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1. Piyush Kumar
2K20/DMBA/087
Technical Analysis
Hindustan Unilever Limited
Candlestick Chart
The concept of candlestick charts came from Japan. That is why they are often referred to as Japanese
candlestick charts. These charts are the most versatile and popular form of chart representation. Price
behavior during eachtime unit is representedin the form of a candle. If the closing price of a stock is higher
than open price during a particular time period, then the candle is green,if the close price is below the open
price, then the candle is red. Each candle has a body and two wicks. The distance between open to close is
representedby the body of a candle and the upper and lower wicks representthe highs and lows of a candle.
Candlestick chart is special not only because it adds a special visual clarity about the price action, but also
because often a single candle stick or two or three consecutive candlesticks together form a pattern that
indicate reversalof a prior move or give conviction on continuation of the ongoing move. These are called
candlestick patterns.
Different Indicators according to the chart are:
 Supertrend Indicator
 Bollinger band

2.  MACD
 ADX
 RSI
Types of indicators used:
1. Supertrend indicator
A Super Trend is a trend following indicator similar to moving averages. It is plotted on price and the
current trend can simply be determined by its placement vis-a-vis price. It is a very simple indicator and is
constructed with the help of just two parameters- period and multiplier.
When we construct the Supertrend indicator strategy,the default parametersare 10 for Average True Range
(ATR) and 3 for its multiplier. The average true range (ATR) plays a key role in ‘Supertrend’ as the
indicator uses ATR to compute its value and it signals the degree of price volatility.
Application: - from observing the chart, on 19th
oct, the supertrend indicator shows that there will a
downward trend in the market. We cannot see any double bottom to even predict that market will rise up in
the future. So, the price of the stock will tend to move down and also the supertrend indicator is showing
red signal which indicates sell signal i.e., the closing price is lower than the indicator value.
2. Bollinger Band
Bollinger Bands are a trading tool used to determine entry and exit points for a trade. The bands
are often used to determine overbought and oversold conditions. Using only the bands to trade is
a risky strategy since the indicator focuses on price and volatility, while ignoring a lot of other
relevant information. Bollinger Bands are a rather simple trading tool, and are incredibly popular
with both professional and at-home traders.
Application: - the Bollinger band can be seen expanding over a period of a month which signifies that
the market is highly volatile. On 12th
sept., red candle stick crosses the upper resistance band in the
downward direction after which the stock is in downward trend continuously below the 20-period moving
average. This can be concluded as oversold of the stock.
3. MACD
MACD stands for Moving Average Convergence / Divergence. It is a technical analysis indicator created
by Gerald Appel in the late 1970s. The MACD indicator is basically a refinement of the two moving
averages system and measures the distance between the two moving average lines
The MACD does not completely fall into either the trend-leading indicator or trend following indicator; it
is in fact a hybrid with elements of both. The MACD comprises two lines, the fast line and the slow or
signal line. These are easy to identify as the slow line will be the smoother of the two.
Application: - As on 16th
oct we can see that MACD line is intersecting the decreasing bar from the
bottom and showed an upward trend till 10th
oct. After that the decreasing bar intersected MACD line on
10th
October and started the downtrend. So, the market for the stock is in downward trend as the distance
between two lines are increasing from then.

3. 4. ADX: Positive and Negative directional movement forms the backbone of the Directional Movement
System. Welles Wilder determined directional movement by comparing the difference between two
consecutive lows with the difference between their respective highs.
The Plus Directional Indicator (+D1) and Minus Directional Indicator (-DI) are derived from smoothed
averages of these differences (mentioned above), and measure trend direction over time. These two
indicators are often referred to collectively as the Directional Movement Indicator (DMI).
The Average Directional Index (ADX) is in turn derived from the smoothed averages of the difference
between +Dl and DI, and measures the strength of the trend either uptrend or downtrend (regardless of
direction).
Application: - on 26th
sept, it could be seen that the positive directional indicator (+DI) line crossed the
base ADXline and started to move in the downward direction and then on 17th
oct we can observe that the
+DI line intersected the -DI line which can be implemented that the socks are moving in a downtrend and
it may cross the ADX line in future which will bring down the price of the stock even more.
5. RSI: Relative Strength Index (RSI) is a momentum oscillator, developed by J. Welles Wilder, which
measures the speed and velocity of price movement of trading instruments (stocks, commodity futures,
bonds, forex etc.) over a specified period of time. The objective of RSI indicator is to measure the change
in price momentum. It is a leading indicator and is widely used by Technical Analysts over the globe. RSI
can be used to spot a general trend. It is considered overbought when it goes above 60 and oversold when
it goes below 40. 40-60 region of RSI is considered to be normal zone.
Overbought and Oversold in RSI
The RSI is a price-following oscillator that ranges between 0 and 100. Generally, technical analysts use
30% oversold and 70% overbought lines to generate the buy and sell signals. • Go long when the indicator
moves from below to above the oversold line. • Go short when the indicator moves from above to below
the overbought line. Note here that the direction of crossing is important; the indicator needs to first go past
the overbought/oversold lines and then cross back through them.
Application: - As we took overbought and oversold at 60 and 40 respectively. As we can see from the
chart,the market wasin a sideways trend from 17th
September till 18th
October.Afterthat the market started
falling below the oversold line and goes on decreasing till now. So, it can be said that the market can rise
up in future but right now it will follow the downtrend.
Conclusion: - So, the final conclusion I, as an investor if has bought some stocks of HUL would sell
the stocks as the market is moving the bearish trend. By observing the market from august till now it is
showing downtrend on weekly basis. So, there is a high chance that the market will follow a bearish trend
for some time as no indicator is showing any chances of moving in an upward trend.