How to read Stock market charts for beginners?
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- Updated On:26-Aug-2021
- Replies:1
Short Answer
The things to look out for are the patterns, candle stock patterns, the trend in the market, support, and resistance lines. Using this, you can include several other things based on your trading preference.
Detailed Answer
Reading charts of stock in the stock market is quiet a simple task provided you know what you're looking for. However, you need to realize that you need few pointers to understand where the price point will go. It's all about probability and a calculated analysis conducted for knowing the price change and trend in the market.
Despite the market being bullish or bearish, you need to get one thing straight. Choosing the right stock will give you many pointers to know the projection of the stock next. However, if you have chosen the stock, you can focus on the below-given pointers while reading a chart. Let's get started.
What to look for while Reading a Stock Market Chart?
• The trend in the market
The first and foremost thing that you might want to look out for is the chart's trend. Whether its going up or going down. No matter where it goes, you need to understand how the stock is performing, and any breaking points to rising even higher. Moreover, if it's in a particular phase with neither rising nor falling, you could execute swing trades. Therefore, try to figure out the direction of the price change and see where there might be a breakthrough.
• Support and resistance
An important finding would be the support and resistance lines. The charts would showcase such a pattern where the prices showcase a rise and fall of the stock. But then, in a bull market, the prices would from a higher high and lower low kind of variation. Its where the prices are in a support and resistance phase. Support is where the prices have been bouncing back from that location repeatedly, and resistance is the phase where the price is trying to break that line repeatedly to grow even further.
• Patterns
Finding several patterns such as flag patterns, swing trading patterns, support and resistance lines, breakthrough lines, double shoulder, double down, triangle patterns, etc., are a few of the many patterns that one might have to look for. its where the patterns might not be readily visible, but if you find them taking place, then it's a better way to spot out a trade and see it rising in prices over time, which could be profitable considering your entry in the trade for early and didn't report any losses whatsoever.
• Candlestick patterns
Candlestick patterns are quite important as they tell w whole lot more about the stock price at that time interval. These patterns have a head, body, and tail. Its where knowing the ending of the candle stock and then seeing what type of pattern is making can be availed. But keep in mind that not all candlestick patterns would be true. There are a higher chance that you might be wrong many times, but then it's a way to know where the market might go along with other pointers.
Bottom line
Reading a stock market chart isn't something you learn out of thin air, but then it's all in practice and noticing the different trends and seeing the correctness of your prediction. However, with the pointers given above, focusing on them should give you a basic idea of how the patterns change, and accordingly, you can place your trades.
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