One question: Lots of my readers ask - Should one position for breakout? It means should one enter the stock before it actually breaks out
The answer: It depends
All one needs to do - Observe stock behavior near breakout resistance. If the stock starts trading sideways and belongs to a bullish sector, then there is a high probability that stock might break out. Even a better strategy: keep an eye on the stock and jump on the vehicle the day stock exhibits momentum and shows sign of breakout.
Here's one stock chart to keep an eye on: Bajaj Finserv
As you can see in the chart above - Bajaj Finserv has developed a well-defined resistance at 2050-2060. Now the stock is trading sideways, just below resistance and considering the way it has rallied towards resistance, sooner or later - the stock is expected to breakout. All one needs to do: keep a close eye on the stock be ready for breakout move
I am sharing this stock as an example. It will help you learn how break outs eventually work out.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers