How to Find Stock Market Will Go Up or Down: Over the past 3-4 years, there has been a significant surge in people’s interest in investing and trading in the stock market. However, lack of knowledge has resulted in substantial losses for many investors. A common complaint among retail investors is the uncertainty of whether a stock’s price will rise or fall after they buy or sell it.
How to Find Stock Market Will Go Up or Down
Predicting Stock Movements
The question arises: how can one estimate whether the price of a particular stock will go up or down in the future? Market experts often make predictions about the potential rise or fall in the price of a particular stock. Do you know how these experts make such predictions? Let’s explore the method of predicting stock movements.
Understanding Technical and Fundamental Analysis
The movement of any stock is determined through technical analysis and future expectations through fundamental analysis. While technical analysis involves understanding the price action of a stock through charts, fundamental analysis assesses the financial position of the company to predict the future prices of its shares.
Importance of Technical Analysis
Anuj Gupta, Head of Commodities at HDFC Securities, emphasized the importance of analyzing volume, price action, and other indicators before purchasing any asset class, including equity.
What is Price Action
Before buying a stock, attention is paid to its price. Determining whether the price of a stock will rise or fall can be done by looking at technical charts. It’s crucial to understand the price action of a stock. Price action refers to the fluctuations in a stock’s price.
Understanding Support and Resistance
Support and resistance are both crucial factors in price action. Support refers to a level at which a stock repeatedly finds support and bounces back up. On the other hand, resistance is a level where a stock’s price tends to fall. Let’s understand this with an example.
Example of Support and Resistance
Suppose the current price of a stock is Rs. 250. Upon examining the technical chart, it is observed that the stock is showing strong support at Rs. 180. Similarly, resistance is seen at Rs. 280. In such a scenario, buying the stock at the current level of Rs. 250 wouldn’t be wise.
The attempt should be to buy around the support level, i.e., if the stock price revisits the range of Rs. 180-200. Conversely, if the stock breaches its support level of Rs. 180, it’s advisable not to buy it, as it might lead to further decline. However, if the stock crosses its resistance level of Rs. 280, there is a strong possibility of an upward movement in its price. Therefore, breakout and breakdown are significant aspects of price action theory.
