Stock Market Basics to Advance : Lecture 8
Phases of Chart
The
accumulation area on a price and volume chart is characterized by mostly sideways stock price movement. In this area
neither buyers nor sellers are strong to give one direction to the particular
stock so price moves in one zone which results maximum participation of retail
investors /traders then after breakout price movement is fast in either
direction.
If we want quick movement of stock then
accumulation of maximum participants is important. Don’t take any kind of hope
trade for either side breakout in accumulation zone, wait for breakout on
either side.
Condition
1:
In
following fig., we can see that before giving breakout maximum traders invited
to take trade in accumulation zone and then upside breakout given which results
quick upside movement. Again before giving downside breakdown maximum retailers
are invited in distribution zone for quick movement then gives breakdown.
Condition
2:
Once maximum participation of traders done
in accumulation zone then it gives breakout, but it is not like that price goes
up and up continuously, this is not general price action behavior so after some
upside movement again one zone formed which is called as re-accumulation zone
and then again price gives breakout.
When buyers are getting weaker then sellers start to enter in distribution zone which results breakdown. Again after some downside movement one zone form which is called re-distribution zone which results again breakdown. This is normal price action behavior.
Stock Market Basics to Advance : Lecture 8 ( Phases of Chart )
Basically, there are 3 trends of market Uptrend, Downtrend and Sideways Market.
1. Up Trend
- It is a rising channel suggests that the bullish sentiments in market.
- It signifies a series of higher highs and higher lows, indicating sustained buying pressure.
- As long as the price is making higher highs and higher lows till then uptrend is continued.
2. Down Trend
- It is a descending channel suggests that the bearish sentiments in market.
- It signifies a series of lower highs and lower lows, indicating sustained selling pressure.
- As long as the price is making lower highs and lower lows till then downtrend is continued.
3. Sideways Market
- A sideways market consists of horizontal price movement that occur when the forces of supply and demand are nearly equal for some period of time.
- This typically occurs during a period of consolidation before the price continues a prior trend or reverses into a new trend.
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