i. Three Premises of Technical analysis. -Market action discounts everything -Prices move in trends -History repeats itself ii. Important Reversal Patterns i.Primary reversal Patterns -Head & shoulders -Double tops & Triple tops -Rectangle

1. Technical Analysis for
Begineers-102

2. Disclaimer
Please note that the information contained within this presentation is for
educational purposes only and should not be construed as any financial or
investment advice. By reading this document, the reader agrees that under no
circumstances is the author responsible for any losses, direct or indirect, which
are incurred as a result of the use of information contained within this
document, including, but not limited to, errors, omissions or inaccuracies.
Any transaction involving currencies involves risks including, but not limited to,
the potential for changing political and or economic condition that may
substantially affect the price or liquidity of a currency.
In short, trading can be challenging and might not suitable for everyone. Before
deciding to participate in the markets, you should carefully consider your
investment objectives, level of experience, risk appetite and take full
responsibility for your trade decisions.

3. Introduction

4. Three Premises of TA
There are three premises on which the
technical approach is based:
1. Market Action discounts everything
2. Prices move in trends
3. History repeats itself

5. 1. Market Action discounts everything
 Cornerstone of TA
 The technician believes that anything that can
possibly affect the price-fundamentally,
politically, psychologically or otherwise-is
already reflected in the price of that market.
 Therefore, study of price action is all that is
required.

6. 2. Prices move in trends
 The whole purpose of charting the price action
of a market is to identify trends in early stages
of their development for the purpose of trading
in the direction of those trends.
 There is a corollary to the premise that prices
move in trends-a trend motion is more likely to
continue than to reverse.
 An adaption of Newton’s first law of motion

7. Objects in motion remain in motion unless acted
upon by an unbalanced force

8. 3. History repeats itself
 Much of the body of technical analysis and the
study of market action has to do with the study
of human psychology.
 Since these patterns have worked well in the
past, it is assumed that they will continue to
work well in the future.

9. Important Reversal
Patterns

10.  Prices move in trends
 Sonner or later, these trends change direction
 They may reverse or they may be interrupted by
some sort of sideways/ranging.
 In most cases, when a price trend is in the process
of reversal, a characteristic area or “pattern” takes
shape on the chart, becomes recognizable as a
reversal formation.

11.  Big reversal formation suggests a big move to
follow and a small pattern, a small move to
follow.

12. 1. The Head-and Shoulders

13. The Head-and Shoulders
 Is a price reversal pattern that helps traders identify
when a reversal may be underway after a trend has
exhausted itself
 Usually occurs at the end of the uptrend
 It is formed by a peak (first shoulder), higher peak
(head), and a lower peak (second shoulder)
 The two shoulders also form peaks but do not
exceed the height of the head.
 Symmetry is not essential to H& S

14.  Left Shoulder
-Price is in a clear uptrend, then reaches a peak and starts to
decline.
-This peak formed the "right shoulder" in the pattern.
 Head
-Price completes a brief decline and rallies again to an even higher
peak.
-Price then begins to decline from this higher peak which forms the
"head" in the pattern.
How is this pattern formed?

15.  Right Shoulder
-Price rallies again, but fails to reach the high of the previous rally
(head)
 Neckline
-You can draw a “ neckline” by connecting two bottoms-the bottom
just prior to the head formation, and the bottom just after the head
formation

16. H&S- Neckline

17.  The neckline can slope up, slope down or be
horizontal.
 When the slope is down, the pattern provides a
more reliable sell signal.
 The pattern is only valid when it broke below the
neckline
H&S- Neckline

18. 2. Double Tops
 A double top occurs when the price
reaches a high point, retraces, rallies
back to a similar high point, and then
declines again.
 Neckline
The low point of the retracement between
the two peaks is marked with a horizontal
line.
 Sometimes called “M” formation
 The second double top moderately
active and nearly as sharp and “spiky” in
contour as the first.

19.  Minimum length between the two peaks- at least
1 month.
 The pattern is only valid when it broke below the
neckline
Double Tops

20. 3. Triple Tops
 Triple Top chart pattern is just an extension of the
double top pattern.
 Sometimes referred to as “W” Pattern
 This pattern forms when the price-action fails to break
below the neckline decisively, after the second peak.
 The price goes up again and finds another resistance
near the same level as of the previous two peaks.

21.  Technically, a triple top pattern shows is that the
price is unable to penetrate the area of the
peaks.
 Translated into real-life events, it means that,
after multiple attempts, the asset is unable to
find many buyers in that price range.
 The pattern is only valid when it broke below the
neckline
Triple Tops

23. 4. Rectangle
 Picture of conflict
 Conflict in supply-demand sense
 Directional tendency
It can be a continuation or reversal pattern
 Rectangle formations may often produce false
breakouts and premature Breakout.

25. THANK YOU