First start paying attention to the ways everyone acts the same under different circumstances. Then watch for individuality. So if you say, go to a funeral, and observe all the people who are crying because they are upset. Then you look for the individual ways in which they mourn. Then look at the people who are not crying, and how they are reacting to the situation.
Try to find common themes among the people you are watching. For instance you may find that all the people from one bucket (the loud emotional crying) share similar views on life, and loss. The people who mourn silently have other views, beliefs, or ways of expressing themselves. You come to get to know how people interact from a natural state. The groupings of people who interact the same, under any possible condition.
Then you can observe the same characteristics under different circumstances, and get a feel for how each sub-category differs in different circumstances. Then you pick up when something is off. Out of the norm, you have this person acting in this way, and can narrow in that something is different about how they are perceiving the current situation. Compare that against the knowledge you have acquired about different reactions under different circumstances, and see which reaction fits naturally to the current situation.
Then take the unnatural reaction and apply it to the normal situation, and connect the ideas of why someone would think that way under these circumstances.
Once you have a hypothesis, watch for cues to either support or negate your idea. If they cues seem to conclude that you were correct in your reading, good for you. If not, start again and see where you made a mistake.
Basically, learn what people do. Learn what individual people do. Learn what is the norm, so you can pick up on the abnormal, then personalize the experience to the person you are trying to read.
Did that make any sense? Lol!