Hello traders, in this post we will learn how to read our charts which we generally post in our telegram channel.
Let us start with an example of Larsen & Toubro (LT)
In above chart we can see 2 lines
Blue line: is Resistance for the stock. Therefore, if the stock breaks this resistance line we will see a change in trend, and stock could show good up-move (breakout).
Red line: is Support for the stock. If the stock breaks this line we will see a change in the trend of the stock (breakdown).
How to Trade on basis of above chart?
Buy Trade: We will buy the stock once it crosses Resistance line (blue). A trader should also use volume confirmation before initiating any trade.
Sell Trade: We will sell the stock once it crosses Support line (red). Here also, we should use volume as confirmation before taking any trade.
What to do when stock moves between red & blue line?
Such a move is known as consolidation which simply means that stock is stuck between a range and a trader should wait for either breakout or breakdown before taking any position.
I hope this small post will simplify our charts for you.
