How to Predict the Stock Index (3 Steps)

Choose the indices that you would like to follow. Monitor the price levels and volume levels of each index to watch for breakouts. Determine the resistance and support levels of the index for the period of time appropriate to your trading time frame. The resistance level is determined as a maximum price level that has been reached three times or more but not exceeded during a given period of time. The support level is calculated in a similar way, but at the minimum price level. If the price of a security exceeds the resistance or support levels, it's called a 'breakout' and indicates the possible beginning of a trend.
Trade breakout levels accordingly for the index you're trying to predict. If a resistance level is breached, you may wish to buy an index fund or index exchange-traded fund (ETF) that provides broad exposure to that index. If the support level is breached significantly, you may want to short-sell one of those funds.
Protect your investment in an index fund by using stop-loss orders. Trends can persist for long periods of time, but historically, most of them encounter re-tracements or reversals. For example, the Nikkei 225 of Japan experienced a high of more than 20,000 in the year 2000. In 2009, it remained at the 10,000 level, although it managed to reach a high of approximately 18,000 in 2007. Even strong trends are prone to eventual reversals.

How to Learn Stock Market Charts

Locate the stock symbols of the companies you are investigating. Knowing the location of the stock symbol (normally on the top left hand corner of a stock chart) will allow you to quickly identify the stock with which you are dealing. Familiarize yourself with all of the symbols which are a part of your stock portfolio by committing them to memory, or simply have them printed out and placed in an area where they can easily be seen.
Read the high and low price points of the stock. Understanding the high and low price of your stock is crucial when it comes to reading stock charts. Viewing the high and low of the stock will let you see the highest price that stock reached, and the lowest price which the stock reached over a given period of time. Most online charts give the option to show different periods of time, from one day to a year or more.
Find the moving average. A moving average tracks the movement of the stock during a particular time frame. Comprehend that you can track the movement of a stock chart over a 30 or 90 day time frame.
Determine the stock volume. Volume simply means the number of people that were trading the stock on any given day. The volume is usually found beneath the price graph. Track the volume in days, months or weeks by referring to the dates on the chart. A high volume indicates a lot of transactions taking place on that day, which usually moves the stock significantly up or down.
Analyze trends. Know that when the price of a stock market chart is trending in an upward direction, the price is likely to go higher due to trading momentum. Similarly, stocks that are moving in a downward direction will tend to keep moving in that direction. Observe which direction the stock chart you are reading is moving. If the price is moving toward the top right corner of the chart, the stock is trending up. If the stock price is moving in the direction of the lower right corner of the chart, the stock is trending in a downward direction.
Understand support and resistance levels. Support refers to the lowest point a stock has a tendency to reach and then rebound in an upward direction. Resistance is the point a stock will normally reach and then seem to bounce off that price level and move in a downward direction.