Every Stock Has Story To Tell
The stock market looks complicated and with the charts and indicators on the page it makes it seem to be something that only a professional can understand. Be it stocks or the type of policy that you want to purchase, everything has a story to tell you.
When you glance at a technical chart you are sure to see many lines and indicators draw on the chart. But reading technical charts are not so complicated if you know the story behind each stock and what it is trying to tell you.
Every single candle on the technical chart is trying to communicate to you what the market is actually doing. It tells you about the traders’ mentality and opinion on the stocks.
To understand how to read this story you need to do a top-down approach. For this, you need to first start with the highest time frame chart. This is most cases is the yearly chart. The yearly chart will tell you the trend of the stock and what the stock is doing currently. So, for example, the trend of the stock could be up on a yearly chart and the price could be in a correction phase.
When the stock is moving in a correction phase you will see red candles getting formed. Till where ill e stock move down to? The stock will keep moving until it reaches the demand level on the yearly chart.
Go a step lower
Once you understand what is happening on the yearly chart you then move a step lower to the monthly chart. Now when the price is ina correction phase in the yearly chart, what is going on in the monthly chart? The price here is in a downtrend. You thus get shorting opportunities here. But till when will the stock in most likely continue the downtrend? Till it reaches the demand level on the yearly chart.
So if the price is far away from the yearly chart demand level it gives you some great opportunities to short the market. And if the price is close to the early demand then you could wait for a little to place the next trade because in all probability the price could start with the original tendon the yearly chart, which is the uptrend.
Similarly, you keep reading the charts one by one to understand what the stock prices are trying to tell you. If you understand this story then stock trading will not seem to be just a game of probability to you