When studying a technical chart, traders focus on a few key elements to understand price behaviour and make better decisions.
🔍 1. Trend Direction
Is the stock in an uptrend, downtrend, or sideways?
(Helps decide buy → uptrend, avoid → downtrend)
📉 2. Support & Resistance
- Support: Price level where stock tends to bounce up
- Resistance: Price level where stock tends to fall from
(Important for entry & exit)
🕯️ 3. Candlestick Patterns
Look for signals like:
- Hammer / Shooting Star
- Doji
- Engulfing Patterns
(Predict reversals or continuation)
📈 4. Moving Averages
Check:
- 20-DMA (short-term trend)
- 50-DMA (medium-term trend)
- 200-DMA (long-term trend)
(Crossover = trend change signal)
📊 5. Volume
Rising price + rising volume = strong trend
Falling price + high volume = panic selling
🎯 6. Indicators
Common ones:
- RSI (Overbought/Oversold)
- MACD (Momentum)
- Bollinger Bands (Volatility)
- ADX (Trend strength)
🔁 7. Chart Patterns
Watch for:
- Double Top/Bottom
- Head & Shoulders
- Triangles / Flags
(Guides future price direction)
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