Dear Anilji do you trade Break Outs:
For example a stock has a well identified resistance of say 400, and it crosses on heavy vols and then it builds base around 400 for a week, so will think of buying that around 400 levels ?
Dear sabharwalji,
Yes i trade breakouts. What you are referring is a pattern i called breakout and retest. Where volumes under pattern is normal one and during breakout it should be above average but not necessarily highest one.
Generally scrips go under period of consolidations. And the breakout from such are have prolonged effect, my observation is scrips move almost 50-6-% in a month or two in such situations.
Its a perfect pattern, but you should know your risk reward well. Breakout is nothing but the emotional surge from that pattern that outburst the resistance levels. Once emotions settles down, like a pullback towards breakout level or even it retest it. As we learn in classical TA, 'once resistance becomes support now'. So testing these levels give a nice oppurtunity.
Now these pullbacks take forms of flags, wedges or simple retracement.
As you posted in your example scrip. The stock undergone almost a 2-year consolidation period with stable volumes. And During breakout volume is above average, and after breakout it tested nicely the BO level and runaway with volumes.
