Now break in the upside direction. 5. So we can take position on direction of the breakout. But my friends there is something more in this story, Actually we can't recognize multiple support and resistance in same direction , that's why we can't draw trend lines there. Reality is there is the difference, between professionals and intermediate or beginners. We have to look into the chart in different way all the time then you can see the chart differently or in professional way. In this chart the price already break the old resistance line and now it's break the new resistance line with big bullish candle. Also previous support and resistance line nothing but a symmetrical triangle pattern. By using multiple trend lines you can see the different opportunity in different position of the chart and you have to choose the correct one which have highest provability to move the price in your way. I know this concept is little bit complex but if you download this in your mind, in near future you will get the taste of success.
NSE:RELIANCEEducation
by marketaffairs
Indicator Free Trading of Cup and Handle Pattern - A Case StudyThe above chart is the daily chart of Bharat Electronics . Here we can observe that the stock has formed a Cup and Handle Pattern. Now I shall elaborate in detail on how to trade the Cup and Handle Pattern with appropriate Trading strategy and Psychology. In the above chart, we can observe a stiff resistance at 160 levels for the stock. Hence it needs to be hit multiple times to make it weak and finally give a breakout. In case of a Cup and Handle Pattern, the resistance is hit a minimum of 3 times, before giving a breakout. In this case, we observe an ideal scenario which may not be the case always. How to Trade Cup and Handle Pattern? Trading Strategems: When to enter? There can be 2 fundamental ways to trade the stock. 1. Take Entry as as soon as stock breaks out of the pattern (Entry 1) i.e. at 161-163. Generally an experienced trader or a trader with good risk appetite takes entry here. Trading Tip - Even if you have good risk appetite, do not take trade as soon as the breakout occurs. Wait for a daily green candle to close above the breakout levels and enter the next day when the previous breakout candles's high is taken out. 2. Wait for Retest of previous resistance and then take an entry (Entry 2) i.e. at 173. Generally a beginner or a safe trader takes entry here. Trading Tip - Wait for a green bullish candle (ideally a bullish green hammer candle with a good tail) to form at the retest levels. Take entry on the next day, only when the previous bullish green hammer's candle's high is taken out. Where should be the Stop Loss? In every trade, we should give utmost and primary importance to Stop Loss rather than target. Only after calculating our Stop Loss, we can assess our Risk and accordingly plan the Reward or Profit. In this case, there can be 2 different SL levels for above 2 strategies: 1. For Entry 1, the stop loss should be a little below the handle i.e. 140. 2. For Entry 2, our stop loss becomes a bit less i.e at 160 Trading Tip - Do not give SL at exact levels from where the stock has bounced back. For example - In entry 1, it is better to give SL at 138 rather than 140 so that minor fluctuations do not hit our SL and then move upward. Similarly in entry 2, it is better to give Sl at 160 rather than 162. What should be the Target? In general, the target is calculated by calculating the depth of the cup. In this case, the depth of the cup ranges from Rs 120 - 160 i.e. Rs 40. Hence the stock will move up by Rs 40 from breakout ( or retest levels) i.e. from Rs 160 - 200. Hence our ideal target should be Rs 200 Trading Tip - In the present times, all traders use digital charts. Hence the whole world can see that a Cup and Handle Pattern has formed. Every trader knows the ideal target is Rs 200. Thus all FIIs, DIIs, automated trading systems, retail traders, etc. would have put huge sell orders at 200 levels. Hence the stock may fall sharply as soon as it touches Rs 200 due to heavy selling or heavy supply. Thus it is better to book profits at just below the target i.e. between Rs 195-198 so that you may not lose money. Thank you. Please like and share the idea if you learnt something..Cheer me up!
NSE:BELEducation
by tksthathachari
4
Low Risk High Reward Setup with RSI BULLISH DIVERGENCEThe analysis is on how to create a low risk high reward trade with RSI being a key indicator,together with previous broken resistance line now acting as a support. If the price slope of the stock is negative (bearish) and the RSI slope is positive (bullish) it is an indication (RSI BULLISH DIVERGENCE) of the reversal in the price of the stock.With the previous broken resistance line which will be the demand zone of the buyers a long setup can be created with the stoploss just below the confirmation bullish candle at the close of the day. My name is Ragav follow me for more educational as well as strategical ideas.
NSE:ASALCBREducation
by Ragav27
Trade with Conviction - Price Action + MACD + EMAIn the chart above, we can see that the trend resistance and support lines are well established, from where prices have bounced and retreated from on multiple occasions. After a decent recent pullback, we find the Exponential Moving Averages looking up again, almost ready for a Bull Cross. I personally prefer 9,21 Days EMI for trading in a short time frame of 7-10 days. It can be easily seen that on numerous attempts, price has kept these EMA levels. MACD and RSI play an important role to confirm the hunch from the preliminary screening off the Support & Resistance and EMA lines. I try to watch out for where the RSI levels are moving toward and the key levels from where it bounces. Personally I find the 50-60 region safer, after rising from a lower level, as it not just implies that bulls are back in control, but it also leaves decent room for upside movement and gain from the share. MACD helps to now time this entry right. If its clear that the divergence levels are reducing and the lines are closing in for a Bull Cross, I can form a decent opinion if I want to wait for the cross or enter while the divergence is still decreasing. Most of the time, I enter right before it is all set for a Bull cross. It helps me to get an early entry and close my position in a day or two if the MACD cross is rejected, this keeps the losses to a minimum. Finally, Volume surge serves to further strengthen the view that the increase in price is accompanied by smart money flowing in, and now you know that this price increase will have a sustained increase with momentum. EPS and Financial position of the company seem good, and that checks out all the major points for a long position. To summarise, watch out for EMA and Resistance Support levels to screen stocks preiminarily. Out of the selected bunch, review the RSI and MACD levels. Increasing Volume with Price increase always helps. Check the EPS growth at least, and set the targets and stop losses as per your risk appetite. Thanks for reading :)
NSE:CYIENTEducation
by Aayush_Rungta
6
How to make a winning trade using pennants A pennant is a small symmetrical triangle that begins wide and converges as the pattern matures (like a cone). Here is an example of IEX. The company has declared a good set up of numbers on 22nd July. Profit after tax is up by 48% Sales are up by 36% The price is now hovering near the previous Resistance which now acts as a support Tight price range near the support level. Look at the small candles. Price goes up with rising volume on 23rd Aug. Any pattern may falter depending on the overall market condition. So one should always keep a stop loss. :) Hope you liked the idea. Happy trading.
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NSE:IEXEducation
by ObliviousChart
6
Biocon - A case study for Long Term InvestmentThis is the monthly chart. Recently Biocon broke the support levels of 360-365 and this resulted in a major 10% fall upto 330 levels. For long term investors, the question that arises here is - Where is the next buying zone? From which price levels the stock will show a bounce back? Here we will learn the use of EMA or Exponential Moving Average. Every stock respects a different exponential moving average and hence a single EMA cannot be used as a common standard. From the historical monthly chart, we can observe that the stock has been respecting the 50 day EMA (more than 3 times) in the Monthly Timeframe for the past 8 years. Now the stock is coming down to the 50EMA support having broken the 20EMA support zone. Thus we can initiate a buy around 300 levels, where the 50 day EMA support exists. When to buy? We should buy only when we receive multiple confirmations. Those should be: a. Stock respects the 50 EMA support. b. Stock forms a bullish hammer or bullish harami candle from the 50 EMA support. Only when these two conditions are satisfied, we can initiate a BUY on this stock.
NSE:BIOCONEducation
by tksthathachari
5
How to enter a trade after a breakout 1) After breakout price comes near the previous supply zone and now it should act as demand zone which is support obviously 2) We should see the volumes at the time of retracing volumes are always low which is a good indication that means some profile booking is happening 3) If the price is not supported by volumes it kind of reverse that exactly happening now in this stock. 4) For entry we should look for any big green candle supported by volumes that's a indication that buyers are active now. 5)Now go for smaller time frame like 1 hour 30min for good entry
NSE:XCHANGINGEducation
by Tauqueer
Let us analyze recent fall and rise events in BTCBitcoin had a fantastic rally this year but also had seen the worst of the falls due to China’s crackdown. Let’s analyze the BTC chart and find out the critical signs we have observed during the fall and also analyze what’s the current situation. In this analysis, we will be using Trendlines, Supply and Demand Zones, and RSI. We shall understand them briefly. Trendlines can be ascending or descending lines. The trendlines are formed using at least 2 tops or bottoms. Ascending lines are formed by joining at least 2 higher highs or 2 higher lows which act as support. Descending lines are formed by joining at least 2 lower lows or 2 lower highs which act as resistance. Applications of Trendline s: 1. They indicate the prevailing trend in the particular duration. 2. They act as support and resistance lines. 3. If ascending trendlines are broken to the downside and the immediate low of the rally is broken then the stock may have a new downtrend. 4. Similarly breaking the descending trendlines to the upside and an immediate high of the prevailing fall indicates the new uptrend. Supply and Demand Zones are the zones where the price is failing to break out multiple times. Supply zones are the areas of interest for the bears and demand zones are the areas of interest for the bulls. Applications of Zone s: 1. They represent the critical areas in the chart where the traders or investors are interested. 2. Breakouts in either direction will add momentum in that direction. Interesting Interpretation of Trendlines and Zones : 1. Ascending trendlines are joined by the points where bulls are interested to go long. 2. Descending trendlines are joined by the points where bears are interested to go short. 3. Similarly demand and supply zones are zones where bulls and bears are interested in long and short respectively. 4. Giving up trendlines and prices going below or above immediate level indicate that the bulls or bears have given up on the stock for a while. Important Note : The breakout should be confirmed by checking higher volumes or pull backtest or waiting for the price to take out immediate high or low. This confirmation gives us a confluence between the different schools of thought. Some traders may only follow trendlines for breakouts, some may follow zones, these checks ensure you have more participation towards your position. Once the trendline or a zone is broken the nature becomes opposite. For example, if a supply zone or a descending line is broken, the price rises and then comes back to test the zone, this time it must act as a demand zone or support line, else it is said to be failed in the pull backtest. Relative Strength Index (RSI) It is a momentum indicator of the price in a particular duration. For detailed definition and formula, please check in the indicators section in TradingView. It is generally used to determine whether the stock is oversold or overbought. Applications of RSI: 1. Oversold if the price reaches 20 or 30. 2. Overbought if the price reaches 80 or 70. 3. Reversal signs based on divergences. If price is making higher highs or higher lows but on contrary RSI is making lower highs or lower lows. Then it is a sign of bulls giving up and a bearish reversal is on its way. Let us these concepts and apply to our chart. You can see supply and demand zones and the trendlines on the chart. FALL The supply zone had been tested four times and then took a great fall. You can have a doubt that actually once the price had managed to breakout supply zone with good volumes and crossed immediate higher high but even failed. Yes, here it failed the pullback test. It received resistance from the purple trendline 1 and came back for the pullback test and failed. We can see a bearish divergence by checking corresponding highs trendline 1 connected in RSI. RSI was also indicating overbought signs. After a certain fall, it rose again to test the zone which now turned to supply zone and couldn’t break. This gave confirmation for the participants of different schools of thought, hence with huge volumes price fell. RISE The price reached another critical area called the demand zone. Before falling into the demand zone, the purple trendline 2 gave support to the fall. The corresponding trendline 2 in RSI confirms the bullish divergence and showing oversold signs. This reversal was confirmed by huge volumes, taking out the 40k mark and breaking a strong trendline which resisted price to rise during the fall. The price also took a pullback test and succeeded. CURRENT SITUATION After a pullback, BTC made a high of 48k and then formed an intermediate demand zone. The blue trendline is supporting the rise. If the BTC breaks 48k, it can go to test the supply zone. If it breaks the blue trendlines and the intermediate trendline, it can test the 37k level. If the 37k level fails it may test the demand zone again. We have a minor bearish divergence in RSI and RSI is in the overbought zone. As we analyzed the fall and rise of BTC, we understood before considering any position, confirmation is necessary. This is just an education post and not investment advice.
COINBASE:BTCUSDEducation
by Sanjan91