Technical Analysis Presentation                                  1
Introduction Basicof Financial Market What is Research F & O Strategies                             2
Financial Market   It is a mechanism that allows    people to buy and sell financial    securities .   Types of Financia...
Financial Instrument   FD   Govt. Security   Equity   Mutual Fund   Commodity   Real estate   Bond   Currency     ...
Research                        Demand &                        SupplyPolitical Factors                          Macro Eco...
Research               Prices &               Volumes                                  Open Interest Intra Day Charts     ...
Basic Assumption & Chart   Price moves in trend   History tends to repeat it self   The market discounting everything ...
Technical Indicator   Trend line   Support   Resistance   Pivot   Moving average                      8
Different types of Pattern   Doji candle stick pattern   The Bullish and Bearish Engulfing   The Hammer   Morning star...
Open Interest Open  Interest details Change in OI and price Rollover figures                           10
Technical Analysis (VersusFundamental Analysis)   Technical analysis is a method of    forecasting price movements by loo...
12
Tools Of The TradeWe accomplish these things by: Identifying the short, medium and long-term  trends for market direction...
Technical analysis   Technical Analysis is the forecasting of    future financial price movements based    on an examinat...
Premise of Technical Analysis   All known Fundamental    Information are shown in Price.   All changes in Emotion and   ...
The three basic principles ofTechnical Analysis Price Discounts Everything Prices move in trends History repeats itself...
1. Price discounts everything   Technical analysts believe that the current    price fully reflects all information.   B...
2. Prices Move in Trends   Technical analysts or chartists    believe that profits can be made by    following the trends...
Prices move in Trends   Price may be rising – Market is in an    Uptrend (Bullish)   Prices may be falling – Market is i...
Up Trend           20
Down Trend             21
Sideways Trend                 22
3. History Repeats Itself   This result’s in periodical emerging of the    similar price patterns and technical    indica...
Chart Presentation StylesBar Chart            Line ChartCandlestick          Total Return or Comparative                  ...
Basic Tool of Technical Analysis   The Chart       A picture of changes in Investor Sentiment and        Emotions over t...
Charts Shows Where:   Investor    Sentiment:     Turned Negative     Turned Positive                             Break ...
Chart Timeframes   Monthly   Weekly   Daily   Intra-    day     Hourly     10     minute    2     minute,          ...
Market Participants  Participant        Time in Position      Selection Decision    Timing Decision                       ...
Levels of Technicals   Support level – level at which    declining share may evoke a    substantial increase in price is ...
Support & Resistance                       30
More about trends   There are 3 types of trends as per the time factor.   Major Trend – Seen on the Monthly charts (6 mo...
Chart Patterns.Trendlines - Support lines & Resistance lines   Channels   Rectangles   Head & Shoulders Top & Bottom  ...
Trendline support
Trendline resistance
HLL – Quarterly chart (Channels)
EKC – Rectangle Pattern
RIL – Rectangle Pattern
RIL – Daily chart (Head & Shoulders Top)
Shipping Corp – Head and Shoulders Bottom
Tata Motors – Daily chart (Triangles)
L&T – (Ascending Triangle)
Triangles            42
Tripple Top & Bottom                       43
Cup and Handle Pattern                         44
Rounding Pattern                   45
Wedges         46
How to use Technical Analysis   Volumes   Price increase Volume increase …… Bullish   Price decrease Volume increase…… ...
Volume & Price Relationship   Important part of technical analysis   High trade volume is considered as    bullish trend...
AnalysisIndicatorsOscillatorsVolatility               49
Element in Strategy Testing   Entry Rate: Entry rate is the actual rate    where one can enter a trade on getting a    bu...
Element in Strategy Testing   Entry Stop: It may happen that when one enters a trade    using a particular strategy, the ...
Exit Reasons   Exit Signals: Displays all the exit trades that have    been generated by the reversal of the entry trade ...
Indicators                                    Oscillators Moving    Averages      simple MA                    Momentu...
Buy Signal   Stock price rises through the    Moving Average (M.A.)line when the    graph of the M.A. line is flattering ...
Sales Signal   Stock price line falls through the    M.A. line when the graph of the    M.A. line is flattering out.   S...
Moving Averages – Monthly chart                                  56
Moving Averages – Weekly chart                                 57
Tisco MACD (Weekly chart – buy/sell)                                       58
Punj Lloyd MACD – Daily Chart buy/sell)                                          59
Gold Kg – Daily chart – Buy/Sell                                   60
Negative Divergence on AD LineNI FTY [ N59901] 6143. 45, 6144. 05, 5970. 60, 5988. 70, 903835008 -2. 17%                  ...
AD Volume LineNI FTY [N59901] 6143.45, 6144.05, 5970. 60, 5988. 70, 903835008 -2.17%                               0. 00Pr...
McClellan OscillatorNIFTY [ N59901] 6143.45, 6144.05, 5970. 60, 5988. 70, 903835008 -2.17%                                ...
McClellan Summation IndexNIFTY [N59901] 6143.45, 6144. 05, 5970. 60, 5988. 70, 903835008 -2.17%                           ...
This (Arrow Signal) Feature is available for following indicators only.       ->   Adaptative moving Avg       ->   Arron ...
Alternative methods Fibonacci. Dow   Theory. Elliot Wave. Japanese Candlesticks. Gann Theory.                        ...
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Research Analysis

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Research Analysis

  1. 1. Technical Analysis Presentation 1
  2. 2. Introduction Basicof Financial Market What is Research F & O Strategies 2
  3. 3. Financial Market It is a mechanism that allows people to buy and sell financial securities . Types of Financial Market Capital Market (Primary and secondary) Commodity market Money Market (Short term Debt) Foreign Exchange market 3
  4. 4. Financial Instrument FD Govt. Security Equity Mutual Fund Commodity Real estate Bond Currency 4
  5. 5. Research Demand & SupplyPolitical Factors Macro Economic Issues Fundamental Analysis International Environmental Price Global Events Conditions Movements & Markets 5
  6. 6. Research Prices & Volumes Open Interest Intra Day Charts Technical Analysis Indicators: Historical Data-Candlesticks, Trend Monthly & Weeklylines & Moving average 6
  7. 7. Basic Assumption & Chart Price moves in trend History tends to repeat it self The market discounting everything Charts Line chart Bar chart Candle Stick Point and Figure chart 7
  8. 8. Technical Indicator Trend line Support Resistance Pivot Moving average 8
  9. 9. Different types of Pattern Doji candle stick pattern The Bullish and Bearish Engulfing The Hammer Morning star and Evening star Triangle pattern Double Top and Double bottom Head and Shoulder 9
  10. 10. Open Interest Open Interest details Change in OI and price Rollover figures 10
  11. 11. Technical Analysis (VersusFundamental Analysis) Technical analysis is a method of forecasting price movements by looking at purely market-generated data. A trader who uses technical analysis (sometimes called a technician or chartist) is essentially concerned with two things; 1) what is the current price? 2) What is the history of price movement? 11
  12. 12. 12
  13. 13. Tools Of The TradeWe accomplish these things by: Identifying the short, medium and long-term trends for market direction. Identifying the levels of support and resistance to determine where price is likely to change direction. Identifying price (or Chart) patterns that indicate reversals or the continuation of a trend. Using technical indicators to reveal useful market forces behind the price to predict future movements and determine good points of entry and exit. 13
  14. 14. Technical analysis Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time. 14
  15. 15. Premise of Technical Analysis All known Fundamental Information are shown in Price. All changes in Emotion and Sentiment are shown in Price and Volume action. 15
  16. 16. The three basic principles ofTechnical Analysis Price Discounts Everything Prices move in trends History repeats itself 16
  17. 17. 1. Price discounts everything Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value, and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, and investors Stock Market Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future. 17
  18. 18. 2. Prices Move in Trends Technical analysts or chartists believe that profits can be made by following the trends. In other words if the price has risen, they expect it to continue rising; if the price has fallen, they expect it to continue falling. 18
  19. 19. Prices move in Trends Price may be rising – Market is in an Uptrend (Bullish) Prices may be falling – Market is in a Downtrend (Bearish) Prices may be moving sideways – Non- trending market (Sideways market) 19
  20. 20. Up Trend 20
  21. 21. Down Trend 21
  22. 22. Sideways Trend 22
  23. 23. 3. History Repeats Itself This result’s in periodical emerging of the similar price patterns and technical indicators (based on price patterns). These patterns, generated by price movement, often signify what type of movement is to come in the near future. The goal in technical analysis is to identify and use these price patterns in the current market to predict what will happen in the future by examining and quantifying their regular effects in the past. 23
  24. 24. Chart Presentation StylesBar Chart Line ChartCandlestick Total Return or Comparative 24
  25. 25. Basic Tool of Technical Analysis The Chart  A picture of changes in Investor Sentiment and Emotions over time.  Shows where Trader Greed became excessive and turned to Fear – “Resistance”  Shows where Trader Fear became excessive and turned to Greed – “Support”  Shows when Investor Sentiment has changed. – “Breakouts” above Resistance or below Support  Show Investor Commitment – Big Volume Breakout  Shows when the Public is jumping in – Up trends  Shows when the Pros are bailing out – Down trends 25
  26. 26. Charts Shows Where: Investor Sentiment:  Turned Negative  Turned Positive Break Down Pros bailing out Public jumping in Breakout Trader Emotion: Resistance  Greed turned to Fear  Fear turned to Support Greed 26
  27. 27. Chart Timeframes Monthly Weekly Daily Intra- day  Hourly  10 minute 2 minute, 27
  28. 28. Market Participants Participant Time in Position Selection Decision Timing Decision Based on: Based on:Long Term (LT) Months to Years Company Fundamentals Charts Investor Fund Manager HistoryIntermediate (IT) Weeks to Months Market Rankings Charts TraderShort Term (ST) 3 – 10 Days Charts Charts“Swing” Trader Day Trader Hours Charts Charts Micro Trader Seconds to Minutes Charts Charts 28
  29. 29. Levels of Technicals Support level – level at which declining share may evoke a substantial increase in price is called support level (price fall below certain level) Resistance level – the share price is not likely to rise above the level of stock price (price rise above certain level) 29
  30. 30. Support & Resistance 30
  31. 31. More about trends There are 3 types of trends as per the time factor. Major Trend – Seen on the Monthly charts (6 months to 3-4 years) Intermediate Trend – Seen on the Weekly charts (3 weeks to 6 months) Minor Trend – Seen on the Daily charts (3 days to 3 weeks) Trend Reversal. When the Index/Stock changes direction from Up Trend to a Sideways Trend or Down Trend or vice versa. Support & Resistance. Once a support/resistance is violated by 3% or 3 consecutive trading sessions it reverses its role, i.e., Support becomes resistance and vice versa. 31
  32. 32. Chart Patterns.Trendlines - Support lines & Resistance lines Channels Rectangles Head & Shoulders Top & Bottom Triangles Cup & Handle Rounding
  33. 33. Trendline support
  34. 34. Trendline resistance
  35. 35. HLL – Quarterly chart (Channels)
  36. 36. EKC – Rectangle Pattern
  37. 37. RIL – Rectangle Pattern
  38. 38. RIL – Daily chart (Head & Shoulders Top)
  39. 39. Shipping Corp – Head and Shoulders Bottom
  40. 40. Tata Motors – Daily chart (Triangles)
  41. 41. L&T – (Ascending Triangle)
  42. 42. Triangles 42
  43. 43. Tripple Top & Bottom 43
  44. 44. Cup and Handle Pattern 44
  45. 45. Rounding Pattern 45
  46. 46. Wedges 46
  47. 47. How to use Technical Analysis Volumes Price increase Volume increase …… Bullish Price decrease Volume increase…… Bearish Moving Averages Short, Medium, and Long Term moving averages MACD Moving Average Convergence Divergence
  48. 48. Volume & Price Relationship Important part of technical analysis High trade volume is considered as bullish trend Low trade volume is considered as bearish trend. High volume with constant rise in price is consider as more bullish trend. Trends – stock price behaviour 48
  49. 49. AnalysisIndicatorsOscillatorsVolatility 49
  50. 50. Element in Strategy Testing Entry Rate: Entry rate is the actual rate where one can enter a trade on getting a buy/sell signal. One can either consider the Day’s close as the entry rate OR Next day’s opening as the entry rate. Exit Rate: Exit rate is the actual rate where one can exit a trade on getting a sell/short cover signal. One can either consider the Day’s Close as the exit rate OR Next day’s open as the exit rate. 50
  51. 51. Element in Strategy Testing Entry Stop: It may happen that when one enters a trade using a particular strategy, the stock price may come down immediately. In such a case an Entry Stop loss has to be entered, which if triggered, the trader may exit the position. One needs to monitor such exits also in testing the Strategy. The trader may keep the Entry Stop according to the Risk reward ratio. This may help the trader identify how many times an entry stop is hit when he enters a trade using a particular strategy. Trailing Stop: If the Trailing stop feature is enabled, it would help the trader to identify as to how many times the Trailing stop is triggered and it made the Trader exit the trade. For eg,if the Entry rate is 800 and the Trailing Stop is Initiated (Initiate Trailing Stop) is kept at 10%,then when the stock reaches 880,the Trailing stop would be initiated and when the Stock fall below 2% from this level (i.e. 880) to 862.4. 51
  52. 52. Exit Reasons Exit Signals: Displays all the exit trades that have been generated by the reversal of the entry trade strategy. For eg: If one enters a long trade when a 8 day EMA crosses the 13 day EMA and when you get a exit signal on reversal (ie 8 day EMA cuts 13 day EMA down),it is displayed as Exit Signal Entry Stops: Displays all the exit trades that due to hitting of the entry Stops. Profit Stops: Displays all the Exit Trades that occurred due to hitting of the Target set. Trail stops: Displays the entire exit Trades that occurred due to hitting of the Trailing Stops. 52
  53. 53. Indicators  Oscillators Moving Averages  simple MA  Momentum  weighted MA  Stochastics  exponential MA  many more MACD (RSI, ROC, …) MACD-line: EMAshort-term – EMAlong-term 53
  54. 54. Buy Signal Stock price rises through the Moving Average (M.A.)line when the graph of the M.A. line is flattering out. Stock price line falls below the M.A. line which is rising Stock price line which is above the M.A. line, falls but begins to rise again before reaching the M.A. line 54
  55. 55. Sales Signal Stock price line falls through the M.A. line when the graph of the M.A. line is flattering out. Stock price line rises above the M.A. line which is falling Stock price line which is below the M.A. line, rises but begins to fall again before reaching the M.A. line 55
  56. 56. Moving Averages – Monthly chart 56
  57. 57. Moving Averages – Weekly chart 57
  58. 58. Tisco MACD (Weekly chart – buy/sell) 58
  59. 59. Punj Lloyd MACD – Daily Chart buy/sell) 59
  60. 60. Gold Kg – Daily chart – Buy/Sell 60
  61. 61. Negative Divergence on AD LineNI FTY [ N59901] 6143. 45, 6144. 05, 5970. 60, 5988. 70, 903835008 -2. 17% 1085744256.0Price Log I RI S 15/ 09/10 Wed 6300 Op 5795. 25 Hi 5869. 45 Lo 5792. 20 6200 Cl 5860. 95 6100 6000 5900 Negative 5800 Divergence : Market 5700 was Rising But Ad 5600 Line was Falling 5500 5400 Source : www. SpiderSof t wareI ndia.Com 5300Vol Cr Qt 80.98 100 75. 00 50. 00 25. 00ADL AD-150361. 00 -148000.00 -150000.00 -152000.00 61 10: J A S O N Dly
  62. 62. AD Volume LineNI FTY [N59901] 6143.45, 6144.05, 5970. 60, 5988. 70, 903835008 -2.17% 0. 00Price Log I RI S 13/ 10/ 10 Wed 6300 Op 6091.45 Hi 6240.25 In the Last Screen we have 6200 Lo Cl 6089.75 6233.90 seen that AD Line was not 6100 6000 supporting the Market ,But 5900 Though Market Made New High 5800 Reason is AD Vol Line was 5700 Supporting it. 5600 5500 5400 Source : www.SpiderSof t wareIndia.Com 5300Vol Cr Qt 100.87 100 75.00 50.00 25.00ADvL AD 13934.65 14000 13750 13500 13250 62 13000
  63. 63. McClellan OscillatorNIFTY [ N59901] 6143.45, 6144.05, 5970. 60, 5988. 70, 903835008 -2.17% 618335360. 00Price Log IRIS 15/ 10/10 Fri 6300 Op 6175.90 Hi 6200.60 6200 Lo 6050.35 Cl 6062.65 6100 6000 5900 5800 5700 Useful For Traders to Know the 5600 Market Strength 5500 5400 Source : www. SpiderSof twareIndia.ComVol Cr Qt 85.98 100 75.00 50.00 25.00McOsc(Y,E,19,E,39) Mc -2. 63 2.50 0.00 -2. 50 Base Line Like MACD Zero LineAvg(S, 1) Avg(S,20) Av -2. 63 2.50 Av -0. 64 0.00 -2. 50 McOsc Ploted as an Average 63 10: J A S O N Dly
  64. 64. McClellan Summation IndexNIFTY [N59901] 6143.45, 6144. 05, 5970. 60, 5988. 70, 903835008 -2.17% 0. 00Price Log IRIS 20/ 09/ 10 Mon Op 5885. 05 6200 Hi 5989. 50 Lo 5885. 05 6000 Cl 5980. 45 5800 5600 5400 Useful to Medium to Long Term Investor 5200 Source : www. SpiderSof twareIndia.Com to know Market Strength 5000 4800Vol Cr Qt 89. 44 100 50. 00McOsc(Y,E, 19, E,39) 5.00 Mc 1. 49 0.00McSum(Y, E, 19, E, 39) 0.00 Mc -28. 79 Base Line Like MACD Zero Line -50. 00Avg(S, 1) Avg(S, 20) 0.00 Av -28. 79 Av -36. 25 McSum Ploted as an Average -50. 00 64
  65. 65. This (Arrow Signal) Feature is available for following indicators only. -> Adaptative moving Avg -> Arron Up Down Indicator -> ATP -> Average -> Avg 2 line 2 input -> Avg OHLCVUT -> Avg Short Long -> Candlestick momentum index -> Chande Mommentum Oscillator -> Chande Vidya Indicator -> Commodity Chanel Index -> Directional Mov Index -> Directional Trend Index -> KST -> Money flow index -> Relative Strenght Index (RSI) -> Rsi Up/Down 65
  66. 66. Alternative methods Fibonacci. Dow Theory. Elliot Wave. Japanese Candlesticks. Gann Theory. 66

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