Module 2 Technical Analysis

Chapter 11

The Support and Resistance

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While discussing candlestick patterns, we had learnt about the entry and the stoploss points, however the target price was not discussed. We will discuss the same in this chapter.

The best way to identify the target price is to identify the support and the resistance points. The support and resistance (S&R) are specific price points on a chart which are expected to attract maximum amount of either buying or selling. The support price is a price at which one can expect more buyers than sellers. Likewise the resistance price is a price at which one can expect more sellers than buyers.

On a standalone basis traders can use S&R to identify trade entry points as well.

M2-Ch11-title1

11.1 – The Resistance

As the name suggests, resistance is something which stops the price from rising further. The resistance level is a price point on the chart where traders expect maximum supply (in terms of selling) for the stock/index. The resistance level is always above the current market price.

The likely hood of the price rising up to the resistance level, consolidating, absorbing all the supply, and then declining is high. The resistance is one of the critical technical analysis tool which market participants look at in a rising market. The resistance often acts as a trigger to sell.

Here is the chart of Ambuja Cements Limited. The horizontal line coinciding at Rs.215 on chart, marks the resistance level for Ambuja Cements.

M2-Ch11-chart1

I have deliberately compressed the chart to include more data points, the reasons for which I will shortly explain. But before that there are two things that you need to pay attention to while looking at the above chart:

  1. The resistance level, indicated by a horizontal line, is higher than the current market price.
  2. While the resistance level is at 215, the current candle is at 206.75. The current candle and its corresponding price level are encircled for your reference

For a moment let us imagine Ambuja cements at Rs.206 forming a bullish marubuzo with a low of 202. We know this is a signal to initiate a long trade, and we also know that the stoploss for this trade is at 202. With the new found knowledge on resistance, we now know that we can set 215 as a possible target for this trade!

Why 215 you may wonder? The reasons are simple:-

  1. Resistance of 215 implies there is a likelihood of excess supply
  2. Excess supply builds selling pressure
  3. Selling pressure tends to drag the prices lower

Hence for reasons stated above, when a trader is long he can look at resistance points to set targets and to set exit points for the trade.

Also, with the identification of the resistance the long trade can now be completely designed as follows:

Entry – 206, Stoploss – 202, and Target – 215.

The next obvious question is how do we identify the resistance level? Identifying price points as either a support or resistance is extremely simple. The identification process is the same for both support and resistance. If the current market price is below the identified point, it is called a resistance point; else it is called a support point.

Since the process is the same, let us proceed to understand ‘support’, and we will follow it up with the procedure to identify S&R.

M2-Ch11-title2

11.2 – The Support

Having learnt about resistance, understanding the support level should be quite simple and intuitive. As the name suggests, the support is something that prevents the price from falling further. The support level is a price point on the chart where the trader expects maximum demand (in terms of buying) coming into the stock/index. Whenever the price falls to the support line, it is likely to bounce back. The support level is always below the current market price.

There is a maximum likely hood that the price could fall till the support, consolidate, absorb all the demand, and then start to move upwards. The support is one of the critical technical level market participants look for in a falling market. The support often acts as a trigger to buy.

Here is the chart of Cipla Limited. The horizontal line coinciding at 435 on chart marks the support level for Cipla.

M2-Ch11-chart2

Few things that you need to notice on the chart above:

  1. The support level, indicated by the horizontal line is below the current market price
  2. While the support level is at 435, the current candle is at 442.5. The current candle and its corresponding price level are encircled for your reference

Like we did while understanding resistance, let us imagine a bearish pattern formation – perhaps a shooting star at 442 with a high of 446. Clearly with a shooting star,  the call is to short Cipla at 442, with 446 as the stoploss. Since we know 435 the immediate support, we can set the target at 435.

So what makes Rs.435 target worthy? The following reasons back the decision:

  1. Support at 435 implies there is a maximum likely hood of excess demand to emerge
  2. Excess demand builds buying pressure
  3. Buying pressure tends to drag the price higher

Hence for the reasons stated above, when a trader is short, he can look at support points to set targets and to set exit points for the trade.

Also, with the identification of the support, the short trade is now completely designed.

Entry – 442, stoploss – 446, and target – 435.

11.3 – Construction/Drawing of the Support and Resistance level

Here is a 4 step guide to help you understand how to identify and construct the support and the resistance line.

Step 1) Load data points – If the objective is to identify short term S&R load at least 3-6 months of data points. If you want to identify long term S&R, load at least 12 – 18 months of data points. When you load many data points, the chart looks compressed. This also explains why the above two charts looks squeezed.

  1. Long term S&R – is useful for swing trading
  2. Short term S&R – is useful intraday and BTST trades

Here is a chart where I have loaded 12 months of data points

M2-Ch11-chart3

Step 2) Identify at least 3 price action zones – A price action zone can be described as ‘sticky points’ on chart where the price has displayed at least one of the behaviors:

  1. Hesitated to move up further after a brief up move
  2. Hesitated to move down further after a brief down move
  3. Sharp reversals at particular price point

Here are a series of charts that identifies the above 3 points in the same order:

In the chart below, the encircled points indicate the price hesitating to move up further after a brief up move:

M2-Ch11-chart4

In the chart below, the encircled points indicate the price hesitating to move down further after a brief down move:

M2-Ch11-chart5

In the chart below, the encircled points indicate sharp price reversals:

M2-Ch11-chart6

Step 3) Align the price action zones – When you look at a 12 month chart, it is common to spot many price action zones. But the trick is to identify at least 3 price action zones that are at the same price level.

For example here is a chart where two price action zones are identified but they are not at the same price point.

M2-Ch11-chart7

 

Look at the following chart, I have encircled 3 price action zones that are around the same price points:

M2-Ch11-chart8

A very important point to note while identifying these price action zones is to make sure these price zone are well spaced in time. Meaning, if the 1st price action zone is identified on 2nd week on May, then it will be meaningful to identify the 2nd price action zone at any point after 4th week of May (well spaced in time). The more distance between two price action zones, the more powerful is the S&R identification.

Step 4) Fit a horizontal line – Connect the three price action zones with a horizontal line. Based on where this line fits in with respect to the current market price, it either becomes a support or resistance.

Have a look at this chart

M2-Ch11-chart9

Starting from left:

  1. The 1st circle highlights a price action zone where there is a sharp reversal of price
  2. The 2nd circle highlights a price action zone where price is sticky
  3. The 3rd circle highlights a price action zone where there is a sharp reversal of price
  4. The 4th circle highlights a price action zone where price is sticky
  5. The 5th circle highlights the current market price of Cipla – 442.5

In the above chart all the 4 price action zones are around the same price points i.e at 429. Clearly, the horizontal line is below the current market price of 442.5, thus making 429 as an immediate support price for Cipla.

Please note, whenever you run a visual exercise in Technical Analysis such as identifying S&R, you run the risk of approximation. Hence always give room for error. The price level is usually depicted in a range and not at a single price point. It is actually a zone or an area that acts as support or resistance.

So going by the above logic, I would be happy to consider a price range around 426 to 432 as a support region for Cipla. There is no specific rule for this range, I just subtracted and added 3 points to 429 to get my price range for support!

Here is another chart, where both S&R have been identified for Ambuja Cements Limited.

M2-Ch11-chart10

The current price of Ambuja is 204.1, the support is identified at 201 (below current market price), and the resistance at 214 (above current market price). So if one were to short Ambuja at 204, the target, based on support can be at 201. Probably this would be a good intraday trade. For a trader going long at 204, 214 can be a reasonable target expectation based on resistance.

Notice in both the support and the resistance level, there at least 3 price action zone identified at the price level, all of which are well spaced in time.

11.4 – Reliability of S&R

The support and resistance lines are only indicative of a possible reversal of prices. They by no means should be taken for as certain. Like anything else in technical analysis, one should weigh the possibility of an event occurring (based on patterns) in terms of probability.

For example, based on the chart of Ambuja Cements –

Current Market Price = 204
Resistance = 214

The expectation here is that if at all Ambuja cements starts to move up it is likely to face a resistance at 214. Meaning, at 214 sellers could emerge who can potentially drag the prices lower. What is the guarantee that the sellers would come in at 214? In other words, what is dependence of the resistance line? Honestly, your guess is as good as mine.

However, historically it can be seen that whenever Ambuja reached 214, it reacted in a peculiar way leading to the formation of a price action zone. The comforting factor here is that the price action zone is well spaced in time. This mean 214 stands as a time tested price action zone. Therefore keeping the very first rule of technical analysis in perspective i.e “History tends to repeat itself” we go with the belief that support and resistance levels will be reasonably honored.

Purely from my personal trading experience well constructed S&R points are usually well respected.

11.5 – Optimization and checklist

Perhaps, we are now at the most important juncture in this module. We will start discovering few optimization techniques which will help us identify high quality trades. Remember, when you seek quality, quantity is always compromised, but this is a compromise that is worth making. The idea is to identify quality trading signals as opposed to identifying plenty, but worthless trades.

Optimization in general is a technique wherein  you fine tune a process for best possible results. The process in this context is about identifying trades.

Let us go back to candlesticks patterns, maybe to the very first we learnt – bullish marubuzo. A bullish marubuzo suggests a long trade near the close of the marubuzo, with the low of the marubuzo acting as the stoploss.

Assume the following credentials for the bullish marubuzo:

Open = 432, High = 449, Low = 430, Close = 448

Hence the entry for the long trade is approximately at 448, with 430 as the stoploss.

Now what if the low of the marubuzo also coincides with a good time tested support? Do you see a remarkable confluence of two technical theories here?

We have a double confirmation to go long. Think about it on following terms:

  1. A recognized candlestick pattern (bullish marubuzo) suggests the trader to initiate a long trade
  2. A support near the stoploss price suggests the trader the presence of significant buying interest around the low

While dealing with a fairly random environment such as the markets, what a trader really needs is a well crafted trade setup. The occurrence of the above two conditions (marubuzo + support near the low) suggests the same action i.e to initiate a long trade in this case.

This leads us to an important idea. What if we had a checklist (call it a framework if you like) for every trade that we consider? The checklist would act as a guiding principle before initiating a trade. The trade should comply to the conditions specified in the checklist. If it does, we take the trade; else we just drop it and look for another trade opportunity that complies with the checklist.

Discipline, they say makes up for the 80% of the trader’s success. The checklist in my opinion forces you to be disciplined; it helps you avoid taking abrupt and reckless trading decision.

In fact to begin with we have the first two very important factors of the checklist:

  1. The stock should form a recognizable candlestick pattern
    1. Note: We have learnt some of the popular patterns in this module. To begin with you can use just these patterns to comply with checklist
  2. S&R should confirm to the trade. The stoploss price should be around S&R
    1. For a long trade, the low of the pattern should be around the support
    2. For a short trade, the high of the pattern should be around the resistance

Going forward in this module, as and when we learn new TA concepts, we will build this checklist. But just to quench your curiosity, the final checklist will have 6 checklist points. In fact when we have the grand 6 checklist points, we will weigh down each one of them. For example, checklist point number 4 may not be as important as point number 1, but nevertheless it is more important than 100 other factors that distract the trader.


Key takeaways from this chapter

  1. S&R are price points on the chart
  2. Support is a price point below the current market price that indicate buying interest
  3. Resistance is a price point above the current market price that indicate selling interest
  4. To identify S&R, place a horizontal line in such a way that it connects at least 3 price action zones, well spaced in time. The more number of price action zones (well spaced in time) the horizontal line connects, the stronger is S&R
  5. S&R can be used to identify targets for the trade. For a long trade, look for the immediate resistance level as target. For a short trade, look for the immediate support level as target.
  6. Lastly, comply with the checklist for optimal trading results

706 comments

  1. Charles says:

    Sir, I have read almost all the chapters and its really useful. Can you plz tell how to use trailing stop loss, should it be based on any indicator or manual stop loss. Require for intraday/ positional. Thanks..

    • Karthik Rangappa says:

      For both intra day and positional it may not be a great idea to base your trailing stop loss based on a typical indicator. It should preferable be based on a preset condition. For example…for every 2% move in your direction you may want to trail the stop loss by 0.5%.

      • srihari says:

        Sir, can you/anyone please tell me… what is difference between manual stop loss and trailing stop loss :-)…

        • Karthik Rangappa says:

          In fact both Manual stoploss and trainling stoploss are manual….they are two different technique of placing SL. In manual you set a price as your SL. For example if you buy a stock at 100 and you are willing to lose Rs.5 on it, then your manual SL is Rs.5.

          Trailing SL is when you trail your SL when your trade starts to make a profit. Have explained trailing stoploss here in section 7.5 – http://zerodha.com/varsity/chapter/margin-calculator-part-2/

          Also, you maybe interested to know that in Zerodha’s Bracket Order type you can automate the trailing stoploss.

      • chirag says:

        hi
        suppose my stock is trading at 1185
        now i get one support at 1150 and other at 1100
        the priceaction zones line is better in 1100 range than 1150range
        to whom should i take support range
        thanks

      • Genesis says:

        Karthik, kudos to you!

        Unbelievably Awesome job at explaining complex stuff in such simple terms….

        I already feel confident and successful at trading stocks after reading your modules 🙂

        Can’t wait to put them into practice (of course with my unique Point of View 🙂

        Thanks a lot for taking time to craft and create these modules – I can see how patient and persistent you are as you’ve repeated some points over and over, so we newbies can digest the sophisticated stock stuff.

        For me, it’s the best trading educational course that I’ve come across!

        Really you deserve at least a five minutes standing ovation from all readers here on Varsity, thanks a lot karthik ji 🙂

        • Karthik Rangappa says:

          Thanks for the very kind words 🙂
          I’m really happy you find the contents useful. Happy learning and all the very best !

          • m n prasad says:

            you are good guide. very nice tutor . i would like to know…in zerodha kite…, can use any specified indicator or tool to identify Resistance levels, demand zone, Support levels , supply zone signals. through these signals of the indicator we can buy or sell easily. few other agencies … like shereKhan / TradeTiger ( youtube videos are available ) they call it Boring Candle indicator to specify Demand and Supply zone. so i have one request can we have any indicator or tool in our Zerodha / kite to specify Demand and Supply zone

          • Karthik Rangappa says:

            Thanks for the kind words, Prasad.

            Its best if you plot the S&R lines manually. Remember this is a visual concept, you need to see the support or resistance emerging at a single price point over multiple time periods. Hence its best if you do this manually.

          • Mahesh says:

            How to draw S&R lines manually ?

          • Karthik Rangappa says:

            Have explained the same in the chapter. Request you to kindly check. Thanks.

        • Raman says:

          Yes, 1000% times.

    • rajeshck32 says:

      IF YOUR ENTRY IS RIGHT YOU CAN HAVE THE PREVIOUS CANDLE HIGH IN CASE OF SHORTING OR LOW IN CASE OF LONG AS THE STOP LOSS .

    • Kannan says:

      Sir, This module 2 can i download as pdf.

    • Pavan says:

      How should I practice. How to know whether iam doing right or not . can any body help me. I don’t have any friends to discuss about this

  2. Sreekanth Vasu says:

    Dear Sir,
    In the above first chart , You plotted 215 as the Resistance point , But My doubt goes here ,how you came to that point that chart is resisting at 215. not even 216 or 214 . Or how i can fix a resistance point . In the said chart many candles are traded above 215 i think in chart it shows 240 ranges. or you confirm it with any candle patterns???

    • Karthik Rangappa says:

      As I mentioned in this chapter, it would not be a wise idea to take a singe price point as a either support or resistance. We should consider the region in and around the price action zone as a S&R. For example if the line coincides with 215, I would be happy to treat 211 to 218 as either support or resistance.

  3. Anishcharith says:

    sir ,what if a stock is trading at a record high price what is the resistance ?

    • Karthik Rangappa says:

      We need to have price history to identify S&R levels. Hence if the stock is trading at an all time high, plotting the resistance is not possible.

  4. rajeshck32 says:

    you can see the candle stick patterns being formed and take the , next trade ex if there is a doji high becomes resistance , or a pin bar high becomes resistance .

  5. jagadeesh says:

    Hi karthik,
    Ihav come across some charts today where some reversal patterns appear above some previous gaps and reversed.. can i consider previous gaps as supports and resistances..???

    • Karthik Rangappa says:

      I personally don’t like to considered gaps as a price action zone and hence prefer to avoid gaps for S&R considerations… but thats just me :). I would suggest you dig up more price history to evaluate the presence of historical price action around the gap price level.

      • Vivek says:

        Hi Karthik, Thanks for the lucid explanation. Would you let me know,while plotting S&R for Intraday trading, 3-6 months of EOD data or any other time frame data(like 15 min. data of 3-6 months) to be taken into consideration.? Thanks.

        • Karthik Rangappa says:

          For intraday I would suggest you plot the S&R on 15 mins candle with a look back period of at least 2 weeks (10 trading sessions).

          • Singh says:

            Sir, your explanations are very helpful and informative as i am new to trading. Can we apply this 2 week R&S method for both Equity-Cash trade and Stock Future also?

          • Karthik Rangappa says:

            Yes, you can certainly do this!

          • Dave says:

            Hi Karthik Rangappa,

            In case of swing trade shall I select 1D time frame of (3-6) months or shall I select some other time frame?

            The reason I asking this question again is because, I am finding challenging to find few specific S&R in the time frame of (3-6 Months) by keeping 1D time frame.

            Appreciate any of the community member feedback. Thanks

          • Karthik Rangappa says:

            1D is good, Dave. To plot the S&R, you can even increase the time frame to over 6 months. This should not pose any problem.

  6. Amit says:

    Is the support line correct on BOB which is around 900

  7. Karthik Rangappa says:

    900 is a valid support…I guess 950 also serves as a short term support but it lacks the 3 price action zone as required.

  8. KAY KAY says:

    Hi sir,
    what should be the support of unitech. i think it already breached it..that is 17 . then … what should be new support

    • Karthik Rangappa says:

      I’m posting this for education purpose only 🙂
      Unitech has a support zone between 16.10 and 16.75. I have attached the chart where I have connected at least 3 price action zone (as described in the chapter)

  9. kay Kay says:

    Thank you sir

  10. rajeshck32 says:

    HOW DOES ONE KNOW THAT THE SUPPORT OR RESISTANCE WILL HOLD OR BREAK . IN CASE OH V SHAPE MOVEMENT OR STAYING FOR SHORT PERIOD FEW CANDLES , IN CASE OF MARKET STAYING SIDEWAYS IT IS CONSIDERED AS BREAK OUT OF THE SIDEWAYS ZONE .

  11. Ram Prabhu says:

    Hi Karthik,

    Thanks for this wonderful blog.

    When will you release Futures trading module. I am waiting for it .

    Thank you!

  12. V.Manikame says:

    thanks for Your Effort

  13. Rishit Shah says:

    Which software do you use for technical analysis?

    • Karthik Rangappa says:

      Have been using Zerodha Pi for a while now.

      • Ranjeet46 says:

        The zerodha pi software isn’t available for macbook pro users. How do i use zerodha pi on my macbook?

        • Karthik Rangappa says:

          I’m really not sure on timelines on this, request you to email [email protected]. Thanks.

          • Chandrabhan Singh says:

            First of all thanku so much for sharing such useful knowledge about stock market which is very helping to beginner like me.sir I have a query….
            As you advised that if a trade is initiated we should wait until it get eighter target or stop loss otherwise trade get bust.
            Sir suppose one bought share of xyz at 100 rs price stop loss is 95 and target is 110 .If price reached to 107 and one is willing to sell at this price.is it wrong…..Can you pls explain…

          • Karthik Rangappa says:

            Well, if you think 110 is a reasonable target, then ideally you should wait. Else there is nothing really wrong booking a profit at 107.

  14. Vasanth says:

    How can i get support & resistance levels automatically in the chart while intra day trading? Can i calculate using pivot point? If using through pivot point how much the success rate?

    • Karthik Rangappa says:

      The only way to calculate the S&R automatically is by calculating the pivot levels. I personally don’t rely much on it, I prefer the old school method of plotting S&R levels.

      • Arun mendiratta says:

        Pivot level is a new term for me.. can u plz in a line or two explain me abt it??

        • Karthik Rangappa says:

          Pivot helps you identify the support and resistance points based on few simple equations. This is different from the regular method because the traditional method is more of a visual concept where as pivots use OHLC data as inputs to the equation.

  15. Ashwini says:

    Hi Karthik,
    In Pi I can only see 15 min chart. Can’t I view 1 min chart.Also, can I use any recongnizable candle stick(like Marubuzo or doji) on 15 min charts?

    • Karthik Rangappa says:

      Yes, you can apply all the recognizable candle stick patterns on a 15 min chart. Btw 1 min chart is also available on Pi.

  16. vasanth says:

    As mentioned in the chapter, For intraday minimum 3 to 6 months data to be loaded for finding S&R. If iam using 5Mins/10Mins candlestick pattern for decision, what’s the time period(Candles) to be loaded for S&R?

  17. Vikash says:

    Is it correct to say that 200 SMA is a support / resistance level?

    • Karthik Rangappa says:

      Yes, 200 day average represents roughly 1 year of trading activity. When the stock price comes down to the 200 day average many traders/investor tend to buy it therefore giving it the support.

  18. NARSIMHA says:

    SIR,IT WILLBE TIME CONSUMING TO PLOT RES,SUPP FOR INTRADAY WHY CANT U PROVIDE DEFAULT IN PI.RATHER THEN THIS LONG PROSES FOR E,STOCK ITS BETTER TO SCREEN SOME WEBSITE&GET ACCRATELY&QUICKLY

    • Karthik Rangappa says:

      Thanks for the suggestion. S&R is a very visual concept and it requires some amount of calibration (which has to be done manually). For this reason its best if the trader can plot it himself. Also, once you get a hang of it, it just takes couple of seconds to plot the same. After all, some hardwork is required to make some money in the markets 🙂

  19. GURU says:

    Hi Karthik,

    You have mentioned that the stoploss should be around the S&R . Let us say in a long trade the stoploss is little above the support level. Now the stoploss has been breached and the price is about to touch the support level. Should I now exit as the stoploss has been breached or stay as it is around the support?Please explain.

    Thanks in advance.

    • Karthik Rangappa says:

      Let us say in a hypothetical long trade situation the support is at 95, and the candle’s low is at 98. Because they are so close, i would as well consider the support level as a the stoploss.

  20. Narasimha says:

    T u ok,we draw s&r as u explain how can I expect as graph will be smerged &what is the validity of this. Is it silly.sorry

  21. nagesh says:

    Dear Zerodha,
    I’m customer of zerodha &
    i’ve few queries please resolve .

    1) What is the difference between BUY STOPLOSS ORDER & SELL STOP LOSS
    ORDER ? Explain With examples, like taking SBI/PNB/RELIANCE.

    2) What is the big difference between TR.PRICE & PRICE in Buy Stop
    Loss Order & Sell Stop Loss Order with Examples required…

    3) I’ve Scenario for you :-
    Stock :- SBI, Qty :- 100, Product Type:- CNC, F1:- BUY.
    a)LTP:- 300. Time: 3:20 PM.
    b)LTP:-295. Time : 3:25 PM.
    d)LTP:-290. Time : 3:27 PM.
    c)LTP:- 300. Time: 3:30 PM.

    Here the best buy is @ 290., Any How there’s BEAR & BULL @ 3:25 PM &
    3:27 PM & at 3:30 there’s Sudden rise Bull.
    My question to you is :-
    a) I’ve to Lock Buy Position @ 295, But as soon it reaches @ 290 order
    should execute. If it doesn’t come @ 290, Atleast it has to Buy @ 295.
    How to achieve it ?
    This question is little tricky, Please think well and answer..
    b) Can we utilize the BUY STOP LOSS ORDER, PRICE, TR.PRICE Privilege ?
    If so, How in Zerodha , F1 Tab, What has to be Tr.price & Price ?? How
    to execute the best buy here…

    Please Note :- I know the concept of limit order…

    4) Another SELL Scenario:-
    Stock :- SBI, Qty :- 100, Product Type:- CNC,
    a)LTP:-315. Time : 9:20 AM.
    b)LTP:- 325. Time: 9:50 AM.
    d)LTP:- 305, Time : 3 PM
    e)LTP:-300, TIME: 3:30 PM

    Here the best sell:- 325 @ 9:50 AM. Any how human will get fear when
    it’s going down, In the above scenario, there’s variation of BEAR &
    BULL. I would like to LOCK Profit @ 315, Time : 9: 20 AM. But best
    Sell is 325 @ 9:50 AM.(BOOK PROFIT IS @ 325).

    How to execute these orders USING SELL STOP LOSS ORDER ? WHAT SHOULD
    BE MY TR.PRICE & PRICE ?

    • Hanan Delvi says:

      Nagesh, we have a very interesting blog on the types of Stop Loss orders which you should read thoroughly to understand. It has some scenarios that you describe already explained.

      Since you wish to block profits, I think it’s best for you to use Bracket Orders. With Bracket Orders you have the luxury to enter your buy price, target price, stop loss and also your trailing SL. You should read this blog to get a better idea on it.

  22. Devaki Nandan says:

    Hi Karthik,
    when we can say that support and resistance has been decisively penetrated or breakout. support we have taken a long trade on support level and no definite candlestick pattern is available like doji. Now assuming that the trade will go up where the stop loss can be placed in case it breaks the support level and go down.

    • Karthik Rangappa says:

      When you take a trade based on support or resistance, please ensure that the SL is placed at pr very near to the S&R region. For example if I have bought a stock because it has a support at 75, then my SL will be somewhere between 72-75. If it goes below say, 70 (preferably on closing basis), I will exit the trade at a loss the next day. However the next day the stock gaps up and starts trading over 75 I will continue with the trade.

      • Devaki Nandan says:

        thanks just to clarify that i was talking about intra day trade and not positional trade….in Intra day trade is it ok if we place the stop loss just below the support level (say .5% of the stock price) and exit the trade if 2nd or 3rd candle breaks the support and hit the stop loss…please advise and thanks in advance for all your support and answering our queries.

        • Karthik Rangappa says:

          Absolutely, you can (in fact you should) be doing the same. In intra-day if the stock breaches the S&R, just wait for few candles, gauge the overall sentiment and then take a call. Sometimes the reaction could be swift where it breaks a tough S&R level and it starts bleeding heavily, in such situations you should be quick to close the position and take a minimum loss.

  23. RAHUL says:

    Hi Karthik, i got an insider info that some traders/operators have softwares which show the stoploss value assigned by other traders and hence take undue advantage. Is it reality? Is it legal? If it is, then what is the relevance of putting stoploss?

    • Karthik Rangappa says:

      No Rahul, as far as I know exchange does not give out order book details just like that. You can subscribe for L2 data which would reveal the orderbook…but honestly doing such things is not easy (at least to the best of my knowledge). So don’t worry too much about all such things, they are just rumors.

  24. RAHUL says:

    Hey Karthik, i think this would be one of those rare cases when a person thanks the other for not agreeing 😉 Thanks a lot !!

  25. demolition says:

    Hi Karthik, let me tell u ..u are doing a commendable job with this modules and they are absolutely wonderful and very informative.
    I wanted to that whether this T.A. applies well with commodity like Gold and Silver too? I want to trade in Gold and Silver. I wish to know what are factors which affect gold and silver price, what should be looked into before trading, T.A works on it or not? Well i need little details please.
    I would be grateful to you for your time and efforts 🙂
    Hope to have reply asap 🙂
    Akash

  26. M ANANTHA RAMAN says:

    Kartik,
    In support and resistance, you have mentioned BTST trades. What is BTST and these trades are for intraday or EOD

  27. T RAMA DEVI says:

    Sir, Is it advisable to keep Stop losses as mentioned below for different time frames i.e Short to Medium term.
    2-3 DAYS – 1 WEEK – 9 DEMA
    2-3 WEEKS – 20 DEMA
    2-3 MONTHS – 50 DEMA
    I would buy the stock after it forms recognizable candle stick patterns and other parameters such Volume, MACD Cross over, RSI are favourable and to keep a stop if stock falls below the mentioned EMA Can I exit. Regards

    • Karthik Rangappa says:

      The most easiest way of placing a SL is by looking at the support or resistance level. So in a way the EMA can also be treated as support levels. I personally prefer to keep SL based on individual stock volatility. In the on going module on Options I will discuss this technique.

  28. San says:

    Hi Karthik,

    Thanks a lot for this wonderful module on TA. I started to practice drawing support & resistance levels on chart. I took latest daily chart for SBI. It would be great if you can clarify following points:
    Are price action points marked correctly here? I have taken 1 year daily and tried to mark points as per step2) in this chapter.
    After drawing lines through price action points, i am confused whether resistance level is 280 (which is already crossed) or is it 290
    Is the support line marked at 255 correct?
    If I am computing fibonacci levels, what are the high & low points to be considered in this chart (335 & 190) or is it (335 & 235)?

    Thanks

    • Karthik Rangappa says:

      Glad you are liked the module 🙂

      1) Resistance and Support are price action zone which change based on the current market price. All price action points above CMP is the resistance and all of them below CMP is the support. Hence based on the pirce what is support today can become resistance t’row

      2) Yes, you have market the levels quite well. However I dont like too many lines on the chart (this is just my personal preference). I just like to place 1 line above the CMP to identify R and one below to identify S.

      3) Going by the above 2 points, 290 is the resistance as the CMP is below the 290. Also whenever you are in such a confusion, its always safe to assume that the S or R is somewhere between the two price levels i.e 280 to 290. No harm doing so, in fact its better this way as you will naturally adopting to a conservative approch

      4) 255 is certainly a good support as it covers at least 3 price action zones

      5) 235 to 335 should do good for the fib levels I suppose.

  29. Arun says:

    Thank you very much for extraordinary effort. I had a query
    So at a nutshell it seems to me you are suggesting to set the TARGET at RESISTANCE , when STOPLOSS ~= SUPPORT ( checklist point 2) for a bullish trend stock. am i right ?. I feel you end up fixing TARGET or STOPLOSS quite far than necessary. Please advise.
    also how many candles do you suggest to consider for 5 mins interval candlestick graph to arrive at a decent support and resistance ?

    • Karthik Rangappa says:

      Perfect, in most of the cases target = resistance and SL = support should suffice. Also the price may look far from necessary only when you initiate a trade which is away from support. So always ensure for your long trades the support is close to your entry price. For 5 mins, at least look for last 2 – 3 days of data…that should be good.

  30. Deep says:

    Dear Mr. Karthik,

    When we are trying to work out the target (to eventually evaluate the Reward-Risk Ratio), do we need to consider Moving Averages which are near current price as possible support or resistance, in case they are closer to the price than the SR identified as per process indicated in this chapter?

    Also does the slope of a moving average line (up/down/flat) have any implication as to whether they are more likely to act as support or as resistance?

    Thanking you again for your efforts,

    Deep

    • Karthik Rangappa says:

      The slope of MA matters when we are in a good trending market. So I would suggest you develop a sense for the price levels based on the traditional S&R technique and also evaluate the slopes. Also in most cases where the market is trending, the MA will be below the price, making it a good support rather than providing for a resistance (hence targets).

      • Deep says:

        Thanks, but does this mean that I should look for long setups only in those charts which have the moving averages strictly below current prices and the target resistance level is that as determined by the process in this chapter?

        Also what will happen when the market tends to trade range bound for considerable periods of time, in which case moving averages will be in between current price and traditional resistance? If we wait for price to go above the MAs then the risk reward ratio at those points would become unfavourable.

        Thanking you once again for the great work and taking the pains to promptly reply to each query.

        Deep

        • Karthik Rangappa says:

          In case the price is trending lower, MA will be below the CMP, so you can use it as resistance level aka stoploss. Also, MA does not really work well when the markets are range bound. So Make sure you stick to traditional S&R for range bound markets.

  31. Nagesh says:

    Excellent explanation. Thank you very much.

  32. […] two blue lines on the chart are horizontal lines drawn to indicate my expected levels of support and resistance. Instead of having to go to the marketwatch, use buy and sell orders, I can very easily place a buy […]

  33. Pramod Beri says:

    sir please check if the blue line marked as a support line is correct or not? and how can i mark the resistance line on it?
    P.S.- it in a chart of 12 months

    • Pramod Beri says:

      this is the image

    • Karthik Rangappa says:

      I think the support line is placed quite well. Use the same techniques that you used to place the support line to mark the resistance line…just ensure the resistance line is above the current market price.

  34. Ganesh says:

    What should I do after the stock breaches the resistance level and starts going further upwards?
    Which indicators will help me in deciding the further movement of the stock?(or does the situation become purely speculative?)

    • Karthik Rangappa says:

      Once it breaks the resistance the changes of the stock picking up steam is quite high. Moving averages helps you track momentum quite well.

  35. Rishi Sekhri says:

    Sir, in step 4, there are enough price action zones to find the support level of Ciplawhich is around 429 as CMP is around 442 but there are no price action zones to identify the resistance level of the stock. How to find resistance level in such a case? please guide.

    • Karthik Rangappa says:

      I’m assuming the stock is at an all time high here. If the stock is at an all time high, then clearly there are no prices to draw a resistance and hence not possible.

  36. Rishi Sekhri says:

    Ok Sir, Thanx a lot.
    I think the time shown here is not +5.30 GMT i.e. IST but -5.30 IST

  37. pravin says:

    hi sir , i read the whole chapter about support and resistance but still not able to draw support and resistance line .sir i attached tata steel 2 yr price graph plz explain me support and resistance in this case ..thanks in advance

    • Karthik Rangappa says:

      Pravin – Can you please tell me where you are facing a problem in drawing S&R lines?

      • PRAVIN says:

        Sir,in order to find support and resistance basis thing required to identify the price that displayed at least one of the following behaviour
        1. Hesitated to move up further after a brief up move
        2. Hesitated to move down further after a brief down move
        3.sharp reversal at particular price point .
        Sir I am able to find such type of behavior in stock that are sideways ..but facing a problem to identify such behavior in stock that are countinusly in downtrade like tata steel sir in such case how to identify support and resistance zone ….sir plz tell me what are the support and resisatance in above uploaded tata steel graph …..thanks in advance ..

        • Karthik Rangappa says:

          Tata steel is making new lows, so it would be tough to estimate any support for this stock. Worst case maybe 230.But of course for other scrips you can stick to the method you have described….but also makes sure the price action zone is well spaced in time.

  38. R P HANS says:

    Hello Kartik,
    I read this module long back since then I was skipping one question I wanted to asked. Finally i made up my mind to ask it. What i understand that at support (demand Area) we shall go long and at resistance (Supply area) we shall go short or sell. But you are saying that the candle pattern should match with the S&R and stop loss shall be at S&R. It means at support we are selling (SL) whereas there we should buy as the stock is suppose to bounce back after hitting the support. Is it not contradictory. What i feel actually the SL shall be little below the support if it is broken then one will come out of the trade. Pl. through some light.
    Thanls
    RPHANS

    • Karthik Rangappa says:

      Please do not hesitate to ask questions – only if ppl ask we get to learn!

      What you said makes sense, in fact that’s the reason why I do not consider a single price point as either support or resistance. In fact the S&R should always be regiod (price band).

      A breach below support could be nasty, hence the reason to get out of the trade near S&R region

      • DIVYA SANGHVI says:

        Hi Karthik,
        I have the same question as R P Hans.
        What I want to know is ->
        1. How much percentage up and down of the support line shall the support range be considered?
        2. The SL shall be in this range or above the lowest Support point? Where shall the SL be kept?

        Thank you in advance.

  39. Rahul Toshniwal says:

    Sir I have written two blogs on Tatamotors and Yesbank price movement on the basis of Support & Resistance. Would you please share yours views on it.
    Yesbank: http://toshniwalrahul.blogspot.in/2015/09/as-on-22-08-2015-at-0047-technical-call.html
    Tatamotors: http://toshniwalrahul.blogspot.in/2015/09/as-on-22-09-2015-at-0116-technical-call.html

    Warm Regards,
    Rahul Toshniwal

    • Karthik Rangappa says:

      Saw the post, I hope your strategy works well for you, good luck 🙂

      Although I personally would not invest in Tata Motors since I don’t really like investing in companies with high debt (this is just my personal view).

  40. Hari says:

    Hi Karthik,

    Hats off to you guys for writing such simple articles for dummies like me! Very well explained..

    Have this doubt, please see if you can help me here.
    After examining daily charts of stock, if I have identified the stock can be short sold, how do I set the target for the day?
    I can set this to the support level, but cannot except the stock to reach support on the same day (since I am looking at daily chart), whereas the position has to be closed intra-day. How do I trade this scenario? Close position today and sell again next day?

    • Karthik Rangappa says:

      Thanks Hari, glad you are liking Zerodha Varsity.

      You can do that – as in initiate the trade the next day again or you can short it in Futures market and carry it forward till you deem fit.

  41. SaikiranGarapati says:

    Hi,
    Can you help in drawing the Support and Resistance for the attached IDEA 6 Months Chart?
    and Can i expect last 4 or 5 candles as Dojis and Spinning tops?

  42. SaikiranGarapati says:

    Hi Karthik,
    Please help me in drawing Support and Resistance for the IDBI bank also? I have encircled some points which all are mentioned as Sudden Price movements?

    Please help me to identify
    Hesitated to move up further after a brief up move
    Hesitated to move down further after a brief down move
    Sharp reversals at particular price point
    and Align the price action zones and Fit a horizontal line.

  43. SaikiranGarapati says:

    Hi Karthik,

    Here is the chart IDBI, Formed a Bearish Engulfing Pattern.
    My question is i could not able to find resistance for this because it is making new highs, As you mentioned, for a short trade, Resistance should be around Stop loss price. As i could not able to find out how can we approach this one? Your views please…. I checked in 6 months chart and 1 year chart.. I am attaching both charts here..Please correct me if i am wrong in identifying the Support in 6 months chart..As of my knowledge it is around 79 to 77 right?

    • Karthik Rangappa says:

      Since the pattern has occurred at an all time high, keep the high point of the pattern as SL. Good luck with the trade.

  44. SaikiranGarapati says:

    6 months chart is here…Support aroung 79-81 right? Please help in finding out resistance for the same…

  45. Lalit Sharma says:

    Dear Mr. Karthick and friends,
    Greeting of the day.
    Mr. Karthick, Today (24.11.2015) I was trying to find out target of HDFC Bank for intraday with the help of Support and Resistance level. Below mentioned is my observation:
    After opening at 9:15 am HDFC Bank was not able to break Rs 1070.45 and was moving down and coming upto 1070.45 and traded approximately 31 candles. (may I consider it as resistance level???)
    On 32 Candle, it broke the same and went upto 1073.50 and keep trading there for long time and start declining but keep on going up after touching 1070 upto 17 times. (May I consider it as support level this time???)
    18th Candle was Bearish Marubuzo (Red, O 1070.20, H 1070.20, C 1070, L 1070) is it right???
    19th Candle Bearish Engulfing (Red, O 1070.50, H 1070.50, L 1069.20, C 1069) after this HDFC Bank has gone down.
    Is finding Resistance earlier (1070.45) and support (1070) correct? May I consider 1070.45 as target if bought @ 1060 (bullishness) and 1070 as target if sold @ 1073 in bearishness.
    I request you to kindly guide.

    • Karthik Rangappa says:

      Lalit – When you look for S&R, it is always good to check on a EOD basis and identify the price zones. Yes intraday also is possible, but I persoannly prefer to do this on a EOD basis.

      Sorry, have not seen the HDFC bank chart, so cant really validate the patterns.

  46. Lalit Sharma says:

    Dear Mr. Karthik

    Greetings for the day.

    Below mentioned details have been posted in Technical Analysis Part 2 chapter 11

    Mr. Karthik, Today (24.11.2015) I was trying to find out target of HDFC Bank for intraday with the help of Support and Resistance level. Below mentioned is my observation:

    After opening at 9:15 am HDFC Bank was not able to break Rs 1070.45 and was moving down and coming upto 1070.45 and traded approximately 31 candles. (may I consider it as resistance level???)

    On 32 Candle, it broke the same and went upto 1073.50 and keep trading there for long time and start declining but keep on going up after touching 1070 upto 17 times. (May I consider it as support level this time???)

    18th Candle was Bearish Marubuzo (Red, O 1070.20, H 1070.20, C 1070, L 1070) is it right???

    19th Candle Bearish Engulfing (Red, O 1070.50, H 1070.50, L 1069.20, C 1069) after this HDFC Bank has gone down.

    Is finding Resistance earlier (1070.45) and support (1070) correct? May I consider 1070.45 as target if bought @ 1060 (bullishness) and 1070 as target if sold @ 1073 in bearishness.

    I request you to kindly guide.

  47. Karthik says:

    Hi Sir,
    I got confused on the stoploss values.
    Considering your first example, of Ambuja cements
    Entry – 206, Stoploss – 202, and Target – 215, and the trader would perform a long as it is a bullish Marubuzo.
    What does stoploss of 202 here signifies. (I believe SL is a value defined to minimize the loss occuring in a trade)
    So here, when the current market price lowers to SL value, does that mean the trader can buy the stocks @202.?
    And similarly why do we set SL as a higher value during short?
    Request you help here please…

    • Karthik Rangappa says:

      The stoploss price level is the level at which you decide to close the trade and book a loss as the trade is going against you. So in this case you enter a long position @ 206..but for whatever reason the stock starts the fall, then you will close the position @ 202 and book a loss of Rs.4/-.

      In case of short positions, you will be profitable only if the stock falls further. Hence the stoploss is always a higher price when compared to your entry price.

  48. hari says:

    Karthik bro,
    which S&R technique gives us more accurate result:
    a) one you have mentioned in this chapter
    b) bollinger band
    c) pivot points

  49. apanda says:

    Hi Karthik,
    Finally S&R started making sense to me thanks to you guys 🙂

    Two Queries:
    1) Any comments about my below S&R. Does it mark all the important levels? If anything is missing kindly let me know
    2) Are the levels marked in red circle valid? I mean those are mostly for range bound right? So, can those be considered as a valid level?

    Thanks Karthik 🙂

  50. Sandhya says:

    Hello Karthik.
    Wish you a great happy new year.

    Just one question.
    As discussed in the chapter for intraday 6 months graph to be taken for plotting S&R. Suppose if I’m only intrested to trade on index like nifty and BN then what will be the best time frame to consider for plotting S&R as only near month contracts are having considerable volumes. And also lemme know is it fine if I would consider 15 minutes candlesticks for recognising candlestick pattern.

    Thanks in Advance ?☺

  51. rohan says:

    how to draw S&R for company after stock split. e.g- infy and avantifeeds. As stock whch is available at rs 2000 will be available around rs 1100 from next day after stock splits in the ratio of 1:2, so all values changes

  52. SARAVANA PERUMAL D says:

    Hi Karthik,

    Good day,

    Are we following any ratio for trailing stop loss order (Target (Sqr.Off Sell/Buy) Price, Stop Loss Sell/Buy & Trailing Stop loss ticks)? Because, we are missed profit or loss incurred in intraday market. Are you give any suggest about this query.
    I observe about on trailing stop loss article on z-connect the below trailing stop loss are:
    1. Sqr.Off (Target) Sell/Buy (Absolute) – 10.5 pts
    2. Stop loss Sell/Buy (Absolute) – 15.5 pts (15.5 pts – 10.5 pts = 5 points up – 52.38% from Sqr.Off (Target) Sell/Buy)
    3. Trailing Ticks (Absolute) – 2.5 pts (50% of 5pts Stop loss Sell/Buy)

    We are observing from here below the information getting:
    Target – 10pts from entry points
    Stop Loss – 5pts (10/2 – 50% of target)
    Trailing – 2.5pts (5/2 – 50% of stop loss)

    Is this correct for trailing stop loss ratio or anything idea about this related query?

    Thanks in advance Karthik.

    • Karthik Rangappa says:

      Trailing SL helps in locking in your profits…you can do it with BO orders. Else you can do it manually with the way you have suggested, both are good in my opinion.

  53. SARAVANA PERUMAL D says:

    Hi Karthick,

    Very thankful for your quick reply.

    one more doubt about the time frame. The time frame (5min, 15min, 30min) trend to indicate either the past or upcoming (5min, 15min, 30min) time frame event?

    • Karthik Rangappa says:

      Consider this, time now is 9:50 AM, and you open a 5 min chart…

      Open will be the tick at 9:50 AM

      High will the highest tick between 9:50 to 9:55

      Low will the lowest tick between 9:50 to 9:55

      Close will be the closing at 9:55

  54. King says:

    Is there any content on trading with Triangles? Here is an ascending triangle setup for Tata Motors.

  55. rohan says:

    if price has come down from certain point for only one time will it qualify for resistance?
    plz refer the diagram
    should this point be referred in future?

  56. Shafeeq says:

    Greetings Sir,
    While plotting S&R levels with a look back period of 2 years, what should be my ideal time frame of candle (Daily, Weekly or Monthly) to plot these levels?
    Thank You.
    Regards

    • shashwatsingh says:

      Daily will be suitable as it is stated in the module that as many candles as you can gather will help you to identify the price action zones. So for a look back of 2 years daily will be the best.

  57. Aman says:

    Hey, I have read this chapter and I found it is very useful.Just one doubt, how will we find support and resistance levels of stocks which is nearly all time(or within required time frame) high or low.If we can’t find how should be set the target prices for these shares and what alternate paramete can we take into account to buy or sell?

    • Karthik Rangappa says:

      Shares at all time high will have no resistance and will have only support. Likewise shares at all time low will have no support, but will have resistance.

  58. Vishal Saini says:

    Sorry Sir if question is silly but i am confused

    Say I find Bullish Marubuzo and the stock I am following only have resistance point (no support point).Here I know what should be my target (=resistance point) but as per your second point in checklist stoploss should be around support point which stock does not have.

    Can such situation arise where stock has either resistance or support but not both.If yes then what should i do in above scenario???

    • Karthik Rangappa says:

      No question is silly Vishal !

      Yes such situation can arise especially when the stock is at an all time low. In such cases, I’d advise you to have the low of the Marubuzo as the SL.

  59. mohd faisal says:

    hi Sir,

    please let me know, can we get leverage facility from day 1? mean if i am new trader with yours , then i can get leverage in first month ? kindly explain.

  60. amar says:

    what is pivot level formula is used in kite since levels doe not match with the standard formula ?

  61. amar says:

    Since pivots in kite works better than standard formula

  62. Raga says:

    Hi
    In calculating the S&R prices, we are using only price action zones.
    What about volumes?
    Can we correlate this with volume profile?
    Like the peak (with some tolerance)of the volume profile closer to the S&R prices tells us that this stock is bought and sold at this price maximum.
    Thanks!

    • Karthik Rangappa says:

      S&R is a concept developed based on prices…but in cases where you see a breakout above the resistance or breakdown below the support, make sure there is sufficient volume. This is perhaps a good way to certain its validity to some degree.

  63. Abhay says:

    Hi sir, it’s a wonderful initiative by zerodha to educate people about market…. I have attached a link of crude oil mcx chart…if I want support and resistance for intraday what would be that…..??? I am unable to find any meaningful resistance….so, please help me about it….and for intraday trade what should be ideal look back period in case of such commodity….??? Thanks in advance sir…..link:- http://m.in.investing.com/commodities/crude-oil-advanced-chart

    • Karthik Rangappa says:

      Hi Abhay – It is very easy for me to just tell the S&R levels, but I wont do that as the purpose of this platform is to educate people :). So please tell me which part is difficult and I will be happy to help you there.

      For intraday lets say 15 mins time frame, a good 5-6 day lookback is great!

  64. Abhay says:

    Sir one more question with above question, for intraday trade what timeframe will be suitable to plot s&r on chart…???

  65. Vasantharam says:

    For 1 Hour chart, is it best to plot S&R level with the look back period of 4 Months?
    In the grand check list you have mentioned look back period is 6 Months to 1 year and in some other area up to 2 years for plotting S&R.
    As per your experience what is the best look back period for the swing trading with target of min 1 day to max 5 days?

  66. John says:

    Hi,
    I want to know that as you said there should be three points to consider and as of today if we talk about Reliance Industries whose price is 1065.80 which was 1065.45 on 13th Apr 2016 and 1077.35 on 13th Jan 2016 so in this case how can we decide which one will be the Resistance point and support point and my second question is that if there is a bullish trend and people know that the prices will rise so why do people sell in the market and how come the traded wanting to buy the shares get the share from.

    • shashwatsingh says:

      I will try to answer the second part of the question. Suppose a stock is uptrending, everyone who have bought some shares are making profit. But remember that the profit is not realised, meaning they still don’t own the extra money; they actually own the stock. The money will be received only after selling the stock. This phase is called profit booking. So Suppose a large number start doing the same, it will tend to bring the stock price down because of the selling pressure. For an uptrending stock, this is called a dip. If things are moving smoothly as before then after a certain number of trading sessions, the stock will resume it’s rally. I hope I cleared your doubt.

    • Karthik Rangappa says:

      S&R is never really a single price point, its best if you consider it as a range within which the support or resistance exists. In this case I’d assume the entire region between 1065 and 1077 as a region where S&R exists.

      • John says:

        So Karthik you mean to say that 1065 will be the support and 1077 will be the resistance, am i correct?

        • Karthik Rangappa says:

          That really depends on were the current price of the stock is. If it is below 1065, then I’d tread the entire region between 1065-1077 as resistance…and if the current market price is above 1077, then I’d tread the entire region between 1077 to 1065 as support. The point is, S&R is not a single price point, but instead its best if you treat it as a price zone.

          • SARAVANA PERUMAL D says:

            Hi Karthik,

            If i want single price point between the range of 1065-1077. Could i calculate the average of the range. I mean (1065+1077)/2 = 1071 is single price point. Is it valid method?

            Thanks in advance.

          • Karthik Rangappa says:

            Yup, but this also depends on why you need to calculate the average.

  67. madhuri says:

    Hi Kartik,
    I have been reading and practicing your lessons but somehow i think i,m not applying them correctly.
    ATTACHING A CHART OF ICICI BANK.I initiated trade on 22nd after gap up opening assumimg a bullish Harami for previous two days.I wish determine the S&R for this stock but am confused.
    1)Can you guide me to determine
    1)What is the S&R for ICICI bank
    2)What is the patttern emerging on end of 21st Sept.
    3)What should be the suggested trade action next day on 22nd when the stock opened with a gap up.
    Thanks.
    I don’t know how to attach the screen shot with this message so sending it via email to support.

    • Karthik Rangappa says:

      Not sure if ICICI formed a bullish harami. There is no downtrend at all in the first place, which is mandatory for any bullish pattern.

      Why isit hard to identify the S&R for ICICI? I’d suggest you follow the technique explained in this chapter, only then you can start identify better trades.

  68. Gaurav Luthra says:

    Hi Karthik,
    First of all thank you for this wonderful module. I have learnt a lot from these modules. Sorry for being an ignorant noob.
    This is the only chapter I am having trouble with. I am having lot of trouble identifying the correct support and resistance level. I have attached the chart of Coal India from past 6-8 months. Could you please check it once and tell me what I am doing wrong. I am pretty sure selected points are wrong and getting very confused.
    http://tinypic.com/r/4kcjg4/9
    [IMG]http://i64.tinypic.com/4kcjg4.png[/IMG]

    • Karthik Rangappa says:

      Gaurav – this looks alright to me. Why do you think there is a problem?

      • GAURAV LUTHRA says:

        Hi Karthik,
        Thank you afor the revert. Well actually the problem is I am unable to determine what exactly would support and resistance by looking at this chart. Also, I have checked couple of websites where they show support and resistance of a particular script. For Ex: http://www.niftylivecharts.com/supp_and_res_1300.php?input=COALINDIA
        How reliable are they??
        One last quest I saw support and resistance were changing on a daily basis on this website is it normal?

        • Karthik Rangappa says:

          Not sure Gaurav as I;ve always relied upon my own reading as opposed to such websites. I’d encourage you to do the same, only then will you develop a knock to identify trading opportunities.

          Yes, S&R is a function of daily price moment, so it is absolutely normal for these values to change on a daily basis (based on the movement in the underlying).

  69. Gaurav Luthra says:

    Unable to attach the pic and I am unable to find the attach option. Here is the alternate link. Sorry for spamming I think the above given link doesn’t work. https://postimg.org/image/yjuipeihv/

  70. AK014 says:

    Hi Karthik, which price to be considered while determining the support or resistance? The closing price/high/low? Not able to attach my file wherein i have drawn S& R levels of Nifty. There seems to be some issue as i am not able to see the ones attached by others. I am using Chrome/Firefox. Mailing it to Support.

  71. Hemant Patra says:

    Can this method be used for predicting the S&R?

    Pivot Point = (H + C + L) / 3
    R3 = H + 2 x ( Pivot – L )
    R2 = Pivot + ( R1 – S1 )
    R1 = 2 x Pivot – L
    S1 = 2 x Pivot – H
    S2 = Pivot – ( R1 – S1 )
    S3 = L – 2 x ( H – Pivot )

    Where,
    H – Previous Days High
    L – Previous Days Low
    C – Previous Days Close
    R – Resistances Levels
    S – Supports Levels

    Also, is this method suitable for long trade?

    • Karthik Rangappa says:

      Yes, you can. Many traders use this method. However, I prefer looking at charts and identifying them on the charts itself.

  72. brshah49 says:

    Sir,
    Can you explain us how to draw base candle based on sam seiden’s supply and demand level theory?

  73. sammandar khan says:

    Hello Sir
    Can you tell me, When we have to sell before resistance or after resistance if before resistance than how will we know that the current market price is below than resistance point or selling point. It is a buying or selling signal
    Just confusing to understand please explain Karthik sir
    Thanks

  74. mohit jain says:

    Hello,
    Please tell me if I am doing right or not.
    Every night I browse nifty 50 stocks for candlestick patterns on EOD basis.
    If I find a recognizable pattern along with S&R ( plotted using 1.5 year data on EOD basis) compliance then the next morning I buy or sell the stock using (MIS) option, so I can leverage more .
    Is everyhting I am doing right?
    What I mean is, Is it ok to calculate the S&R using EOD data and then use that S&R for intraday trading ?

    • Karthik Rangappa says:

      This is absolutely fine. In fact, I personally think identifying intraday opportunities based on EOD data is a great way to start.

      • mohit jain says:

        Thanks Karthik,
        Actually I have this doubt because most of the time when I do this kind of trade, the trade goes in opposite direction and I incur a loss.
        I observed that the predictions i do using EOD data come true only after 1 or 2 sessions and not the next day.
        Is it normal? Is that how it is?

        • Karthik Rangappa says:

          Tricky, in this case you need to plan your trades with an intention of holding it overnight.

          • Abudhar al Hassan says:

            Hey Karthik,
            What exactly does it mean to plot S&R on the basis of EOD data? Do we need to look at the daily time frame candlesticks or is it something else altogether? And if it’s not too much of trouble then could you please illustrate with an example how to plot S&R levels for INTRADAY trading based on EOD data? Thanks in advance.

            Regards,
            Abudhar al Hassan.

          • Karthik Rangappa says:

            The technique of plotting S&R remains the same. If you plot them on EOD (or daily time frame) then it becomes an EOD S&R, which is good for slightly longer term trading. If you plot them on intraday trading, then this is good for short-term trading.

      • chirag says:

        sorry i didnt get what does EOD basis means ,
        and what does MIS basis means?

  75. sammandar khan says:

    Sir I’m not able to look the chart exactly on your kite zerodha. How could i get three days chart to understanding all your indicators ( when I open 1day chart then why am I getting last two months chart.) My mean how can I understand your modules with kite zerodha

    Thanks

  76. Anupam says:

    I find the way of discussing different trading topics on zerodha varsity to be the best. You guys know very well what exactly newbie traders are looking for and how to perfectly deliver the right information required to trade successfully

  77. Samir says:

    Sir,I am positional trader and i hold for 2 to 4 month.Which indicator i have to follow? S&R,RSI,BB,MACD,SMA?

  78. Dhinakaran says:

    Karthik, How do we say we have maximum sellers at the Resistance? is it based on the assumption that most of the market participants will follow the technical analysis/look at the charts and sell when resistance is reached ?

    • Karthik Rangappa says:

      This is an empirical observation. Typically, at resistance points the price starts to decline. This happens because there are more sellers willing to cash out.

  79. Samir Patel says:

    Which time frame i have to use is useful for positional trading ?

    • Karthik Rangappa says:

      It really depends on the time frame you have in mind. For example for a 1 week time frame, I’d be comfortable looking at 30-45 trading sessions.

  80. manishdjk21 says:

    Voltas_daily_chart_last_6_months_Bearish_Engulfing.jpg
    voltas_daily_chart_3_months_Scenario_1_Target.jpg
    Voltas_15min_chart_10days_Scenario_2_target.jpg

    Hi Karthik,

    My question is for Intraday Trade. (It took me 2 hours to write this, so as to make it effortless reading for you and other users also get benefit out of this)

    In some of the comments above you suggested that one should be looking for the 15 min chart with a look back period of 10-15 trading sessions for S&R. But in the actual reading material you mentioned 3-6 months for Intraday and BTST. So I am bit confused.

    Here is a real and recent example for Voltas.

    On 6-jan-2017, EOD. Voltas formed a bearish engulfing (Identified this pattern on the basis of daily EOD charts)

    I want to sell the stock for Intraday (given all other items on check list comply).

    Scenario 1

    As I identified the candlestick pattern based on the daily chart, this becomes my rational for identifying the S&R (target in this case), so, I look the daily chart for 3 months. Based on this the target comes to be around 320

    My trade setup is:

    Sell price: 334 , SL: 347, target: 320

    Scenario 2

    If I look for 15min chart for last 10 trading session and the horizontal line for the target fits in 336. This target clearly does not make sense as it is already above my selling price of 334

    My final understanding is (please correct me if I’m wrong) – we should look for daily chart and not the 15 min chart for identifying the S&R for Intraday because we identified the candlestick pattern based on the daily chart in the first place.

    Please provide you thoughts on the same.

    • manishdjk21 says:

      I am unable to attach the screen shots that I have taken of the voltas charts

    • Karthik Rangappa says:

      Sorry about the inconsistency, but really this depends on the chart. It does make sense to differentiate between intraday and EOD trades. For EOD you need lot more data points and much lesser for intraday. For example, when trading intra day, I look for the 15 mins chart with 10 day look back. However, if it fails to give a S/R level (remember same price action zone, well spaced in time etc) then I would extend beyond the look back period and dig for more data. So there is no hard and fast rule here…it really depends on the chart. However, please don’t consider anything less than 10 days.

      Also, remember the trade setup profile for intraday and EOD can vary quite a bit.

  81. VISHAL DHAKAN says:

    I have basic query. I was looking at Nifty Jan-Future daily chart and came across that Pivot and S&R calculation is different compared to pivot point calculation in ICICI direct. Why is this discrepancy? Isn’t this should be the same?
    Please revert.
    Thanks

    • Karthik Rangappa says:

      Both these methods take different approach to answer the same question. S&R (the traditional one) is a visual concept, while pivot points requires you to crunch some numbers. My dependence on the traditional method is higher.

      • VISHAL DHAKAN says:

        Hi,
        I am not clear on this. You said, ” S&R (the traditional one) is a visual concept, while pivot points requires you to crunch some numbers”.

        1. numbers that we work out for Pivot point and S/R are the same numbers that we plot on chart. Right?
        2.Reiterating my question that why Zerodha and ICICI direct has drastic difference in result? Whatever be the methodology or approach, would not the final result be nearly same (with some tolerance)?

  82. VISHAL DHAKAN says:

    Thanks Karthik!
    Appreciate that.

  83. nishigandha says:

    Hi, Karthik,
    Please tell if you look at current chennai petro NSE chart what would be the resistance and support levels? Support I feel support would be around 256 (plus minus 5) as per method you told above.but resistance I can not guess. What is your opinion?

  84. mehmood1 says:

    Sir….Can we used pivot point as support and resistance level ?

  85. siddharth says:

    the maximum duration of 15 min chart is 60 days in pi. How do you see data for more than 60 days???

    • Karthik Rangappa says:

      Once you select 60, a new option to select 90 opens up, once you select 90, you can select 120. By the way, 120 is the maximum time period available.

  86. Ashish Ranjan says:

    Sir,
    you have mentioned that for short term S&R, load 3-6 months of data and for long term S&R, load 12-18 months of data.
    Can you please tell what sould be the periodicity of these datas?
    I mean daily or weekly?

    Thanks.

  87. Rajiv says:

    hi Sir, my query is on the “points indicate sharp price reversals” while identifying the S&R. can these points be high and low points of a SHADOW of a candle? or should it always be open or close of a Candle. Please clarify. Thanks.

  88. Kawalpreet ghai says:

    Hi,

    I have a question regarding the stop loss and the target in a sell call. Could you please explain these ?

  89. AMIT KUMAR PANDEY says:

    sir for intraday trading , what will the ideal look back period for marking support and resistance zone?
    can we mark s&r zone within previous 5-10 candles in 15 min chart?

  90. trader2017 says:

    can we apply fundamental techniques like CAPM, sharpe ratio, jenssen alpha etc to calculate risk, return, target, entry price etc, while applying technical analysis methods in trading for short term?

    • Karthik Rangappa says:

      Nope, at least not in any technique I know off. The ratios you mentioned are all portfolio/return metric which measures performance.

  91. Debasuish says:

    Dear sir, i am from bangladesh. i want to use rsi–(Relative Strength index) in Forex uses. which category time frame is best for trade ? RSI-14 Default but i want long period use.which is best ..Example. 7,14,21,50,100,120 . which is best please give me a positive Message. i wait for your Message.

  92. KP SRIKANTH says:

    while drawing S & R for swing and intraday trading . What candlestick time length should be taken? like 1 Day, 1 month, 15 min etc

  93. Ayush says:

    At resistance point the trader should squareoff the trade,
    Am i right?

    • Karthik Rangappa says:

      Sq off if it is a long trade. You can even initiate a short at resistance (expecting a retrecement in prices).

  94. RamMane says:

    Sir I am confused with this line. Please elaborate.
    Entry – 442, stoploss – 446, and target – 435.

    • Karthik Rangappa says:

      Entry is the price point at which you sell, stoploss the price point at which you book a loss and get out of the trade, target is the price point you hope will occur soon for you to profit from the trade.

  95. Ayush says:

    Is support and resistance are only approximation of buying and selling at trigger price?

  96. Ayush says:

    Suppose in long trade if CPM touched the reference price point, then who will buy the share if all of them are selling.

  97. Ayush says:

    How many price point one can set and should set in chart?

    • Karthik Rangappa says:

      I’m assuming you are talking about the price action zone….if yes, then look for at least 3 price point.

      • Ayush says:

        No?, i mean to say how many S&R we can and we should add in chart?

        • Karthik Rangappa says:

          Ideally 2 – one for long term and 2nd for a short term basis.

          • Ayush says:

            1 S&R for long term and 1 S&R for short term?
            I am little bit confused about what long and short term mean in S&R cam you clarify my doubt.

          • Karthik Rangappa says:

            Load the chart for a year or so and plot the S&R level…this is a long term S&R, now zoom in the chart to say 1-2 months and plot the S&R again, this will be short term S&R.

  98. Akash says:

    What does it mean,
    1. For a long trade, the low of the pattern should be around the support
    2. For a short trade, the high of the pattern should be around the resistance
    1—-If we are going long on stock, the CMP will be around resistance than how could the low be around support, it is necessary that the candlestick or price will be between support and resistance???
    Can you explain it please ??i cant understand it

    • Karthik Rangappa says:

      For all long trades, the low of the candle is the stop loss. Likewise for short trade, the hight of the candle is considered as SL. Keeping this in perspective –

      1) It means that its best if the SL coincides with the support
      2) Similarly, the SL should coincide with resistance

  99. Ayush says:

    What if prices dont match at same level than how would i draw s&r?

  100. Fahad Khan says:

    hello karthik sir.. first of all thank u for ur kind effort of spreading knowledge.. my question to u is can I use S&R tool instead of calculating it manually? I mean are these tools accurate?

  101. vikash says:

    what is price action zones and how to mark it..please explain about price action zones

  102. Satyaki Mallick says:

    Hello. How can I get S&R levels on Kite.. ?

  103. pushkar says:

    are these S&R levels plotted correctly. chart is for infosys. follow the link below for image.
    https://ibb.co/ntg1kk

  104. Ananth says:

    Hello Karthik,
    I have plotted S&R levels, please let me know if it is plotted correctly. I hope i have not plotted many lines as S&R
    https://kite.zerodha.com/share/U45BXGEUXA.png
    Thanks in advance

  105. shabaz says:

    Dear sir,
    thanks for explaining s&r in a simple way, but i have a query regarding it that what is the use of volumes in considering support and resistance?
    and
    what happens if price crosses after a resistance with a good volume?

    • Karthik Rangappa says:

      S&R and volume are two different topics. Its best if they confirm to each other. Price + volume increase beyond resistance is a great thing.

  106. trader says:

    Who buys when an uptrend has ended and the prices are continuing to fall from above and who sells when a downtrend has reversed as per all standard criteria and prices are beginning to rise after the steep fall? If we are to assume that only the novices are buying when market is falling and selling when prices are rising then will the huge volume figures justify that there are so many novices who trade most of the time like that?

    • Karthik Rangappa says:

      Its the difference in opinion that makes up a market. At every price point you will find traders with different point of view.

  107. trader says:

    If a stock has broken a support level or a resistance which has never been a previous level of support or resistance in its history that can we assume that there must be some fundamental change in the stock because of which investors are betting on a likelihood of further fall or rise? and going by this is it safer to take a position on the ongoing direction of the trend (by checking other parameters also)?

    • Karthik Rangappa says:

      S&R at uncharted territory usually indicates a strong momentum in stocks. This can happen for fundamental reasons. Yes, you can set up a trade here – I’d prefer options here. But tracking such positions closely becomes very important.

  108. trader says:

    Could you show us how we can estimate volatility using the Garch model? If it can be done using excel

    • Karthik Rangappa says:

      I’m not too familiar with the calculation of GARCH models. I will have to learn this myself to explain it 🙂

  109. Prashant Sharma says:

    Hello sir,
    first of all thank you for this wonderful module.
    i am a beginner and i went through your TA module and found it really helpful. I am following what you told about being swing trader at starting and graduating over time to day trader.
    but i have a question:
    as you said to plot s&r using EOD data over a period of at last 2 years in the last chapter. i have been trying that but have failed for stocks like eicher motors etc that have continuously increased over last few years. please help me on your approach with few example like eicher, yes bank etc so that am comfortable in plotting s&r. Please sir help with respect to this via few examples which do not have such distinct peaks as given in your examples. Feel free to mail me at [email protected]. (explanation using snapshots would be really helpful)
    further if i want to invest just for few days what should be the strategy of plotting s&r (i.e. should the time frame be 2 yrs for plotting s&r??) and what should be my look back period (should it be 6-12 months???)

    • Karthik Rangappa says:

      Prashant, if your intention is to invest for few days, then I’d suggest you look at shorter term time frame for plotting S&R. Maybe something like 6 months. This should help I guess.

  110. trader says:

    when price breaks previous support or price breaks previous resistance, what does it exactly mean with respect to buyers and sellers? Does it mean that when previous resistance is broken then sellers that were earlier active in those price levels are no longer active and hence buyers are driving the prices higher and hen previous support is broken then buyers that were earlier interested to buy the security at those price levels are no longer interested and hence sellers are taking prices lower?

    • trader says:

      also i would like to know that when once support or resistance is broken why does it again at some point later become level os support or resistance in the future?

    • Karthik Rangappa says:

      Breaking a previous price action zone (could be support or resistance) invariable conveys a continuation in price momentum. One possible explanation could be due to the fact that the price could attract traders who traded at that level previously.

  111. trader says:

    For setting target price, when should we use the different methods viz. risk-reward ratio based, Fibonacci based, support/resistance based etc. Since each of these are likely to give different values for targets is there any specific circumstance in which only a particular method should be used?

    • Karthik Rangappa says:

      No, its best to go as per the situation. I’d suggest you adopt one technique and stick to it during the trade.

  112. trader says:

    is there any tool on zerodha pi or kite which lets us mark support and resistance levels of multiple stocks manually and upon reopening the chart later the marked zones are highlighted so that we can be aware that a particular stock is nearing support or resistance zone?

  113. trader says:

    I am a swing trader with a holding period of 5-10 trading days (1-2 weeks) and I want to target returns of 5-8% in that period. For plotting support and resistance zones, how long should my look back period be like? Is it fine to have a 2 years look back period for this purpose?

    • Karthik Rangappa says:

      You could look at 1 year and then 6 months data. I personally think 5-8% could be a challenge, but anyway…good luck 🙂

  114. trader says:

    Once a previous support or resistance level is broken how is a new level created? If the stock has broken support or resistance levels that was never broken, in other words it is trading at all time high or low, then how is a new resistance or support level created?

    • Karthik Rangappa says:

      Stocks that have reached a all time high will not have a resistance. Likewise, a stock which has breached an all time low will not have a support.

  115. Raj says:

    I am a little confused with the idea of plotting S & R using formulae (S1, S2, P, R1, R2, etc.). The formula does not look for things like “sticky zones”, levels where prices have in the past bounced off from, etc., which is what S&R is all about. This appears to be a completely different way of looking at it. It only looks at previous day’s OHLC data and nothing more. The steps that you have described above in the article have nothing in common with this approach. I am really curious – what am I missing here?

    • Karthik Rangappa says:

      Yes, the one I have explained here is a visual concept and does not really depends on formulas. You must be referring to pivot levels.

  116. Hi Karthik,

    Thank you so much for this extremely informative articles. Even better is the fact that you’re still replying to the queries after all these years :). Usually, in places like this, writers stop supporting the new readers. What I wanted to ask is:

    Is the process of finding support and resistance same? that is, finding the range where price stayed the same or made sharp reversals? should it be acc to what we’re trying to find?

    for ex, let’s say we’re trying to find resistance for a long position we entered and the support points we find are based on trend reversals. If all of these reversals are from bear to bull, then it will not be a resistance, right? because buyer demand increases there.

    • Karthik Rangappa says:

      Thanks for the kind words, Pratyush 🙂

      Yes, the process is the same. These ranges are referred to as price action zone. So identify them, well spread across time and plot the S&R level. Also, please note – support and resistance levels interchange based on the CMP. So given this, today’s support can be resistance tomorrow and vice versa.

  117. tradder says:

    some stocks move faster than others for eg. Adlabs has a greater up/down move in 3-5 days time frame than a stock like SBI. How can we identify these fast moving stocks? Is stock Beta and standard deviation the right measures to do this?

  118. trader says:

    how can we identify support level for a stock which is continuously in a downtrend and resistance level for a stock that is continuously in an uptrend if we are not able to use a trendline (ie, not three points can be joined using the trendline for resistance or support)

  119. kkkk says:

    sir i tried plotting prixce action zones but every single time i cant seem to find any in same price level and if i do they are not well s-paced in time

    • Karthik Rangappa says:

      I’m not sure where you are getting this wrong, it is a fairly standard practice and quite easy to implement.

  120. kkkk says:

    and tghe metho0d suggested in module just doesnt works the way it has been explained . please help

  121. kkkk says:

    there are 1_2 differenmces in every chart i try to plot s&r …..also i tried peak and trough method but in vain

  122. Rajesh.R says:

    I read the article, but not understand support and resistance. My Question is how to identify Buy or Sell stocks with this graph.
    In support time what to do? (Buy/Sell), In resistance what to do? (Buy/Sell).

  123. rahul says:

    I paid 300 rupees for demat and trading account for equity trading 15 days ago. I filled up and gave all the related forms and documents at bangalore headoffice. Yet my account hasn’t been opened till now. Why?

  124. Ankit Agrawal says:

    Sir, I can’t find the link to the PDF anymore. Where are they ?

  125. Dharni Sisodiya says:

    Hello Sir,
    Varsity is actually a wonderfull Place to start learning abt trading,& Im so elated that I can learn many things from comment section also.
    Thankyou So much?

  126. Ronak Shah says:

    I am looking at the chart for L&T Finance Holding and on the daily chart it looks like there will be a bullish marubuzo.
    my question is for a stock like that which is at its all time high how do you get the resistance points ?

    PS: Also do let me know if it is a bullish marubuzo because on the “all time chart”it looks like a hanging man.
    how to do decide which one to go for in such a situation

  127. Ash says:

    Karthik,

    1. Are there BTST trades in the Zerodha Kite trading platform? If not, how do we do the trade in Zerodha?
    2. Is S&R always a manual process? Or is there a tool like we have under the “Studies” drop down in the Kite platform?
    3. What to do if we can’t find 3 action points, in some cases, the stock may keep rising/falling for over a period of 12-18 months isn’t it?

    Thanks,
    Ash

    • Karthik Rangappa says:

      1) You can do BTST on Kite
      2) Pivot Points identify S&R using simple addition/subtraction. I’m not a big fan of PP, I prefer to look at the chart and identify the areas of S&R
      3) In that case, there simply won’t be any S&R

  128. Ujjwal says:

    Hi Ash,

    You could buy a stock today and sell it in the net trading day. The stock will be shown as T1 holdings but you could sell it as any other stock in your holdings. Do remember that you cannot do BTST only if the next trading day is a settlement holiday. Zerodha has a separate blog for settlement holiday, you can go through that one.

    Thanks,
    Ujjwal

  129. Nayan raj says:

    Hello Karthik,

    My understanding of S&R is once price breaks a resistance and moves up(along with considerable momentum) the same level acts as an Support now. Is this right or wrong. If yes then let’s say while constructing Support level in Down trend Can i use previous price action zones which were earlier acting as Resistance.

    Also i find it difficult to plot S&R levels in strong up or down trend, say i am using a day frame looking at candles corresponding to 2 years and the price has been on up trend with minor fluctuation as per Dow secondary trend, in such cases price action zones don’nt occur at same level. How should i decide S&R in such a scenario as i need them for my stop loss and exit price.

    Also please let me know if there is a option to attach screen shot so that i can show you what i mean.

    Regards,
    Nayan

    • Karthik Rangappa says:

      Thats right – today’s resistance be tomorrow’s support and vice versa. I understand your point. The only way to deal with it is by loading more data points. No option for screen shots I guess.

      • Nayan raj says:

        Hello Karthik,

        Adding to above scenario i observed that on some occasions even 5Y period candles are unable to provide me price action zone for creating Support and Resistance.

        Additionally i observed that these have rebounded as Per Fibonacci Retracement 23.6% level on couple of previous occasions.

        Can i use Fibonacci Retracement level, level decided as per previous behavior of stock, to calculate my Support level in a strong uptrend like in this scenario i mentioned here. When i ask this i do understand that i am treating my current price as resistance level.
        Please note the candle stick pattern formed is Bearish Harami with more than average vol(10day EMA) on both P1 and P2 candles, prior trend in Up trend.

        Regards,
        Nayan

        • Karthik Rangappa says:

          Yes, of course. You can use the Fib levels if the stock is trending continuously. It is especially common to find such situations in a strong Bull market.

  130. Ash says:

    Karthik – I was looking into the nifty index chart and had this doubt.
    What if a script is trading at its all time high, how do we find its resistance point? Since it is one of the points of the 6 point checklist.

    • Karthik Rangappa says:

      Its not possible to identify resistance for stocks making an all time high. You will have to rely on the other checklist items. However, for support, you can use Fib retracements.

  131. Rinkesh Ahuja says:

    1) What if the price is at all time high? how to find resistance then?
    2) also, for S&R should we consider the lows and high or real body?
    3) while drawing eclipse/circle, how to decide on the area of drawing? because if we draw small, the horizontal line may not pass through that circle.
    4) For long trade, the Stoploss should be the low of pattern. If support is below the low of pattern, then we should not take up trade? or if support if above the low of pattern, we should not take up trade?

    • Karthik Rangappa says:

      1) You cannot as there are no data points
      2) Maybe you could, really depends on the situation
      3) Try loading fewer data points?
      4) It’s best if support coincides with low. If it’s anywhere else, check the viability of the trade by quantifying the Risk to reward pay off.

  132. Abhiram says:

    tell me how do i learn to set a target price.tell me everything about target price. and how should i research for intraday?

  133. Murugesh says:

    Hi How to calculate the buy above and sell below values using previous day’s data like daily i am getting the values from niftysign.com website and it’s working well for me. Today’s(15/09/2017) values are for Banknifty Future BUY ABOVE 24977 TARGET 25066/25155 STOPLOSS 24933
    SELL BELOW 24888 TARGET 24800/24711 STOPLOSS 24933 So Please anyone can do this (at least approximately) and reply how to calculate.

  134. Brahma Reddy says:

    What is the time frame to find prior trend?For example let us assume a stock which is in bullish trend overall,but it is bearish today.

  135. ARUN says:

    Hi karthik,
    In one of ur post u have said that trendline as a tool is available in kite. I cant find the same. Can u help me with it?

  136. Sudipta Chakraborty says:

    Sir, can I place a stoploss based on ATR? If yes, please tell me how?

  137. Sai Pramod says:

    Hi Karthik,
    I found it easy to understand and read all the technical analysis.
    I am very new to trading and started trading only after reading varsity. I have advised my friends to prepare notes from varsity and start investing.
    I have a silly question. How can I plot support and resistance level in Kite chart.
    I have seen it mentioned as studies> pivot points.
    While I do that I got many lines. I did not understand that. Is there a way to select the price action zones as you have mentioned in the varsity..? Please instruct me how to do it..?? ( I am pretty new. So please answer it simply as it is your style)
    Also tell me how does the pivot point study work to plot support and resistance level.

    • Karthik Rangappa says:

      Happy to note that, Sai Pramod!

      Yes, you can use the horizontal lines available under tools. This will help.

      Good luck.

      • Shrenik says:

        Hi Karthik,

        I see that you are using basically using horizontal line to get to S&R. I have also been reading other sources of TA and learned that we can use sloping lines as well.

        I personally have a liking for sloping lines for getting my S&R.

        1) Any particular reason for your preference for horizontal lines ?
        2) I also have a observation that once you draw the sloping lines beyond current date you are almost getting a resistance/support level for stocks/index making all time highs/lows.

        Your suggestions please.

        Thanks

        • Karthik Rangappa says:

          1) Nothing really. Slope lines are used when the stock is trending. I guess I missed explaining that part 🙂
          2) Hmm, this is because the stock is trending and has a good momentum.

  138. Ash says:

    1. How to determine the next immediate support and resistance for nifty index while trading index options? I want to trade in options and asking also since I see most often the analyst who come on news media, say the immediate S&R.
    2. How do they come up with resistances when the markets are at an all time high?

    • Karthik Rangappa says:

      1) The same way you would for any other stocks. Plot the trendlines. Ignore the media.
      2) Not sure, as this is not really possible.

  139. venu says:

    Hi

    Long term S&R – is useful for swing trading -> is this useful for equity futures ???
    Short term S&R – is useful intraday and BTST traded -> should we use hourly candle stick or day to find the support and resistance

  140. sujay says:

    sir 6 pages if watch list is not enough please add additional pages

  141. […] learn in-depth about support and resistance you should visit varsity of […]

  142. Rudra says:

    Hi Karthik,

    Please accept my sincere compliments for having Zerodha Varsity and supporting people like me who want to explore investing in equity markets. Believe me you are the best online content on this topic I have come across.
    I have been into Buy and hold strategy for quite sometime. I wanted to know whether we can put stop loss on the buying day itself if we are using ‘CNC’ as order type. Similarly, can we sell the scrip on the buying day itself (say it gains 3-4%) if we are using the order type ‘CNC’.
    Many thanks for your prompt reply as always.

    Thanks and Regards
    Rudra

    • Karthik Rangappa says:

      Rudra, thanks for the kind words.

      Yes, in such a scenario, even though the product code is CNC, it will be considered an intraday.

  143. Jawahar says:

    Hello Sir,

    For intraday trading, plotting S&R in 15 min chart with the look back period of 15 days is very difficult as sometimes, we dont have enough price action zones and sometimes every other point matches. Also, as it is intra-day trading, the trend lasts for short period. Is there any other way of setting target in intraday??Pls advise. Thank you so much for all your efforts.

    Regards,
    Jawahar

    • Karthik Rangappa says:

      I agree, 15 day period for a 15 mins time frame is a little tricky. However, try and reduce the frequency to 5 trading sessions. This should help.

  144. Ananth Reddy says:

    Can we say that currently ICICI has support at 260-262 and resistance at 290-293?

  145. V.Vivek says:

    Hi Kartik,

    The examples given here are very nice. I am going through your posts as a daily routine :).

    For S&R, can you please help me with some more examples? Where can I look for these patters apart from what you have shown above? Theoretically I have understood the three major points for identifying the S&R points, but need your support to have more examples.

  146. manish says:

    Sir, guidelines u told in finale chapter really work a lot, but i m confused about the target. I don’t know where to take exit. Can u explain little about it???

  147. Vaijanti chouhan says:

    sir mera demade Acount chalu karana he

  148. Gulshan says:

    hello sir i become fan of your teaching style . sir can i use S&R 10 min chart frame for S&R or i do reliable to hour or daily chart for S&R. please guide me

  149. Vaijanti chouhan says:

    Sir mene fome our document coriyer mar diye he
    Aadhar our pancard ki zirofh cleayer nahi he
    Mujhe dono bhejana he
    Kese bheju mail se nahi jaa raha he
    Me kya karu

  150. sainath says:

    Hi Karthik
    Your blog in varsity is really simple and easy to understand. Thanks

    I would like to know if I am right with following. I usually plan my trades such that if intraday reverses will carry forward for next couple of days.

    Micro (5-10min): 1 min chart with 1hour data points

    Intraday: 10min chart with 3months data points

    Swing (upto 5days ): 1 hour chart with 6 months data points

    Short term (3-5 months): daily chart with 1 year data points

    Long term (beyond 1 year): weekly chart and data points max

    For long Term I usually prefer fundament data.

    Kindly suggest me.

  151. jyotshna says:

    Please explain about slanting support and resistance. Trend line support.

    • Karthik Rangappa says:

      Trendline is very similar to S&R, except that it connects higher highs and lower lows. The functioning and its implication are very similar to the regular Support & Resistance.

  152. jyotshna says:

    In Kite we can add script in 5 given market watch option, In 1 market watch upto 20 stocks, If possible please make it dynamic so that we can add more market watch.

  153. Priya says:

    Hi Karthik,
    All your modules are superb and simple and we’ll explained. Thanks a ton.

    I want to know how to calculate the target for shares which have reached their highs (some newly listed shares also). How can we plot their resistance and know targets. If not through S&R what is the alternate way? We keep seeing people saying target is so and so. How can we do it? Plz explain.

    • Karthik Rangappa says:

      It would be hard to plot the S&R for newly listed shares or for that matter, shares which are making an all-time high/low. The only alternative is to plot something like a pivot point.

  154. chidambaram says:

    Hi Sir,
    What is the max difference permitted between SL and S&R level,above which we should avoid entering the trading. Kindly explain the reason too.

  155. Priya says:

    Can you pls guide me with pivot points. Did you explain them in any of your modules. How can we know time frame to reach the target?

  156. chidambaram says:

    Hi sir,
    For a swing trader, if the SL is broke on a closing basis he would sell on the next day but what about a intraday trader? How should one confirm to close his position??

    • Karthik Rangappa says:

      Its best to close positions based on the closing basis, but that may not be possible for an intraday trader. Hence he has to close the position during the day.

  157. Himanshu modi says:

    Hi karthik sir,
    I am little confused.
    What is difference between s&r calc. based on pivot point level which changes each day and the s&r level calc based on trendlines as discussed above????

    Which has higher accuracy rate??
    Which is useful for intraday or btst??

    • Karthik Rangappa says:

      PP is based on a formula but the other S&R technique is based on identifying price action zones. I personally prefer the S&R based on price action for all sorts of trading (intraday, swing, EOD etc).

  158. Amit Deshpande says:

    Hi Karthik,

    In kite app , Chart section there is studies called “Pivot Points” , Which has R1,R2,R3 & S1,S2 & S3
    So we can readily pick up support and resistance with the help of “Pivot Points” Isn’t It ?

  159. Arya Dutta says:

    Hi Sir,

    Could you please explain as to how one can identify a stock exhibiting identifiable technical patterns for a profitable trade. There are plenty of stocks but how does one come across these technical patterns against the movement of such stocks?

    Thanks,
    Arya

    • Karthik Rangappa says:

      Arya, for that you need to go through the entire TA module 🙂

      • Arya Dutta says:

        Sir, I went through the entire TA module. Maybe, I didn’t make myself clear.
        How does one screen a stock to identify technical concepts applicable? It is not feasible to open charts of every stock to view identifiable trends.

        • Karthik Rangappa says:

          You need to define your opportunity universe first – like Nifty 50. Then look at the charts of Nifty 50 stocks…scanning through these 50 charts does not really take much time on a daily basis.

      • Arya Dutta says:

        Sir, I went through the entire TA module. Maybe, I didn’t make myself clear.
        How does one screen a stock to identify technical concepts applicable? It is not feasible to open charts of every stock to view identifiable trends..

  160. srini says:

    I tried calculating pivot points (based on formula high + low + close / 3) – the results are not aligning with zerodha kite values. For instance I tried calculating the pivot for Jan 4th for Inidiacem Jan fututres. Basis the above formula:
    high for 3rd Jan was 189.7
    low for 3rd Jan was 181.2
    close for 3rd Jan was 187.6
    basis these values pivot for 4th Jan should be 186.17 however kite shows a pivot value of 180.9. Can you please help understand the logic behind pivot point identification (as done by kite – does it involve any differentiation formulas??)

  161. Gyan says:

    Karthik..could you please explain little bit logic behind gap up working as support, gap down working as resistance? Also what is theory behind gap filling?

    • Karthik Rangappa says:

      I’m really not sure if the gap can act as a support or resistance level, Gyan. Gaps are formed due to an increase in sentiment – this could be bearish or bullish sentiment.

  162. rajesh reddy says:

    Thank you
    Include trendlines in this module…

  163. Raj says:

    please clarify my doubt, sir…
    while we are drawing support or resistance, whether we can include price actions of previous resistance zone in today’s support zone… or we should include only respective zone areas only ie.. support areas only for support and resistance areas for resistance?
    As we know support can become resistance and vice-versa…
    Kindly reply me, sir… I am confused in this

  164. Amit Nigam says:

    Dear Sir,

    Is there any way through which I can get real time update on stocks crossing its support or resistance level, especially on mobile.

  165. Prateek kumar jaiswal says:

    Hi Karthik,
    Another amazing chapter ended on a great note, thanks a lot for putting all this.

    Just couple of points to discuss:
    1. What makes price action zones to be more significant if they are well spaced in time, I mean the psychology behind this? and what if price has touched the resistance for past 2 consecutive days and today again most likely it will touch the same level, what and how psychology will be playing out here and how it is different from former one?

    2. While analyzing data what time frame is most suited for intraday/positional? Is 3min and 5min time frame worth giving a try or 15min/Daily time frame is OK(currently I try to use this), also lets assume if we say any particular time frame is best or most suited why do we say so? does it reflect any psychology/behavior.

    • Karthik Rangappa says:

      1) It implies that the market participants are anchored to these price points – so greater chance of the price reacting at these levels.
      2) I’d suggest 10 or 15 mins for intraday and EOD for positional trades. Remember, the longer the time frame, higher is the information component and lower is the noise component.

  166. chidambaram says:

    Hi Sir,
    1. If support and resistance is a band,then Say if we find S&R point to be 100, then what is the % we can set to S&R band.99-101(1%) or 99.50 -100.50(0.5%) or 108-112(2%).
    2.In the chart for “the encircled points indicate the price hesitating to move down further after a brief down move:” why have you encircled the last price action zone?I hope it is in the uptrend .
    3. “Hesitated to move up further ” – for this if there was a uptrend and in the middle of it,if the price momentum was low and so price was hovering around the same place for a long time(say a month) and followed by that if there was a steep up move to continue the uptrend ,then can this also be considered a price hesitation point (price action zone)or only the price hesitation point with price direction reversal are to be considered?
    4.If a candlestick low is formed at 102 and Support band we assume it to be 99-101, we are going long on the stock,then what should be our SL? should it be 99 or 101 or 102 ??
    5.Suppose we were slightly wrong in assuming Support band and thinking that our SL is hit and we sell our stock and if then a bit lower to our sell point if support comes in,what to do and how to avoid it?
    6.In some stocks(like KTKBANK) i a finding it difficult to find S&R band.I feel that many S&R points are very close by and so i am unable to take trade since i am not clear with S&R points.Help me on it.(i feel easy to trade in stock with low volumes as i am able to find S&R for them easily)
    7.When we try to include more data points in our observation to find S&R,then i find the many peak and lows are formed which are suppose to be S&R points.In this case if the peak is visible, to formed inbetween 257 and 249 ,how to fix the S&R?
    8.If we have taken a position and we are in profit, but still our target is not hit and if the Q results are to be announced tomorrow what to be done in this case?should we need to close the position by today(inspite of target not done) as were are not sure about Q results or can we wait with the hope that even if the price move down slightly (because of Q result is being bad) still our target would hit after few days of result.

    • Karthik Rangappa says:

      1) Identify the price point and spin a band with about 1-2% around this price. For example, if the S&R line points to 100, then I’d consider 98 to 102 as the S&R zone
      2) Not sure which circle you are talking about – but I guess there is a hesitation to move
      3) The uptrend is within the trading zone I guess. Plese give reference to the image – hard for me to locate
      4) 99
      5) You cant – another reason why support is a better place to place your SL
      6) Look at longer-term trends, load more data points
      7) Choose the one which has stronger reactions at the price action zone – you should have not more than 3 points
      8) When fundamentals are at play, technicals does not hold up.

  167. chidambaram says:

    If we have taken a position and we are in loss with our SL has already been hit and if the Q results are to be announced tomorrow what to be done in this case?should we need to close the position by today(since SL has hit) or can we wait till the results?

  168. chidambaram says:

    Hi Sir,
    1. In the chart given as a example for the point “Hesitated to move down further after a brief down move” ,from the right first encircled price action zone is in uptrend,but you have encircled it as a example for “Hesitated to move down further after a brief down move”,Why so?
    2.If a price hesitation is there in between a up or down trend and after that hesitation the same trend continues,then can that also be considered as price action zone? or only price hesitation point with the direction reversal are to be considered as price action zone?
    3.Many a times when i try to find S&R,i find that there are many small peak and trough (with range of 3-6 point) in between a major trend(10-20 points) move(example : airtel). If we are a swing trader, should we need to consider all those small peak and trough,while trying to spot S&R or only the major move is enough for finding S&R.
    4.If we are a swing trader and If a candlestick pattern is formed and if all the checklist points coincide and we have entered a trade but after that if the price hasn’t moved in our direction or even though the price moved but target was not achieved within 5 to 8 trading session(or 1-2 weeks) should we need to close our position or we can still wait for the target or price movement?If so how long we can wait?
    5.It happens that many a times when I wait for the SL to hit on a closing basis,the price moves much below SL and close and it turnout to be a huge loss.How to tackle this?
    6.If we need to trade only major trends( secondary or primary trend) avoiding minor trend ,can this same candlestick technique with checkpoints can be used?
    7.If we are trying to trade using spindle,
    7a)then what is the SL for spindle?Is it low point of the spindle?
    7b) for trading based on spindle also checklist need to be considered?
    7c)for spindle prior trend is important?
    7d)if we are a risk taking trader,can we initiate trade based on a single spindle formation in any prior trend? or for spindle based trading is it good to be a risk averse trader?

    • Karthik Rangappa says:

      1) This is because the stock did hesitate to move – owing to the presence of support
      2) Yes – can be considered as a price action zone
      3) Consider the ones where the follow-on price action is significant. Small reactions are natural in markets.
      4) Wait for either the target or SL to trigger
      5) Maybe you should trail your SL
      6) Yes

      Sorry, I’m unaware of the spindle technique.

      • chidambaram says:

        Hi sir,
        Sorry its a typo,not spindle its spinning top.
        1.If we are trying to trade using spinning top
        1a)then what is the SL for spinning top?Is it low point of the spinning top?
        1b) for trading based on spinning top also checklist need to be considered?
        1c)for spinning top prior trend is important?
        1d)if we are a risk taking trader,can we initiate trade based on a single spinning top formation in any prior trend? or for spinning top based trading is it good to be a risk averse trader?

        • Karthik Rangappa says:

          A spinning top does not really give a trading signal. So you cannot really construct a trade based solely on it. Its best used when you combine it with other patterns.

      • chirag says:

        Hesitated to move down further after a brief down move”
        here can u elaborate what does these means?
        AFTER A BRIEF DOWN MOVE
        thanks

  169. Rinkesh Ahuja says:

    Sir, in the above example you got 429 as support levels and you considered the zone of 426-432 (+- 3) which is just 0.7 of deviation of 429. While, the stocks trading at lower prices for example Rs 50, then what zone should we consider? (+- 3) would be a lot of deviation according to me. Should I consider (+- 1%)?

    • Karthik Rangappa says:

      The % will always remain the same irrespective of the stock price.

      • Rinkesh Ahuja says:

        But if we take percentage of a stock like IndusInd where 1600 is a key level and approximation zone of 0.7% results in 10 points of deviation which means 1590 to 1610 is the crucial level? Or should we make our zone tighter when we deal in high priced stocks?

  170. Saalim says:

    Dear Sir,
    on 12 th Feb,AuroPharma showed morning star pattern.However I am very confused, how to plot S&R here.should I take 2 years of data or 1 year or just 6 months.
    I am just a new newbie, If you do not mind ,Could you please draw & send me S&R plotting for reference.
    Thanks in advance.

    • Karthik Rangappa says:

      If you are looking for a short-term trade, then look for at least, 6 months data. By the way, the morning star pattern is not very convincing, P3 should have closed higher than P1.
      Good luck and happy learning.

  171. Dhananjay Chaudhari says:

    Sir how should we look at a stock that is making new highs. What is the method of plotting s&r? Looking forward to your guidance..

  172. satish says:

    Hi Karthik,
    As you explained S&R are used to set our targets. And you aslo suggested in 2nd Checklist that , if S&R matches our stoploss we are double confident. So for a going long trade, Resistance is my target, and i can double confirm the trade buy checking if support = stoploss.Hence we are using both S&R to decide a trade. Am i correct?

    • Karthik Rangappa says:

      This is correct, Satish. There is always more confidence in the trade if the support and resistance coincide with the targets indicated by the candlesticks.

  173. Rinkesh Ahuja says:

    Supposedly, a bearish marubuzo had formed and it has even breached a crucial support level. So, the Stoploss should concide with now resistance (earlier support) or else the resistance level before the candlestick pattern?

    If your answer is SL should be around new resistance then don’t you think that it can bounce back and the approximation of our levels went wrong.

    • Karthik Rangappa says:

      This depends on the extent of the breach. Suppose the pattern has occurred at 100 (which is the original resistance and Sl) and breached 95(new resistance), I’d watch out for 95 since this has moved 5% from original SL. However, if the new support is at say 97, I’d still consider 100 as SL.

      • Rinkesh Ahuja says:

        I didn’t get it sir. Sorry if I have not framed my question properly. Let me put it clearly with precise example.
        Stock- IndusInd Bank

        It closed at around Rs 1622 on 20th Feb, 2018. Crucial support was Rs 1594 and Resistance was Rs 1660.
        The next day a bearish marubuzo formed and it closed exactly at Rs 1594 and making a high of 1636.

        My logic: The SL is the high of candlestick which is 1636 and it should concide around 4% of resistance. Now, which level should we consider resistance? The earlier one (1660)? Or if the candle which was above the support and it breached that support level (1594) and closed below it making that candle divided into two zones. So now the resistance should ideally be 1594 which was earlier support. SL should concide with 1594 or 1660 (earlier resistance)?

        I really sound noob but I want form a hollistic approach and trying to make my own trading principles and strategies. I am grateful for your patience.

        • Karthik Rangappa says:

          Rinkesh, this is a classic case where I’d trail the SL. The day I enter the position, I’d set the SL at 1660 and as and when the stock moves lower, I’d trail my SL and gradually move my SL towards 1594.

  174. mahesh says:

    how do we set the target, if the stock price is going all time high or low?

  175. Chandrabhan Singh says:

    Sir first of all thanku so much for sharing such useful knowledge about stock market which is very helping to beginner like me.sir I have a query….
    As you advised that if a trade is initiated we should wait until it get eighter target or stop loss otherwise trade get bust.
    Sir suppose one bought share of xyz at 100 rs price stop loss is 95 and target is 110 .If price reached to 107 and one is willing to sell at this price.is it wrong…..Can you pls explain…

  176. Dhananjay Chaudhari says:

    Sir, what should one do if the candle suffices the requirement with greater volume, but it is not at the Support or Resistance level? should we go with it or leave?

  177. Apurva A Kunkulol says:

    Hi Karthik,
    Do you use a specialized tool to plot those lines of Support and Resistance?

  178. Apurva A Kunkulol says:

    Hi Karthik,
    I have attempted to identify some price action zones for Jain Irrigation Systems in the attached screenshot, so could you please advise on the correctness and the accuracy of the same. It can be found in the link below.

    https://drive.google.com/file/d/1DLlnmCai-0ASvXqbNtt4mPTQt7GrYQt7/view?usp=sharing

    Thanks.

  179. Varun says:

    I really like the way you explained however for me to plot S&R using the above technique is very difficult. Is there a way I can use a formula/study in Kite to place the S&R points on it’s own? If yes, what should be the time period?

    • Karthik Rangappa says:

      You can try using the Pivot point calculator to identify the levels. Btw, what makes it difficult? Is there anything I can do to help you with it?

  180. Aadesh Shetty says:

    Hey, Kudos on the great work…

    Coming straight to the point, while finding S&R, a sharp reversal of bullish trend (ie. a peak in the upward trend) in the past can be considered to locate Support at present (considering the current market price is above the level). Am I correct?

    It doesn’t seem logical, the price level could have been a Resistance a few weeks ago, for example, but now we are assuming it to be Support.

    • Karthik Rangappa says:

      Aadesh, yes, you can use the sharp reversal point (in the past) as areas of support or resistance. However, this has to be time-tested, creating a price action zone. Also remember, the price action zone can be both support and resistance. It becomes support if the current market price is above the price action zone and resistance otherwise.

  181. Prateek kumar jaiswal says:

    Hi Karthik,
    Can u pls suggest some books to refer to understand supply and demand of stocks as support and resistance itself create demand and supply in markets

  182. Apurva A Kunkulol says:

    Hi Karthik,
    I have attempted to take a call for JP Associates by identifying some indicators(Recognizable candlestick, Volume, S&R), as follows:
    Short at 20.85
    Target: 17.5 +- 1.
    Stoploss: 22.05

    I would appreciate it if you could share your thoughts on it.
    You can find it here: https://drive.google.com/file/d/1nsinAJMhbpwYcPuPEdSVyDmYilyLnfnU/view?usp=sharing

    Thanks,
    Apurva.

    • Karthik Rangappa says:

      I’d be a bit hesitant with the short considering the strong gree candle plus a gap up opening. You may see some profits, but I’d suggest you be quick to book it. Good luck.

      • Apurva A Kunkulol says:

        You’re right. Though that, I came to the conclusion because of the shooting star, and the volumes showed a lot above average selling in corresponding to the shooting star, but this it showed in Pi not Kite.
        So would I be correct in arriving to this conclusion based on the aforementioned info?
        Also, what are your thoughts on the spotted support levels?

        Thanks.

        • Karthik Rangappa says:

          I’d suggest you look at the EOD charts for this. But yes, patterns such as shooting start (hammer) etc tend to attract a lot of volume action.

          I’m not too sure about spotted support levels. What is this? Can you share some links to the reference material?

          • Apurva A Kunkulol says:

            If you’re asking about the ellipses then I have tried to spot Price action zones. I found no more than two zones at the resistance level and found three at the support level. However if the diagram looks cluttered I’ll send you another one.
            I was just trying to apply what I have learned so far at varsity. I’d also have you know that, the support levels mentioned in my attempt above has been reached.
            The reference material is this same chapter. I have only studied from Varsity modules. Please let me know if any of your above query is unanswered.

            Please find the updated chart here: https://drive.google.com/file/d/1H4PUaDFCVC2uoxtpI05e8zF973tGnmpl/view?usp=sharing

          • Karthik Rangappa says:

            Yes, the support levels look perfectly valid.

          • Apurva A Kunkulol says:

            Hi Karthik,
            I have two questions:
            1. How do we decide which stock to pick for the day, e.g. COALIndia or SAIL or whichever scrip. How do we know where the action is happening, so as to be able to pick a stock?
            2. I have seen advisors also mention, that the support(or resistance) level would be hit in ‘x’ days, so how do they do that?

            Thanks.

          • Karthik Rangappa says:

            1) Firstly you need to create an opportunity universe where you list down all the stocks which you like to trade. Secondly, once you have the list of stocks you look at the charts every day to figure out where the action lies, the action as you know manifests itself in the form of candlestick patterns.
            2) I’m not sure about this 🙂

  183. chirag says:

    hi sir,i want to ask if iam doing day trading so what percentage should support and resistance range be there from current market price,
    and also if am trading for 4-5 days.
    also for 15-20 days.

  184. Vibhor Malik says:

    Dear Karthik,

    I have one confusion related to S&R….I think something is contradicting in this chapter..
    1. Its written that only one line can be drawn..and according to the current market price (CMP) it becomes support, if lower than CMP, or if becomes resistance, if higher than CMP.
    2. In the 2nd rule of checklist its written that if going long, Stop loss should be near the support (that means that line drawn is lower than current market price) then how would we will be able to know the target price (because there will only be one line, and we will not be having any resistance line because there already is one support line near SL) ???

    Thanks in advance.

    • Karthik Rangappa says:

      Vibhor, there can be multiple support and resistance lines and not just one set of lines. I would suggest you relook at this with this perspective.

      • Vibhor Malik says:

        Dear Karthik,

        Thanks for prompt reply.
        I have a few questions based on your reply above.
        1. As you mentioned somehere that we have to identify best price action zones so its not necessary that in a particular time period you will get two sets of good price action zones (3-4 for resistance, 3-4 for support) also we cant increase time much to find action zones as when we are doing intraday. so what to do in that case? As we surely needs two lines, one to satisfy our 2nd rule of checklist and second line for target price.
        2. looking at Ambuja cement example in this chapter, can you tell me what price points will be to draw support line there?
        3. lookin at Cipla example in this chapter, how would you draw resistance line to support your 2nd rule in checklist?

        Other all together separate queries – not related to this above question:
        4. looking at Cipla example in this chapter, why did you choose 435 price line, why not 412 or 375. It had better price zones. As a speculation that the spike in price from 375 to 442 could result in a correction later dropping to 412 or 375 back?
        5. How to draw a line in Kite3?

        Many thanks in advance for taking patience for replying to my questions.

        • Karthik Rangappa says:

          1) Yes, you can. Also, if the stock is liquid and trades easily, you will be able to find at least 2 sets of price zones in 2 years.
          2) Rs.215 was the resistance and ard 180 as support
          3) If the stock is at all time high, you cannot draw a resistance
          4) I thought 435 connected more price action zones which are well spaced in time
          5) Please check under drawings.

    • Karthik Rangappa says:

      I guess you can move the lines a little lower to coincide with the closing prices.

      • chirag says:

        sorry sir i didnt get the point you explained
        and on that link sir there is 3question kindly reply on that

        • Karthik Rangappa says:

          Ah, dint notice your other question.

          1) Yes, the lines are placed right
          2) Yes, you can take R1 for intraday and R2 for swing, but make sure the reward you are expecting compensates for the risk you are taking (this is with reference to R2)
          3) Yes, especially since 496 is not too far from 499.

          Good luck!

  185. chirag says:

    hi sir,as in candlestick pattern u stated that for bullish trade setup ,keep stoploss at lower shadow or low of the pattern,
    then by using RRRcant we find out the resistance or target price?
    why there is unnecessary of drawing the line that coincides with atleat 3action price zone,to find out resistance and support?

    • Karthik Rangappa says:

      You cannot find out the resistance and target based on RRR, but rather you should use S&R and find out RRR.

  186. J says:

    Hi,

    As you recommend, ‘don’t exit a trade till the target is reached or SL is breached’. As i understand SL will be breached only on an intraday trade. However in positional trading if the market continues sideways or falls, would you recommend exiting from that maybe at a loss, perhaps atleast when the support has been breached? Or do u recommend sticking with it till the target is reached?

    Thanks

    • Karthik Rangappa says:

      SL can be breached for positional trades as well. So the same rule holds – You hold the position either till SL is triggered or your target is hit.

  187. prasanthbab says:

    Is there any special indicator ( chart view) available to identify entry price of a stock and stop loss based on S&R technique? If yes please specify the indicator name for short term and long term purpose.

  188. Nikunj Purohit says:

    Hi Kartik,

    I believe most traders will know Support and resistance, candlestick and other main charts. Then how do they derive alpha using technical analysis. If stock is reaching support then I will know there will be liquidity coming in —— or comany will have earnings growth and moving average lines are crossing so it should move up. How traders play a smart move in real mega money generating trades?

    Regards

    • Karthik Rangappa says:

      Nikunj, there are several aspects here –

      1) Yes, everyone would be aware of TA and other factors – the question is how many of them would act with conviction? How many of they would have pockets deep enough to hold the positions through M2Ms?

      2) Frankly, real mega money generating ideas, also called as ‘wealth generators’ goes beyond TA. You need to think about business and their dynamics. Think about longer holding periods. These are more on the lines of deep fundamental analysis

      3) You can embrace quants and stats, quite an alternate way to evaluate trading opportunities. We have been talking about it here – https://zerodha.com/varsity/module/trading-systems/

  189. KNV says:

    I am unable to see 3 months daily candlestick chart in your screen. It shows only for 2 months. Secondly the support & resistance are not available to see readily

    • Are you looking at Futures/Option charts? For EQ, 10 year daily data is readily available but for F&O, the charts will only form from the day trading begins. However, try using continuous chart option(You will find it under Display> Chart Preferences).
      To add S&R lines, select Pivot Points from the Studies dropdown

  190. Abudhar al Hassan says:

    Hey Karthik,
    Sorry to bombard you with my never-ending queries…
    I was drawing S&R on a 15 minutes chart and there seemed to be one or more price action zone at many levels throughout the chart. So my question how can we figure out which price action zone is the price likely to hit INTRADAY. For instance, we are short on a particular stock and there happens to be 3 potential support zones below CMP then should we just assume the one nearest to the CMP as target zone or it can be the farthest one also? I mean the point is after all to maximize profits so why not the farthest support level? How can we get an edge over as to which support level will be breached and which will not be?
    Needless to say, your comments are always highly appreciated. Thanks.
    Regards,
    Abudhar al Hassan.

    • Karthik Rangappa says:

      This one is hard to say, Abudhar. I generally give more importance to the price action zone which is well spaced in time. Also, the higher number of time the price tests this level, the better it is.
      Not sure if I answered your question convincingly enough 🙂

      • Abudhar al Hassan says:

        It’s ok Karthik. Convincing or not, your answers are always logical which is what matters to me the most..:)

        I think I am having what is popularly known as the “Analysis Paralysis” especially in Intraday trades. Time and again I decide not to trade intraday but my capital constraints is compelling me to trade intraday, at least for the time being. However, I am kinda proud to say that even though I haven’t made any substantial profits I haven’t made any huge losses either, thanks to position sizing and your modules.

        Alright, one quick question if I may…

        Under the Risk management module, in the Kelly’s criterion chapter, you have cited an intraday trade with Tata Motors futures. The S&R based on which you took the trade were hardly two days old and yet your trade panned out.
        So my question is, when it comes to intraday trading specifically, S&Rs over 2-3 days look back period is fine enough or should we scan back more? The reason why I am asking is when we scan back further, some sort of price action zone always seems to pop out of nowhere thereby making it difficult to get a picture on how the trade’s going to pan out.

        Thanks and Regards,
        Abudhar al Hassan.

        • Karthik Rangappa says:

          Thanks for the kind words, Abudhar 🙂
          You can look at 2-3 days data, but make sure you are looking at something like a 10 or 15 mins chart to ensure you have sufficient data points as look back.

  191. Saurabh says:

    Sir,

    I was trying to draw the support and resistance in Axis bank table but iam not able to, can you please guide.

    Thanks in advance

  192. Sai Kande says:

    Pivot Point = (H + C + L) / 3
    R3 = H + 2 x ( Pivot – L )
    R2 = Pivot + ( R1 – S1 )
    R1 = 2 x Pivot – L
    S1 = 2 x Pivot – H
    S2 = Pivot – ( R1 – S1 )
    S3 = L – 2 x ( H – Pivot )

    Where,
    H – Previous Days High
    L – Previous Days Low
    C – Previous Days Close
    R – Resistances Levels
    S – Supports Levels

  193. Vinothini says:

    HI karthik,

    If I want to do intraday, I use a 15 min chart and identify a trade with entry and exit points. If the target is not hit that day, and SL is also not breached, should I hold till the target is reached or exit at the end of the day?

    • Karthik Rangappa says:

      Ideally, you should continue with this position. But if you do not want to carry overnight risk, cut the position and initiate the same trade again tomorrow.

      • Vinothini says:

        Thank you so much for replying to all our queries even after all these years. Getting to learn not just technical analysis but also patience from you.

        One more query, How to find out the average volume in kite? Can you direct me somewhere where I can learn how to use the features in kite and Pi efficiently?

        • Karthik Rangappa says:

          Thanks for the kind words, Vinothini 🙂
          You need to load the moving average indicator from studies. Once you select this, select the field as ‘Volume’ and you should be able to plot the MA on volume. However, before you do this make sure you have plotted the volume chart below the price chart.

          • Vinothini says:

            Thanks. Got it.
            For intraday, on a 15 min chart, to find out the trend , should I consider the candles formed only on that day, or can I use the previous days’ candles also?

          • Karthik Rangappa says:

            You can use the previous 2-3 day’s data points.

  194. Roshan says:

    Sir, please correct me regarding S&R. Suppose current market price is 100 so there will be support price range (below 100) and resistance price range (above 100). For any candle stick pattern we have to find BOTH support and resistance price zone.
    1.As for bullish pattern (one will go long), stop-loss will be low price of candle stick (say 90) and support zone should be around 90. So 90 price will reconfirm as stop loss. Target price will be resistance (say 110)
    2. Current market price 100, For bearish pattern (one will go short), stop loss will be high of candle say 110. Resistance should around 110 so it will reconfirm stop-loss price. Target (say 90), should be support.
    Thanks..

    • Karthik Rangappa says:

      That’s perfectly valid, Roshan. It’s best if both SL and S&R coincide to a single value.

      • Roshan says:

        Many many thanks sir, I have query regarding plotting of S&R. (Please correct if anything wrong) End of day price 100. Bearish engulfing pattern formed. I have to go for short sell. Let the Stop-loss is 110; which should be reconfirm with resistance price zone. Now to find resistance, as per given in varsity a). I have to load data points – Q1. How many days data points to be load for this short sell ?(spot market). b). Find out three price action zone with gap of atleast 2 weeks. C. Q2. Should all the three price action should be found or any one or two price action can be taken for 3 times .?
        Q3. Is the procedure to find support is same as resistance?
        Q4. Should Horizontal line fit to all 3 different types of zones (hesitant to move up, hesitant to move down, sharp reversal). Bit confused sir… Regards..

        • Karthik Rangappa says:

          Q1) You can look at at least 6 months data, assuming you are looking at EOD charts. If you are looking at intraday charts, then at least last 3-5 days.
          Q2) 3 price action zone, well spread across time is best, worst case at least 2.
          Q3) Yes, it remains the same.
          Q4) Sort of yes. But you can be a little flexible here.

          • Roshan says:

            Thanks a lot sir, Regarding Q3. I did not got .. How the procedure to find support and resistance will be same. For example, If EOD price is 100. Resistance line110 and support line 90. There would be two separate line. As per procedure Horizontal line should fit well spaced 3 action zone (hesitant to move up, hesitant to move down, sharp reversal). Please suggest. Regards.

          • Karthik Rangappa says:

            I’m not sure if I understand your query right. However, the procedure to plot to plot the S&R remains the same.

  195. KNV says:

    Do you think it is better to use a line graph instead of Candlestick for drawing support & Resistance

  196. Roshan says:

    Sir, the module is very informative. The question and answers clears many doubts. I was reading all the previous posts but I am not able to see the charts posted by other readers. Please suggest.

  197. Roshan says:

    Dear sir, sorry to ask silly doubts. I am stuck during plotting of Support and resistance line. For any price, there will be support and resistance. To plot support, one has to find 3 price action zone (hesitant to move after brief up move, hesitant to move down after brief down move, sharp reversal). All three should be well spaced in time. Encircle 3 price action zone and put horizontal line; having same prices. To plot resistance, one has to find AGAIN SAME 3 price action zone (hesitant to move after brief up move, hesitant to move down after brief down move, sharp reversal). All three should be well spaced in time. Encircle 3 price action zone and put horizontal line; having same prices. But both the lines will be same. Please advise.

    • Karthik Rangappa says:

      I get your point, Roshan. You need to keep the latest price as the reference price. The support point will be below the reference price, so therefore the support lines that you will plot will be below the ref price. Likewise, the resistance lines will be above the reference price.

  198. Ashutosh says:

    How to decide support and resistance of a stock if it is trading at it’s all time high or all time low?

  199. Anand says:

    Hi Karthik ,

    Thank you so much this article it was easy to understand.
    Can you please help us to put indicator(Support and resistance) in Zerodha chart.
    It would really helpful if you make video or images so that we can refer easily.

    regards,
    Anand

  200. Harshajeet Patil says:

    Hello Karthik,

    Once again thank you to your team for the explaining the topic in detail; however I have a question regarding to ‘Load data points ‘.
    It is mentioned as “to identify short term S&R load at least 3-6 months of data points. If you want to identify long term S&R, load at least 12 – 18 months of data points.”

    However, what is the time frame for candlestick that we should choose. Should we select time frame of 30 mins, 1 hr, 1 day, 1 week or a month?

    Please let me know your response.

    Thank you once again.

    Regards,
    Harshajeet

  201. arun says:

    On Kite there is ‘Pivot Points’ study, which comprises of 3 Support and 3 resistant lines that i understand but there is Pivot line also.
    What is the significance/use of that ?

  202. shishir kumad das says:

    https://drive.google.com/file/d/1_r6hNWjilRNktHCqO4NilOaSzlWseeeL/view?usp=drivesdk
    kartik ji…plz help me..how i can draw S&R in this chart.
    i think in this chart support is arround 188-190(not sure)
    and how resistance draw resistance.

    • Karthik Rangappa says:

      Shishir, like I have explained in the chapter, S&R is not a particular price point, rather it is usually a price range. So if you think the support lies around 188-190, then it probably is.

  203. Lakhvinder says:

    Hi
    Kindly suggest the best candle stick time frame for Intraday trade on which we have to draw support & resistance horizontal lines to get the best possible results. It should be 1 day or 1 hr or 15 mins candles?
    Please note that the query is regarding candlestick time frame and not for chart time frame.

  204. Hrishikesh says:

    Hi Karthik,

    Would like to thank you for your clean and clear explanation on each topic.
    If a stock is in clear downtrend/uptrend how to calculate/plot the S&R?
    thanks,

  205. Apurva Anil Kunkulol says:

    Hi Karthik Sir,
    I have managed to mark some price action, zones in the recent IDBI chart, however I am not sure whether to call it the Support region
    or Resistance since the line is below the CMP by only 0.5 to 1. So is it already in the Resistance region or about to hover there?
    2. I have some difficulty in spotting a zone, meaning that, to mark the extent of the zone. Like in the chart posted here, I have marked the entire region(6) here as since it looked like the scrip had a hard time moving above that limit.
    3. Regions 2, 6 and 8 are on the same line, however, if a line has to be actually drawn, it doesn’t pass from the exact middle of the regions, is it necessary for the line to pass through the middle exactly?

    Chart: https://drive.google.com/file/d/1OkJTSOOYhcjNOkMAYCDq76vL-OGKmHO-/view?usp=sharing

    • Karthik Rangappa says:

      Well, if the difference is 0.5 to 1, then clearly, you can consider the entire price band as price action zone.
      2) Yes, 6 is a valid time period
      3) Not to worry, please remember the idea is not to consider 1 single price point as either support or resistance. It is about the region surrounding the price action zone.

  206. Ram says:

    is there any website which will give the s&r ready made?

  207. Deepak says:

    During all times high in a market , do we have resitance levels ? and vice versa do we have support levels during all time low ?

  208. Wasim says:

    Since there is no reference point in all time high or low.. How do we trade these stocks?
    Fibonacci retracement maybe?

  209. akash mahajan says:

    can u explain me that for short trade why we look at the immediate support level as a target we should look at resistant for buying trade as a target here is that complete statement:(S&R can be used to identify targets for the trade. For a long trade, look for the immediate resistance level as target. For a short trade, look for the immediate support level as target)

    • Karthik Rangappa says:

      This is because when you short, you expect the price to go lower. So you first sell at a higher price and buy back at a lower price.

  210. Venkat says:

    Hi Karthik,

    I am analysing the daily charts for KotakBank and observe that on the 17th a Bullish Harami pattern is formed. Now I am trying to calculate the support and resistance levels for this chart and am finding it difficult as its been in a constance uptrend and now a small downtrend and I am not able to apply the technique suggested in this chapter, i.e., identifying price clusters or sudden spikes and connecting them with a line. I was reading about using ascending and descending triangles and using the width to come up with a support and resistance.
    I want to check if this is a valid approach or if there is a different technique to calculate support and resistance when the stock is in a long term up/down trend.
    The chart I am referring to can be found here. https://drive.google.com/file/d/17sYhUuyA2N5y_Mj5xGeqei4hB3y5zaYX/view?usp=sharing

    • Karthik Rangappa says:

      Valid point, Venkat. It is hard to identify support when the stock is constantly trending in either direction. You can certainly use the concept of ascending triangles or even trend lines to identify support or resistance.

  211. Nitin says:

    Hi, i was making my analysis regarding support and resistance on aurobindo and i saw that the current market price is above the resistance price. There were no traces behind where the current market reaching at this high before. where as the resistance should be above the current market price. Also, could you please tell me if the support and resistance line constructed is right or wrong. Thanks.
    https://drive.google.com/open?id=1u8HYpmse38dikIANfPa53qL06x-YIxU8

    • Karthik Rangappa says:

      Yes, Nithin….this is becuase the stock is trending. Your S&R lines are fairly accurate.

      • Nitin says:

        Sir, suppose you make a Support and Resistance for intraday with 10 days 15 mins chart, and also you consider the range of the prices for support and resistance. So, within how much time or days will the current market price fall to its support level and vice versa to its resistance level?
        Also, can you tell how much time or days will the current market price fall to its support and resistance for long positions?
        thanks.

        • Karthik Rangappa says:

          Nitin, unfortunately, you cannot draw timelines in the market. So no one can really answer this question for you 🙂

  212. Sourabh Rathi says:

    Dear Karthik,

    Isn’t it counter-intuitive to have stop-loss equal to support because support means that there is more probability that prices will go up and in case of a long trade if prices reach the “stop loss level of the pattern” and incidentally it is also the support level then I am more certain that the prices will now take an upward rally (since it is at the support level) instead of a downward one. And this will be in my benefit as I would be recovering from the losses (losses, since the prices are lower than they were when I took a long position) which I have made. Please clarify this doubt.

    • Karthik Rangappa says:

      I’m not sure if I get your point completely, but quoting from your comment “because support means that there is more probability that prices will go up and in case of a long trade “, exactly why having SL around support for long trades makes sense. In the case of a short trade, the same logic applies to the resistance.

  213. Ajinkya Sawrikar says:

    Hey Karthik ! The s1 & r1 for Titan company are 895.49 and 925.69 respectively (calculated using pivot points) and it’s CMP is 880.90. I’m looking forward to short sell but like you said the 2nd criterion of S&R is not confirmed. The R1 is way above the CMP. Should I hesitate to make a trade ?

  214. Sandeep Dhaka says:

    Sir I need you help and guidance. Please have a look at the chart of Tata Motors
    https://drive.google.com/file/d/1PAFXebJSygm4xSL9xOiabBB4mP_-in7q/view?usp=drivesdk
    Sir I am looking for a long term opportunity. I anaylsed the Tata Motors monthly chart from 2008. I drew support at 290. The price in 2013-14 was sticky and there was a sharp reversal in 2016 from this price. In mid of 2012, price also reversed and a small down in price was observed. In 2011, there was also reversal from 270 though our support line is at 290. Considering an upper and lower level of 5, our support zone comes between 285 and 290. Now the CMP is below the support and made a low of 245 in Aug 2018. Clearly the support level is broken. In july 2018 Hummer pattern formed with considerable increase in volume and in August price increased from 245 to 275 with rising volume giving an indication of change in reversal. Now I am confused as the price is below the support level and a confirmation by pattern and volume for trend reversal is observed. My question is- support level drawn correctly? If yes then should I wait for price to move above CMP to enter in trade. The whole purpose of my question is educational.

  215. Rahul says:

    Dear Sir,
    I have read all the modules about technical analysis. I’m still having difficulty identifying support and resistance on a chart.
    Is there any other way to do it?

  216. Rachit says:

    Hi Sir,

    Thanks for providing such an informative article. Nowadays, most of the knowledgeable people are sadists who don’t want to help others, but you are a rare exception. While going through this article on S&R, I started analyzing some stocks. There are quite a few where a recognizable candlestick pattern is formed, but due to constant up or down movement in the past couple of years, we can’t deduce and S&R. What should we do in such a situation? Should we avoid trading the stock? Thanks so much sir.

    • Karthik Rangappa says:

      Thanks for the kind words, Rachit.

      If the stock is constantly moving then there could be levels of S&R being formed. I’d suggest you carefully look for it.

  217. Dhananjay Chaudhari says:

    Karthik sir, while plotting support or resistance line what data points should we take into consideration? Low or Close?
    And sir, you haven’t described marking channel or trend line in this module, isn’t that important? like ascending triangle or range breakouts? please explain sir.

    • Karthik Rangappa says:

      I’d suggest you look at the close, not the low. Low can just be a spike. Yes, I’ve not done that, will try and add it as a supplementary note.

      • Dhananjay Chaudhari says:

        Thank you sir. Am eagerly waiting for those supplementary notes.
        Your explanation is so lucid and simple for a newbie. I started reading this technical analysis notes a year ago and after reading your TA module only, i got to know about technical analysis. previously i use to think it must be a great task to learn TA but your platform has made everything so simple. After taking this lessons as basics, I’ve surfed the net and YouTube for further exploration. And even today whenever in doubt i go through them or comment my doubts over here, and thanks to you, you’re always here to help!
        Your TA shishya forever..

  218. saiteja says:

    What is the basis for calculationg Pivot Point (Standard in kite). As it is not matching with the general fORMULA

  219. You can find the logic used for Pivot points in this link. Similar logic is used industry wide.

  220. Viswajith says:

    Dear Sir,

    Please find the sentence from the material below

    S&R should confirm to the trade. The stop loss price should be around S&R
    For a long trade, the low of the pattern should be around the support
    For a short trade, the high of the pattern should be around the resistance

    can you give more detail abut the wordings – “around S&R”, “around the support” and “around the resistance”

    • Karthik Rangappa says:

      By saying ‘around S&R’, I mean the vicinity. For example, if you figure out that a stock has a support at 55, then I’d consider anywhere between 53 – 57 as the support band. This is what I mean.

      • viswajith says:

        Thank you sir for the reply. I would also like to know if there is any tool/study in PI to plot S&R apart from the manual plotting mentioned in the material.

  221. Arun says:

    Dear Karthik,
    If some level has acted as support in the past, will that level act as support only in future also, or support & resistance can exchange level with each other.
    Hopefully I m making sense..means if we have drawn some level as support but in past that level has acted as resistance, wl this level clear as support level presently?

    • Karthik Rangappa says:

      Support and Resistance keep interchanging, based on the current traded price. Also, once a support/resistance is created, it stays valid forever.

  222. Sanju says:

    Hi could you plz tell me best time frame & best indicator ( for entry & exit) for intraday? Also how to choose S & R……i mean during day trading, should i wait till 10am or till 12pm to find out S&R for the day.

    • Karthik Rangappa says:

      Nothing like the best indicator, Sanju. Really depends on your trading style. I always prefer EOd charts for all analysis, including S&R.

      • Sanju says:

        What exactly is EOD chart? Where can I find EOD chart?

        • Karthik Rangappa says:

          EOD = End of Day. You can find this across pretty much all charting software, including Kite.

          • Sanju says:

            Hey Karthik,

            Where is EOD chart in kite, I couldn’t find in indicator/studies?? Bro plz be specific know….or if u can plz share screen shot.
            Plz guide ……

          • Karthik Rangappa says:

            Open the chart in Kite, the first dropdown you find is set to 1D by default (next to view option). 1D means the end of day. From here you can change to any time period you’d want.

  223. shubham says:

    Hello kartik sir please add a chapter on option chain analysis to find out support and resistance of nifty

  224. Shubham says:

    Please tell me how to select a suitable timeframe for a stock for finding support and resistance levels ??
    Thank you !!

  225. Jimit Bafna says:

    Sir, in most of the software’s they show 3 support & resistance points, along with a pivot point, can you please explain why is it so?

  226. Gopi says:

    Sir i am using zerodha pi . Im trying to find support and resistance levels.
    The timeframe that i selected is EOD or 1D . But the Minimum duration it is showing is 1 Y . I cannot find the 3 or 6 month duration as stated above

    • You should be able to select all timeframes on Pi for Pivot tables(1 min to a week). The pivot points will be calculated using candles for a day for all minute and hourly charts and candles for 1 week for all daily charts.

  227. Amandeep Singh Baveja says:

    Hi Karthik.
    https://drive.google.com/file/d/1BzUjGoCgt-uYDCXm0vOTkcgS7WWvJwtw/view?usp=sharing
    I’ve plotted S&R for PNB bank on a 3 month chart
    1. Can you pls check it and suggest where i can improve?
    2. If it is correct then how can we explain such a drastic movement happened before oct? News is the only answer or some other factors could be there?
    3. If i’ve correctly plotted the S&R then the distance between Support n resistance lines is less. Taking plus minus 3 adjustment in both will reduce it further. Can u explain this please

    And if it is completely wrong can u please upload a correct version of it so that i can see where i was wrong?

    • Karthik Rangappa says:

      1) I think the region between 70 and 73 is more tighter, I can see a lot of price action there
      2) The S&R lines are indicative of a certain price reaction…pretty much like everything else in the markets. Remember there are no guarantees here.
      3) This really depends on a case to case basis. You should never force fit the S&R points on a chart.

      I guess you are more or less on the right track!

  228. pentayya polagani says:

    Dear SIR,
    IS it possible in kite charts to show Boring candle/biasing candle , mark price zones-demand and support zones, Risk-Reward similar to what is available in charts of SHAREKHAN.? kindly help if it is possible ,otherwise, may kindly add these features sothat Zerodha will be the best trading software. Regards

  229. PIYUSH says:

    Sir,
    I am new to the concept of investing and in a learning stage.
    I am trying to draw the Res. Price and support Price for the SunPharma (just for practice)as of 29/12/2018, so while i can draw atleast two resistance price lines, yet i am unable to figure out the support price, due to the current prices being at their minimum for past year.
    Now, how do i conclude whether i am entering the market at the right time or not. What if i just buy one share and book a loss. That would be a bummer.

    • Karthik Rangappa says:

      Piyush, if the stock is making new high or low then this is a problem. You will have to take lot more data points into consideration.

  230. Apurva Anil Kunkulol says:

    Hi Karthik Sir,
    Recently(Jan-11-2019) the price levels of TataMotors has fallen to levels around 180. It formed a Bearish engulfing pattern. I have some queries as follows:
    – Volumes are also seen above average here. So if it were to be considered a shorting call, how can we proceed to plot the S&R?
    – The recent price levels where it lingered, were around 166 twice and 156 once.
    – But the 156(and around) levels have been attained only before 2012, so can that be considered?
    – Can the 166(and around it) level be considered for a target, then(since, if we go methodically, then a price level should at least be touched thrice.)?

    Thanks,
    Apurva.

    • Karthik Rangappa says:

      1) If the stock is at an all-time low, then it will be difficult to plot S&R because there are no previous data points to form the price action zone
      2) You should aim for 166 and from then on, trail to 156.

  231. CHIDAMBARAM V says:

    Hi Sir,
    Kindly add chapters on following topics,as it will be a great help.
    1. Demand and Supply zone trading concepts.
    2.Gap Trading concepts.
    3.Eliot and Wolfe wave concepts.
    4. Gann concepts
    It seems to be difficult to understand from other platforms. 🙁 Would be easy to understand with your simplified illustration.
    Also a gentle reminder,you said you will put up a Module on Mutual funds but not able to find them yet 🙁

  232. Bharani says:

    Hi,

    Thanks for the great tutorial – its presented in a easily understandable format .

    I have a query.

    When to exit a stock, that has already appreciated and breaks out of resistance level as well?

    a. Should we exit near the resistance level, even when the momentum is positive and volumes are high?
    b. Should we look for price decrease and volume increase?

    Confusion arises, as the target given by brokers is well above the 6 months resistance levels – please advise on the strategy

    For e.g I bought Infy @676 – it is trading around 730+ now. But I see the target price well above 800 for it, from many broking houses

  233. SUHAS says:

    Hi Sir,
    My question is about support and resistance. Some times when the price of stocks reaches at Support levels or resistance levels, they reacts to contrary; they may keep go down or move upward. It makes difficult for me to take a position due to this. So how could we understand such situations?

  234. NIKHILESH JOSHI says:

    Sir ,which type of support should we used there are number of types of support and resistance in zerodha kite.

  235. Pathmabalan Thiruvengadam says:

    Dear Karthik,

    How to draw lines in zerodha chart? I tried using the dra, but am not able to draw any lines in the chart. Is that i need to draw manually in my paper? Can you please help me on this.

    • Karthik Rangappa says:

      You can use the draw functionality in kite. Pick the line (either horizontal or vertical) and place it anywhere on the price level. This works quite smoothly.

  236. […] the famous proverb in stock trading, battle of ‘bulls and bears.’ which can be referred to the support and resistance levels. Support is a term given to the point where demand is deduced to be stable and strong that […]

  237. […] the famous proverb in stock trading, battle of ‘bulls and bears.’ which can be referred to the support and resistance levels. Support is a term given to the point where demand is deduced to be stable and strong that […]

  238. […] the famous proverb in stock trading, battle of ‘bulls and bears.’ which can be referred to the support and resistance levels. Support is a term given to the point where demand is deduced to be stable and strong that […]

  239. Ashutosh Jain says:

    Hi Karthik,

    Please help me out with a doubt.

    S&R levels may change based on the time candlestick period we select. Which means 15 min period and 1 day period may have very different S&R levels.

    So, my questions are:
    1) If we trade intraday using 15 min candlestick periods. What should be the look back period for plotting S&R levels and should the CS period remain 15 min while doing so?
    2) What should be the look back period for plotting S&R levels for long term investments (2-3 years) and what should we select as candlestick period? Should it be 1 day candlesticks?

    Thanks!

  240. Maarg says:

    In “Support” topic you have mentioned Entry Price – 442 and Stoploss at – 445 Higher than the current market price .Why?

  241. Senthil Kumar says:

    Hi Karthick

    If i bought “X” shares after conforming Bullish pattern, after some days if Bearish candles is formed , in that situation should i hold or sell , kindly suggest

  242. Vinay Dangwal says:

    Sir,
    Can you help me identifying S&R in this chart
    https://www.tradingview.com/x/mVMEgoD3/

  243. Deep Dave says:

    Hi,

    If I am trading a Nifty Future, should I take Support and Resistance into consideration of the Underlying or of the Future?

    If Nifty has a Resistance of say 12,000, should I look for that 12,000 mark on the Underlying or on the Future?

  244. Apurva Anil Kunkulol says:

    Hi Karthik Sir,
    Just as ideally two price action zones must be placed at least 2 weeks apart in EoD charts,
    what should the separation be in intraday charts, say for 15 min charts?
    i.e. the separation period between two price action zones in intraday.

    Thanks.

  245. Apurva Anil Kunkulol says:

    Thanks.

  246. Ajay kumar Das says:

    what should be the candlestick time frame to find S&R for intraday.

  247. Himanshu modi says:

    Hi Karthik sir, can we use the pivot point method to calculate support and resistance level ..¿

    • Karthik Rangappa says:

      Hmm, I guess there are few decent articles on this. Let me try and source that. By the way, in my opinion, classic approach is still the best way to figure the S&R points.

  248. rajesh says:

    how to find s & r in intraday, weekly, monthly or yearly and specially in a commodity like gold, silver and crude oil, as we cannot find s & r as above guided.

    • Karthik Rangappa says:

      The technique does not change based on the time frame and look back period, Rajesh. It is the same across all assets and timeframes.

  249. santosh shetty says:

    Dear sir,
    First of all i would like to say thank you for all valuable information.

    I am following monthly trading chart.To put S&R level how many months i should take? Only 12 months not enough it seems.

    Kindly help me to come out of this problem.

  250. santosh shetty says:

    Thank you sir 🙂

  251. Pratik Shah says:

    Hi Karthik,

    I just want one clarification, Can we define S/R irrespective of trend before hesitation? Or it needs to be uptrend before hesitation for resistance point and down trend before hesitation for support point?

  252. Rohiit says:

    Hi Karthik,

    Can you pls let me know how we can calculate intermediate support and resistance .These are small support and resistance level between the actual support and resistance level and in some cases they also turn out to be important reversal point.

    Regards
    Rohit

    • Karthik Rangappa says:

      I’d personally ignore these minor S&R levels because more often than not, they don’t add much value to your analysis.

  253. Jitu says:

    Sir
    If suppose 2 price zones are average time spaced but 3rd price zone found at same level before many years,will it work for S&R.

  254. rajesh says:

    hello

    how to find S & R in commoditys because in a commoditys there are contracts of 1 months so how to find ? i also have demat in zerodha.

  255. Abhishek says:

    Hi Sir
    How to identify S&R if a stock is continuously growing or trending since a long time?

  256. Aishwarya mishra says:

    How far the support level should be from stop loss in percentage if I go long .I have read the chapter and it said stop loss should be near the support. But how much is near.

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