This document provides an overview of technical analysis, including its key definitions, assumptions, differences from fundamental analysis, and various technical indicators used to analyze market trends such as support and resistance levels, trend lines, and Dow theory. Technical analysis uses historical price and volume data to identify patterns and predict future market behavior. It assumes current prices reflect all known information, prices move in trends, and past trends may recur in the future.
The document introduces the RSI indicator strategy for trend reversals on timeframes of 5-15 minutes for currency pairs like EURUSD and GBPUSD. It explains that RSI shows when the price is overbought or oversold, signaling trend reversals back within its 30-70 trading range. It provides instructions on how to set up the RSI indicator on a 1-minute candle chart using a period of 5, and describes buying put options when RSI drops below 70 from overbought conditions or call options when RSI rises above 30 from oversold conditions.
Rectangles are consolidation patterns that signify indecision between buyers and sellers. They form when price ranges between high and low barriers with alternating highs and lows, and volume tapers off over time. The breakout from the rectangle is reliable, with prices unlikely to return once broken. Target price moves are usually the height of the rectangle. Flags are short, slight price trends within a larger movement that last 1-2 weeks. Rounding bottoms form at market bottoms as investor interest wanes, signaling a reversal from bearish to bullish.
Technical analysis is the attempt to forecast stock prices based on historical market data like price, volume, and other indicators. Chartists look for trends and patterns in charts that may signal future price movements. While perfect market timing could provide high returns, it is difficult to achieve consistently. Technical analysts use various chart types and indicators to analyze market trends and generate buy/sell signals, but there is no consensus on any single method and past performance is not a guarantee of future results.
Technical analysis is the study of price, volume, and open interest to forecast market trends by analyzing charts and indicators. It is based on the assumptions that current prices reflect all known information, prices trend over time, and history repeats. Technical analysis focuses on market effects rather than fundamental causes and can be applied quickly to any market. It helps understand market psychology and short-term movements.
Technical analysis is the attempt to forecast stock prices based on historical market data such as price, volume, and other indicators. Technicians look for trends and patterns that may indicate future price movements. They analyze charts like bar charts, candlestick charts, and point and figure charts to identify patterns. Common patterns include head and shoulders, triangles, and rounded tops/bottoms. Technicians also use indicators like MACD, RSI, and Bollinger Bands to generate buy and sell signals. The goal is to time entries and exits to generate above-market returns, though perfect timing is difficult to achieve in practice.
Technical analysis is a method of forecasting the direction of prices through studying past market data like price and volume. It assumes that market patterns repeat and prices move in trends. The key tenets of technical analysis are that: 1) Price movement is determined by supply and demand forces, 2) Trends persist but also reverse, 3) Price patterns repeat. Technical analysis uses charts and patterns to identify trends and predict future price behavior, in contrast to fundamental analysis which examines financial statements.
Technical analysis is a method for estimating future security prices based on historical price and volume data. It assumes market psychology repeats and that data can predict buyer and seller behavior. Charts like candlestick are used to analyze trends, support/resistance levels, and retracements. The golden rule is to trade with the prevailing trend: buy in uptrends, sell in downtrends, and avoid trading in sideways trends.
The document introduces the RSI indicator strategy for trend reversals on timeframes of 5-15 minutes for currency pairs like EURUSD and GBPUSD. It explains that RSI shows when the price is overbought or oversold, signaling trend reversals back within its 30-70 trading range. It provides instructions on how to set up the RSI indicator on a 1-minute candle chart using a period of 5, and describes buying put options when RSI drops below 70 from overbought conditions or call options when RSI rises above 30 from oversold conditions.
Rectangles are consolidation patterns that signify indecision between buyers and sellers. They form when price ranges between high and low barriers with alternating highs and lows, and volume tapers off over time. The breakout from the rectangle is reliable, with prices unlikely to return once broken. Target price moves are usually the height of the rectangle. Flags are short, slight price trends within a larger movement that last 1-2 weeks. Rounding bottoms form at market bottoms as investor interest wanes, signaling a reversal from bearish to bullish.
Technical analysis is the attempt to forecast stock prices based on historical market data like price, volume, and other indicators. Chartists look for trends and patterns in charts that may signal future price movements. While perfect market timing could provide high returns, it is difficult to achieve consistently. Technical analysts use various chart types and indicators to analyze market trends and generate buy/sell signals, but there is no consensus on any single method and past performance is not a guarantee of future results.
Technical analysis is the study of price, volume, and open interest to forecast market trends by analyzing charts and indicators. It is based on the assumptions that current prices reflect all known information, prices trend over time, and history repeats. Technical analysis focuses on market effects rather than fundamental causes and can be applied quickly to any market. It helps understand market psychology and short-term movements.
Technical analysis is the attempt to forecast stock prices based on historical market data such as price, volume, and other indicators. Technicians look for trends and patterns that may indicate future price movements. They analyze charts like bar charts, candlestick charts, and point and figure charts to identify patterns. Common patterns include head and shoulders, triangles, and rounded tops/bottoms. Technicians also use indicators like MACD, RSI, and Bollinger Bands to generate buy and sell signals. The goal is to time entries and exits to generate above-market returns, though perfect timing is difficult to achieve in practice.
Technical analysis is a method of forecasting the direction of prices through studying past market data like price and volume. It assumes that market patterns repeat and prices move in trends. The key tenets of technical analysis are that: 1) Price movement is determined by supply and demand forces, 2) Trends persist but also reverse, 3) Price patterns repeat. Technical analysis uses charts and patterns to identify trends and predict future price behavior, in contrast to fundamental analysis which examines financial statements.
Technical analysis is a method for estimating future security prices based on historical price and volume data. It assumes market psychology repeats and that data can predict buyer and seller behavior. Charts like candlestick are used to analyze trends, support/resistance levels, and retracements. The golden rule is to trade with the prevailing trend: buy in uptrends, sell in downtrends, and avoid trading in sideways trends.
Stock chart-Chart patterns and formations-Analysis of chart patternAkbarAli309
This document discusses stock charts and chart patterns. It begins by defining different types of stock charts, including line charts, bar charts, and candlestick charts. It then explains common chart patterns such as double tops and bottoms, head and shoulders, triangles, channels, and wedges. Key aspects of these patterns like support and resistance zones are described. The document provides examples of each pattern and discusses how technical analysts use patterns to potentially predict future price movements and identify reversal signals.
Technical indicators are mathematical representations of market patterns and behavior that are used to generate buy and sell signals and confirm price movements. Some common leading indicators that precede price movement include RSI, Parabolic SAR, Stochastic, and Williams %R. Lagging indicators like MACD and moving averages follow price movement. Technical analysis uses indicators like RSI, Stochastic, and Bollinger Bands to identify overbought and oversold markets. Divergences between indicators and prices also signal potential trend reversals.
This document provides an introduction to technical analysis for investors. It outlines several key techniques of technical analysis including price charts, candlestick patterns, trend lines, support and resistance, moving averages, and chart patterns. Price charts visually represent stock price data and can take the form of line charts, bar charts, or candlestick charts. Candlestick patterns provide insight into market sentiment. Trend lines identify uptrends and downtrends while support and resistance levels indicate where buyers and sellers enter the market. Moving averages smooth price data to identify trends. Finally, chart patterns like triangles, flags, double tops, and head and shoulders formations signal potential reversals or continuations in price. Technical analysis tools help gauge the probability of future price
This document provides an overview of technical analysis and the tools used for short-term forecasting of stock prices and trends. It discusses chart patterns like head and shoulders and double tops/bottoms that indicate reversals, as well as trend lines, triangles, and indicators like MACD that can provide buy and sell signals. Examples are given of each tool using charts of actual stock data to illustrate technical analysis in action.
The document provides an introduction to technical analysis (TA), covering some of its basic concepts and techniques. It discusses TA basics like price charts and trends. It then explains common basic formations like trend lines, channels, and reversal patterns. The document also introduces Japanese candlestick patterns and popular technical indicators like moving averages and the MACD. It emphasizes that TA analyzes past price and volume data to identify patterns that may forecast future price movements.
Triangles are patterns formed by converging trend lines meeting at a single point, showing indecision in the market. There are three main types: ascending, descending, and symmetrical triangles. Triangles can indicate continuation or reversal of the pre-existing trend. Volume is generally low inside the triangle and increases at the breakout. Traders watch for breakouts of the trend lines and aim to enter positions in the direction of the breakout. Stop losses are placed outside the pattern to limit risk. Patterns like triangles can provide insight into market behavior but may not always work as expected.
The document provides an overview of technical market indicators, classifying them into four main groups: trend indicators, breadth indicators, contrarian indicators, and oscillators. It discusses trend indicators in more detail, defining them as indicators that measure the main direction of the underlying security or market. Trend indicators have the advantage of being stronger than other indicators since markets trend most of the time, allowing trend-following strategies to be profitable. However, trend indicators also have the complication of being lagging rather than leading indicators that only confirm trends after they have occurred.
- The document discusses technical analysis, which uses patterns in stock prices and trading volume to predict future stock performance, rather than analyzing companies' financials.
- It outlines various technical analysis techniques like charting patterns, indicators like RSI and Bollinger Bands, and identifying support and resistance levels.
- Technical analysis is believed to be one of the oldest forms of security analysis and is still widely used today, though it also faces challenges from theories like the efficient market hypothesis.
Support and resistance (SR) levels define the trading range of a stock's price movement. The support level is the lowest price in the range that buyers currently consider worthwhile, where downward trends may halt or reverse. The resistance level is the highest price that sellers currently consider worthwhile, where upward trends may halt or reverse. Analyzing SR levels is fundamental to technical analysis, as it provides signals on potential changes or continuations in price trends within the established trading range.
By www.ProfitableTradingTips.com
Scalping in Day Trading
Traders who engage in rapid momentum trades are often scalping in day trading. These traders make their profit from the difference between bid and ask prices. Even in a flat market traders can profit from scalping in day trading. In order to successfully make a business out of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. Despite the theoretical possibility of trading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. Thus when scalping in day trading one acts as a mini trend trader as well.
In and Out of Positions in a Hurry
There is a rhythm to scalping in day trading and it is fast. Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. This strategy guarantees a profit if the trader acts quickly. It can result in losses if the stock price moves too quickly. As an example, Xyz Corporation has a bid price of $10.10 and ask price of $10.15. If the scalper can buy at the bid price and sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. However, the market might move lower before he can complete his trade. Let’s say that the stock moves so that the bid price is now $9.90 and the ask price is $9.95. The trader who purchased for $10.10 now needs to sell at $9.95 if he wants to quickly exit his trade. The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. This later course is anathema to scalping in day trading. When scalping a trader is never trying to outguess the market but simply helping to make the market and make repetitive small profits.
The Nature of Bid and Ask Prices
Bid and ask prices are available on markets across the world. By using this price system traders are able to execute trades immediately, so long as there are enough bid prices to match ask prices. The difference between bid and ask prices is called the spread. Gaining the spread on every trade is the goal when scalping in day trading. The ideal scalping trade would be instantaneous. Buy at the low price and sell at the high. Getting in and out in an instant would seem to be the ideal situation if dealing with absolutely static bid and ask prices. However, the market is never static so traders must look to market direction even when scalping in day trading. A successful scalper also engages in trend following in day trading.
Think of the Spread as a Bonus
Scalping in day trading takes advantage of market movement as well as the bid to ask spread. While trend traders use technical analysis to read market sentiment they attempt to ride out a trade to gain the maximum profit.
A forex trading strategy is a technique used by traders to determine when to buy and sell currency pairs based on technical analysis, fundamentals, or developed trading signals. Effective strategies include selecting markets, establishing entry and exit points, determining position size, and developing trading tactics. Traders should evaluate whether a strategy remains profitable and suited to current market conditions, and be willing to modify or change strategies when necessary to maintain effectiveness.
This document provides 16 tips for consistently making profitable stock trades in any market. It advises traders to understand how different industries and sectors react, wait for a clear setup in a stock before chasing it, allocate a minimum of 200 shares to factor in commissions, let stocks play out without watching them daily, sell on bad news or large downside volume, and use indexes to identify sectors that may move with current market trends. The document also encourages further learning technical analysis skills through online courses with a money-back guarantee.
Technical analysis is the study of stock price movements by analyzing historical price data like charts and indicators. It assumes market prices reflect all known information and historical trends will repeat. Common techniques include analyzing price patterns, support/resistance levels, candlestick/line charts, moving averages, and indicators like RSI. Reversal patterns like head and shoulders or double tops signal trend changes, while continuation patterns like flags/triangles suggest pause before trend resumes. Technical analysis has weaknesses like requiring experience, potential bias, and inability to predict new phenomena.
The document summarizes 9 common trading mistakes: 1) Trying to bottom fish and catch falling stocks. 2) Timing market tops which are hard to predict. 3) Trading against the dominant trend. 4) Taking losses personally. 5) Becoming emotionally attached to stocks. 6) Chasing stocks with runaway momentum. 7) Averaging down on losing positions. 8) Ignoring preset stop-loss limits. 9) Letting losses accumulate instead of cutting them quickly. The key is to limit losses by adhering to stop-losses and not become emotionally invested in positions.
Technical analysis uses charts of market action to detect trends and predict future prices based on the idea that history repeats itself. Various technical indicators are used to analyze price, time, volume, and market breadth to identify trend changes. Dow theory analyzes market averages to identify primary bull and bear markets through confirmation between averages. Charts like line charts, bar charts, and point and figure charts along with common patterns like triangles, head and shoulders, and rectangles are used to identify trends and signals.
Opening range breakout trading strategyNasir Tareen
The document discusses strategies for trading opening range breakouts. It defines the opening range as the high and low prices established within the first hour, 30 minutes, 15 minutes, or even one minute after the market opens. It recommends taking long signals if the price breaks above the high of the opening range or short signals if the price breaks below the low of the opening range. Additional factors like volume, daily chart trends, and catalysts can improve the odds of a successful trade. An example trade is presented to illustrate how to profit from an opening range breakout.
This document discusses the importance of risk management in trading and investing. It outlines the basic principles of risk management, including having a defined trading strategy with entry, stop loss, and profit taking levels. It emphasizes limiting risks on individual trades to 2-5% of capital and maintaining a reward to risk ratio of at least 1:2. The document also provides examples of how risk management differs between beginner, intermediate, and professional traders.
The document discusses various basic chart patterns including double tops and bottoms, head and shoulders, wedges, rectangles, pennants, and triangles. It describes the formation and interpretation of each pattern, including whether they indicate a reversal or continuation of the existing trend. Common patterns include double tops formed during uptrends indicating a potential trend reversal downward, symmetrical triangles showing consolidation between bulls and bears, and ascending triangles seen as continuation patterns during uptrends.
This document lists and defines various candlestick patterns used in technical analysis. It separates the patterns into bullish and bearish categories and provides the name of over 40 different candlestick patterns in each category.
The document provides an outline for an introduction to technical analysis seminar. It discusses key concepts in technical analysis including Dow theory, different types of charts, common chart patterns, and popular indicators. Dow theory examines trends in the Dow Jones Industrial and Transportation averages to identify primary, secondary, and minor trends in the market. Technical analysis uses tools like candlestick charts, moving averages, and oscillators to identify trends and signals in security prices.
Stock chart-Chart patterns and formations-Analysis of chart patternAkbarAli309
This document discusses stock charts and chart patterns. It begins by defining different types of stock charts, including line charts, bar charts, and candlestick charts. It then explains common chart patterns such as double tops and bottoms, head and shoulders, triangles, channels, and wedges. Key aspects of these patterns like support and resistance zones are described. The document provides examples of each pattern and discusses how technical analysts use patterns to potentially predict future price movements and identify reversal signals.
Technical indicators are mathematical representations of market patterns and behavior that are used to generate buy and sell signals and confirm price movements. Some common leading indicators that precede price movement include RSI, Parabolic SAR, Stochastic, and Williams %R. Lagging indicators like MACD and moving averages follow price movement. Technical analysis uses indicators like RSI, Stochastic, and Bollinger Bands to identify overbought and oversold markets. Divergences between indicators and prices also signal potential trend reversals.
This document provides an introduction to technical analysis for investors. It outlines several key techniques of technical analysis including price charts, candlestick patterns, trend lines, support and resistance, moving averages, and chart patterns. Price charts visually represent stock price data and can take the form of line charts, bar charts, or candlestick charts. Candlestick patterns provide insight into market sentiment. Trend lines identify uptrends and downtrends while support and resistance levels indicate where buyers and sellers enter the market. Moving averages smooth price data to identify trends. Finally, chart patterns like triangles, flags, double tops, and head and shoulders formations signal potential reversals or continuations in price. Technical analysis tools help gauge the probability of future price
This document provides an overview of technical analysis and the tools used for short-term forecasting of stock prices and trends. It discusses chart patterns like head and shoulders and double tops/bottoms that indicate reversals, as well as trend lines, triangles, and indicators like MACD that can provide buy and sell signals. Examples are given of each tool using charts of actual stock data to illustrate technical analysis in action.
The document provides an introduction to technical analysis (TA), covering some of its basic concepts and techniques. It discusses TA basics like price charts and trends. It then explains common basic formations like trend lines, channels, and reversal patterns. The document also introduces Japanese candlestick patterns and popular technical indicators like moving averages and the MACD. It emphasizes that TA analyzes past price and volume data to identify patterns that may forecast future price movements.
Triangles are patterns formed by converging trend lines meeting at a single point, showing indecision in the market. There are three main types: ascending, descending, and symmetrical triangles. Triangles can indicate continuation or reversal of the pre-existing trend. Volume is generally low inside the triangle and increases at the breakout. Traders watch for breakouts of the trend lines and aim to enter positions in the direction of the breakout. Stop losses are placed outside the pattern to limit risk. Patterns like triangles can provide insight into market behavior but may not always work as expected.
The document provides an overview of technical market indicators, classifying them into four main groups: trend indicators, breadth indicators, contrarian indicators, and oscillators. It discusses trend indicators in more detail, defining them as indicators that measure the main direction of the underlying security or market. Trend indicators have the advantage of being stronger than other indicators since markets trend most of the time, allowing trend-following strategies to be profitable. However, trend indicators also have the complication of being lagging rather than leading indicators that only confirm trends after they have occurred.
- The document discusses technical analysis, which uses patterns in stock prices and trading volume to predict future stock performance, rather than analyzing companies' financials.
- It outlines various technical analysis techniques like charting patterns, indicators like RSI and Bollinger Bands, and identifying support and resistance levels.
- Technical analysis is believed to be one of the oldest forms of security analysis and is still widely used today, though it also faces challenges from theories like the efficient market hypothesis.
Support and resistance (SR) levels define the trading range of a stock's price movement. The support level is the lowest price in the range that buyers currently consider worthwhile, where downward trends may halt or reverse. The resistance level is the highest price that sellers currently consider worthwhile, where upward trends may halt or reverse. Analyzing SR levels is fundamental to technical analysis, as it provides signals on potential changes or continuations in price trends within the established trading range.
By www.ProfitableTradingTips.com
Scalping in Day Trading
Traders who engage in rapid momentum trades are often scalping in day trading. These traders make their profit from the difference between bid and ask prices. Even in a flat market traders can profit from scalping in day trading. In order to successfully make a business out of scalping in day trading the trader needs to pay close attention to the market, always be aware of market fundamentals, and keep abreast of technical analysis. Despite the theoretical possibility of trading in an absolutely flat market the price of a stock constantly moves to some degree throughout the trading day. Thus when scalping in day trading one acts as a mini trend trader as well.
In and Out of Positions in a Hurry
There is a rhythm to scalping in day trading and it is fast. Traders seek to profit from the actions of traders to simply take the bid and ask prices of a stock. This strategy guarantees a profit if the trader acts quickly. It can result in losses if the stock price moves too quickly. As an example, Xyz Corporation has a bid price of $10.10 and ask price of $10.15. If the scalper can buy at the bid price and sell at the ask price he gains $0.05 per share, a small amount but a lot if repeated many times throughout the day. However, the market might move lower before he can complete his trade. Let’s say that the stock moves so that the bid price is now $9.90 and the ask price is $9.95. The trader who purchased for $10.10 now needs to sell at $9.95 if he wants to quickly exit his trade. The other choice is to continue the trade in hopes that the market will turn upward and not fall farther. This later course is anathema to scalping in day trading. When scalping a trader is never trying to outguess the market but simply helping to make the market and make repetitive small profits.
The Nature of Bid and Ask Prices
Bid and ask prices are available on markets across the world. By using this price system traders are able to execute trades immediately, so long as there are enough bid prices to match ask prices. The difference between bid and ask prices is called the spread. Gaining the spread on every trade is the goal when scalping in day trading. The ideal scalping trade would be instantaneous. Buy at the low price and sell at the high. Getting in and out in an instant would seem to be the ideal situation if dealing with absolutely static bid and ask prices. However, the market is never static so traders must look to market direction even when scalping in day trading. A successful scalper also engages in trend following in day trading.
Think of the Spread as a Bonus
Scalping in day trading takes advantage of market movement as well as the bid to ask spread. While trend traders use technical analysis to read market sentiment they attempt to ride out a trade to gain the maximum profit.
A forex trading strategy is a technique used by traders to determine when to buy and sell currency pairs based on technical analysis, fundamentals, or developed trading signals. Effective strategies include selecting markets, establishing entry and exit points, determining position size, and developing trading tactics. Traders should evaluate whether a strategy remains profitable and suited to current market conditions, and be willing to modify or change strategies when necessary to maintain effectiveness.
This document provides 16 tips for consistently making profitable stock trades in any market. It advises traders to understand how different industries and sectors react, wait for a clear setup in a stock before chasing it, allocate a minimum of 200 shares to factor in commissions, let stocks play out without watching them daily, sell on bad news or large downside volume, and use indexes to identify sectors that may move with current market trends. The document also encourages further learning technical analysis skills through online courses with a money-back guarantee.
Technical analysis is the study of stock price movements by analyzing historical price data like charts and indicators. It assumes market prices reflect all known information and historical trends will repeat. Common techniques include analyzing price patterns, support/resistance levels, candlestick/line charts, moving averages, and indicators like RSI. Reversal patterns like head and shoulders or double tops signal trend changes, while continuation patterns like flags/triangles suggest pause before trend resumes. Technical analysis has weaknesses like requiring experience, potential bias, and inability to predict new phenomena.
The document summarizes 9 common trading mistakes: 1) Trying to bottom fish and catch falling stocks. 2) Timing market tops which are hard to predict. 3) Trading against the dominant trend. 4) Taking losses personally. 5) Becoming emotionally attached to stocks. 6) Chasing stocks with runaway momentum. 7) Averaging down on losing positions. 8) Ignoring preset stop-loss limits. 9) Letting losses accumulate instead of cutting them quickly. The key is to limit losses by adhering to stop-losses and not become emotionally invested in positions.
Technical analysis uses charts of market action to detect trends and predict future prices based on the idea that history repeats itself. Various technical indicators are used to analyze price, time, volume, and market breadth to identify trend changes. Dow theory analyzes market averages to identify primary bull and bear markets through confirmation between averages. Charts like line charts, bar charts, and point and figure charts along with common patterns like triangles, head and shoulders, and rectangles are used to identify trends and signals.
Opening range breakout trading strategyNasir Tareen
The document discusses strategies for trading opening range breakouts. It defines the opening range as the high and low prices established within the first hour, 30 minutes, 15 minutes, or even one minute after the market opens. It recommends taking long signals if the price breaks above the high of the opening range or short signals if the price breaks below the low of the opening range. Additional factors like volume, daily chart trends, and catalysts can improve the odds of a successful trade. An example trade is presented to illustrate how to profit from an opening range breakout.
This document discusses the importance of risk management in trading and investing. It outlines the basic principles of risk management, including having a defined trading strategy with entry, stop loss, and profit taking levels. It emphasizes limiting risks on individual trades to 2-5% of capital and maintaining a reward to risk ratio of at least 1:2. The document also provides examples of how risk management differs between beginner, intermediate, and professional traders.
The document discusses various basic chart patterns including double tops and bottoms, head and shoulders, wedges, rectangles, pennants, and triangles. It describes the formation and interpretation of each pattern, including whether they indicate a reversal or continuation of the existing trend. Common patterns include double tops formed during uptrends indicating a potential trend reversal downward, symmetrical triangles showing consolidation between bulls and bears, and ascending triangles seen as continuation patterns during uptrends.
This document lists and defines various candlestick patterns used in technical analysis. It separates the patterns into bullish and bearish categories and provides the name of over 40 different candlestick patterns in each category.
The document provides an outline for an introduction to technical analysis seminar. It discusses key concepts in technical analysis including Dow theory, different types of charts, common chart patterns, and popular indicators. Dow theory examines trends in the Dow Jones Industrial and Transportation averages to identify primary, secondary, and minor trends in the market. Technical analysis uses tools like candlestick charts, moving averages, and oscillators to identify trends and signals in security prices.
Technical analysis is a method of evaluating securities using market data like prices and volume to identify patterns that can predict future price movements. Key aspects of technical analysis include trends, support and resistance levels, volume, chart patterns, and mathematical indicators. Trends can be up, down, or sideways. Support and resistance levels indicate where prices are likely to stop or reverse. Volume is used to confirm patterns and trends. Common chart patterns include head and shoulders, triangles, and flags. Popular indicators include moving averages, MACD, and RSI. While technical analysis uses historical data, critics argue this approach cannot consistently predict future prices according to the efficient market hypothesis.
Technical analysis is the study of price, volume, and open interest to forecast market trends using charts and indicators. It is based on the assumptions that current prices reflect all known information, prices trend over time, and history repeats. Technical analysis studies market effects rather than fundamental causes and can be applied quickly to any market. Key aspects of technical analysis include identifying trends, support and resistance levels, trend lines, and retracement levels.
i.Support & Resistance
-the psychology
-How to estimate the potential importance of Support & Resistance
ii. Trading with the trends
-Bullish and Bearish Trends
-Primary, secondary and Minor trend
iii. Fibonacci retracement
iv. “Lines” may substitute for secondary-Dow Theory
The document provides an overview of technical analysis. It defines technical analysis as identifying trend reversals using indicators such as price, volume, support/resistance levels, and chart patterns. It discusses various technical analysis tools like moving averages, oscillators, and chart patterns that are used to identify trends and potential reversals. The key difference between technical and fundamental analysis is that technical analysis focuses on internal market data like price and volume, while fundamental analysis considers external factors like the economy and company performance.
This document provides an overview of technical analysis. It discusses how technical analysis is used to identify trend reversals and formulate buying and selling strategies using indicators to analyze relationships between price and volume. The assumptions of technical analysis are that the market is determined by supply and demand, discounts all information, and moves in trends. The main theories discussed are Dow theory, which analyzes primary, secondary, and minor trends similar to tides, waves, and ripples in water. Primary trends can be bull or bear markets lasting 1-2 years, secondary trends correct the primary trend over 3 weeks to months, and minor trends are daily price fluctuations. Charts are provided to illustrate the different trend patterns.
This document provides an introduction to technical analysis and its key concepts and techniques. It discusses the basic assumptions of technical analysis, including that the market discounts everything, price moves in trends, and history tends to repeat itself. It then covers various charting techniques like line charts, bar charts, candlestick charts, and point and figure charts. It also discusses important concepts in technical analysis like chart patterns, trends, trend lines, channels, support and resistance, and specific patterns like head and shoulders, cup and handle, double tops/bottoms, triangles, flags, and pennants.
This document provides an overview of technical analysis in 3 paragraphs or less:
Technical analysis uses historical market data, particularly price and volume, to identify trends and predict future market movements. Charts like bar charts and candlestick charts are used to identify patterns indicating trends are strengthening or reversing. Technical indicators like moving averages, MACD, and ADX are analyzed to determine whether the market is trending or consolidating. Common chart patterns like head and shoulders and double tops/bottoms provide additional signals on the strength and direction of trends. Volume analysis is also important, with increasing volume confirming trends and decreasing volume indicating potential reversals.
The document discusses various technical analysis methods used to analyze securities including fundamental analysis and technical analysis. Technical analysis uses historical market data like prices and volumes rather than a company's financials. Specific technical analysis techniques covered include chart patterns, trends, resistance and support levels, candlestick charts, moving averages, indicators like relative strength index and on-balance volume. Advantages and limitations of technical analysis are also presented.
This document provides information on different types of financial market analysis, including fundamental analysis and technical analysis. Fundamental analysis studies factors like economic conditions and company financials, while technical analysis focuses solely on price patterns and trends. Several technical analysis techniques are described, including trend lines, support and resistance levels, consolidation and breakouts. Common chart types for technical analysis like line charts, bar charts, and candlestick charts are also mentioned. The document aims to explain the basic concepts and approaches of both fundamental and technical analysis.
Trends and Trendlines in Indian stock market.pdfiamraham
Trends and Trendlines explained for intraday and swing trading in Indian stock market. A complete guide for the trend identification for a short term or medium term investments.
The document discusses various technical analysis methods and theories, including:
- Dow Theory, which predicts upward market trends if one market average advances above a previous high and is followed by a similar move in another average.
- Primary and secondary trends in Dow Theory, where primary trends are the main market direction and secondary trends are temporary corrections.
- Bullish and bearish methods, where bull markets involve rising prices and bear markets see price declines of 20% or more.
- Elliott Wave Theory, which sees long-term price patterns as five successive waves that can indicate bull or bear markets.
- Dow theory was formulated from a series of editorials by Charles Dow, who believed the stock market could be used to measure business conditions.
- The theory uses trend analysis to determine the overall market direction by identifying primary, secondary, and minor trends. A primary trend remains in effect until a confirmed reversal occurs through peak-and-trough analysis.
- The theory also outlines bull and bear market phases including accumulation, public participation, and excess/panic phases. Market indexes must confirm each other's trends and volume must support price movements.
This document provides an introduction and overview of technical analysis. It defines technical analysis as using price movements to make trading decisions. Key concepts discussed include Dow Theory, chart construction, identifying trends through tools like moving averages, support and resistance levels, and trendlines. The advantages of technical analysis are that all market information is reflected in price and it provides a quantitative representation of market psychology. Technical analysis is compared to fundamental analysis.
Technical analysis is the forecasting of future asset prices based on past price movements. It uses charts, indicators, and patterns to analyze supply and demand forces influencing prices over time. The objectives are to determine the direction and extent of price trends, as well as when trends may reverse. Key aspects of technical analysis include identifying support and resistance levels, trendlines, moving averages, and common patterns like head and shoulders and triangles. Volume analysis and indicators provide additional context for interpreting price charts and anticipating trend changes.
This document provides an overview of technical analysis. It defines technical analysis as attempting to forecast stock prices based on market data like price and volume over time. Technicians look for trends and patterns that may indicate future price movements. The document discusses various chart types, patterns, indicators, and theories used in technical analysis like moving averages, MACD, RSI, Dow Theory and Elliott Wave. It also notes some of the potential benefits of market timing but challenges of doing so successfully. In summary, the document introduces the key concepts and techniques of the technical analysis approach to analyzing financial markets.
Technical analysis is the attempt to forecast stock prices based on historical market data such as price, volume, and other indicators. Technicians look for trends and patterns that may signal future price movements. Strict chartists do not consider fundamentals. The document outlines various technical analysis tools like moving averages, chart patterns, indicators, and theories such as Dow Theory that technicians use to predict markets.
Technical analysis is the attempt to forecast stock prices based on historical market data such as price, volume, and other indicators. Technicians look for trends and patterns that may signal future price movements. Strict chartists do not consider fundamentals. The document outlines various technical analysis tools like moving averages, chart patterns, indicators, and theories such as Dow Theory that technicians use to predict markets.
This document summarizes a research paper about hardware-enhanced association rule mining using hashing and pipelining (HAPPI). The HAPPI architecture proposes three hardware modules: 1) a systolic array that compares candidate itemsets to a database to find frequent itemsets, 2) a trimming filter that determines item frequencies to eliminate infrequent items, and 3) a hash table that is used to filter unnecessary candidate itemsets. The HAPPI architecture aims to reduce the number of candidate itemsets and database items loaded into hardware to address bottlenecks in previous hardware approaches for association rule mining. Experimental results showed that HAPPI significantly outperforms previous hardware and software methods.
1. The document describes a proposed system called HAPPI (HAsh-based and PiPelIned) architecture for hardware-enhanced association rule mining. HAPPI aims to solve performance bottlenecks in existing Apriori-based hardware schemes by reducing the frequency of loading the database into hardware.
2. HAPPI includes three hardware modules - a systolic array to compare candidate itemsets with database items, a trimming filter to eliminate infrequent items, and a hash table to filter unnecessary candidate itemsets.
3. The proposed HAPPI system is intended to address limitations of existing Apriori-based approaches that involve repeatedly loading large candidate itemsets and databases into hardware.
The document discusses a facial recognition system based on locality preserving projections (LPP). It begins by explaining that existing facial recognition systems using PCA and LDA aim to preserve global structure but local structure is more important. It then proposes a system using LPP, which aims to preserve local manifold structure by modeling the image space as a nearest-neighbor graph. The system represents faces as "Laplacianfaces" in a low-dimensional subspace that preserves local structure for more accurate identification. It provides theoretical analysis showing how PCA, LDA and LPP can be derived from different graph models.
Facial recognition systems analyze facial images to identify individuals. They measure facial features to create a unique template for each face. Historically, early systems used neural networks to recognize aligned faces. More advanced techniques like eigenfaces, laplacianfaces, and locality preserving projections map faces into subspaces to analyze them. Facial recognition has improved accuracy in identifying faces with variations in expression. However, it has limitations as it only utilizes a subset of human facial nodal points and does not account for manifold structure or biometric characteristics. Future areas of development include 3D recognition and unobtrusive audio-video identification systems.
Worldwide market and trends for electronic manufacturing servicesStudsPlanet.com
New Venture Research Corporation is a market research and business development consultancy that has specialized in contract manufacturing and outsourcing for over 15 years. They produce widely quoted syndicated research on the electronics manufacturing services industry. The presentation summarizes trends in the worldwide electronics assembly market between 2007-2012, with the computer and communications segments growing the fastest. It also reviews growth in the EMS market by geographic region as well as direct labor costs and leading contract manufacturers in key regions like Mexico, Eastern Europe, and China. In conclusion, the author predicts continued strong growth in the EMS market, particularly in low-cost regions, over the next 5 years.
This document provides an executive summary of the world electronic industries from 2008 to 2013. It finds that while the electronics industry experienced a decline in 2009 due to the financial crisis, production of professional electronic equipment is expected to drive overall growth above average between 2008 and 2013. Specifically, industrial and medical electronics will contribute significantly to industry growth. Additionally, China is projected to outperform other regions in recovering from the economic downturn. The summary highlights innovation and integration across various applications as keys to the long-term prospects of the electronics industry.
The document summarizes Alfred Weber's locational theory model, known as the Weberian model or the least cost approach. The key points are:
1. The Weberian model explains the optimal location of industrial facilities using the locational triangle. Transportation is the most important element of the model.
2. Solving the Weber model involves three stages - finding the least transport cost location, adjusting for labor costs, and adjusting further for agglomeration economies.
3. Transportation cost is the primary factor in determining optimal location, according to the model. Labor costs and agglomeration economies are secondary adjustment factors.
Kluckhohn and Strodtbeck developed a model for analyzing and comparing cultures based on their underlying values and orientations. The model identifies six key dimensions along which cultures vary: humanity's relationship with nature, concepts of time, views of human activity, social relationships, basic human nature, and orientation towards space. These dimensions provide a framework for understanding differences in how cultures approach issues like social organization, time orientation, and human nature. While useful, the model is limited by its vagueness, difficulty of measurement, and lack of direct focus on business and management issues.
The document discusses Kluckhohn and Strodtbeck's model of cross-cultural value orientations, which identifies six basic dimensions that cultures vary along: relationship to nature, time orientation, activity orientation, relationships among people, human nature, and space/property. These dimensions influence a culture's values regarding important issues like work, family, and social relations. While insightful, Kluckhohn and Strodtbeck's framework has weaknesses like being vague, difficult to measure, and not directly addressing business and management concerns.
This document outlines a model mediation procedure and agreement for intellectual property disputes in the UK. It provides guidance for conducting a mediation, including procedures for exchanging information, conducting the mediation, reaching and formalizing any settlement agreement, ensuring confidentiality, and allocating costs. Key aspects include having representatives with full authority to settle, preparing concise case summaries and documents to share, maintaining confidentiality of mediation discussions, and jointly sharing mediation fees and expenses.
Trompenaars and Hampden-Turner identified seven cultural dimensions along which cultures can be classified based on their research on business executives. These seven dimensions are universalism versus particularism, communitarianism versus individualism, neutral versus emotional, diffuse versus specific cultures, achievement versus ascription, human-time relationship, and human-nature relationship. Their 1997 book "Riding The Waves of Culture" explores these seven value orientations between cultures.
Toyota built a new car factory in Burnaston, UK, creating over 3000 jobs. Burnaston was chosen as the site because it was a large, flat, greenfield site next to major roads with access to suppliers and a local workforce. The new factory had positive economic effects, including jobs, increased spending, and supplier companies moving to the area. However, it also increased traffic and destroyed greenfield land. While most benefits were local, there was a potential downside if it reduced sales or jobs elsewhere.
The International legal environment of businessStudsPlanet.com
The document discusses the international legal environment of business. It covers topics such as international law and agreements, business structures abroad, and dispute resolution. It also examines the international business environment, risks of international transactions, and origins and sources of international law. International business involves entities from multiple countries and issues around trade, capital, personnel across borders under different legal systems and government policies.
India's textile industry is one of the largest in the world, contributing 14% to industrial production and employing over 35 million people. It is the largest provider of employment after agriculture and earns 27% of India's total foreign exchange through textile exports. The industry has grown significantly since economic liberalization in 1991 and includes cotton, silk, wool, readymade garments, and hand-crafted textiles segments. It faces competition from countries like China but also has opportunities for growth in the domestic market and through trade agreements. The government is taking initiatives to support the industry through skills training programs and new textile parks.
This document discusses key concepts related to documentary sales and international transactions. It defines key terms like documentary sale, negotiability, bills of lading, and documentary draft. It explains the stages of a documentary transaction and how the risks are allocated between buyers and sellers under different trade terms like CIF. The document also summarizes several cases that illustrate how these concepts are applied, such as who is responsible if goods are stolen during transport depending on whether it is an FOB or CIF contract.
This document discusses various leadership roles and responsibilities. It begins by listing numerous roles of strategic leaders such as visionary, builder, acquirer, implementer, integrator, and motivator. It then provides more details on the roles of staying informed, promoting culture, adapting to change, exercising ethics, and making corrections. The document also discusses developing new capabilities through senior management intervention and cooperation. It outlines actions demonstrating social responsibility like family policies and community involvement. Finally, it discusses leading corrective adjustments through both reactive and proactive changes to strategy and alignment of activities.
The document provides information on various credit insurance products offered by ECGC (Export Credit Guarantee Corporation of India) to exporters and banks. It describes short-term and medium/long-term export credit insurance that protects against payment risks and lending risks. It also outlines domestic credit insurance, overseas investment insurance, and exchange fluctuation covers. Statistics on ECGC's growth over time and profiles of specific insurance policies are included.
This document discusses various methods for resolving international commercial and business disputes. It notes that international litigation can be complicated by differences in judicial systems and challenges enforcing judgments across borders. The International Court of Justice allows disputes between nations but not individuals. Arbitration and mediation provide alternatives where a neutral third party decides the outcome (arbitration) or makes non-binding suggestions to reach a settlement (mediation). Other options include negotiation, expert determination, and utilizing dispute resolution processes under international treaties like the World Trade Organization. Overall, the best approach is to prevent disputes through risk management and carefully drafting contracts.
This document provides an overview of India's foreign trade policy for 2009-2014. It discusses India's growing exports and trade share in recent years. It then outlines the economic crisis and declining exports. The policy aims to arrest this decline and achieve annual export growth targets. It describes various components of the policy including import/export controls, duty exemption schemes, and promotional measures. Stimulus measures by the government and RBI to boost exports are also summarized.
This document discusses various types of multinational enterprises (MNEs) and their international operations. It defines MNEs as firms that engage in foreign direct investment and own or control value-adding activities in more than one country. The document also discusses measures of internationalization like the transnationality index. Finally, it covers topics like developing country MNEs, small and medium enterprises, and "born global" firms that seek international operations from the start.
The report *State of D2C in India: A Logistics Update* talks about the evolving dynamics of the d2C landscape with a particular focus on how brands navigate the complexities of logistics. Third Party Logistics enablers emerge indispensable partners in facilitating the growth journey of D2C brands, offering cost-effective solutions tailored to their specific needs. As D2C brands continue to expand, they encounter heightened operational complexities with logistics standing out as a significant challenge. Logistics not only represents a substantial cost component for the brands but also directly influences the customer experience. Establishing efficient logistics operations while keeping costs low is therefore a crucial objective for brands. The report highlights how 3PLs are meeting the rising demands of D2C brands, supporting their expansion both online and offline, and paving the way for sustainable, scalable growth in this fast-paced market.
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DEFINITION:
Technical Analysis is the study of:
PRICE.
VOLUME.
OPEN INTEREST.
It is the study of market action through the
help of charts and other technical indicators
so as to forecast the trend.
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DIFFERENCES:FUNDAMENTAL ANALYSIS TECHNICAL ANALYSIS
1. TIME CONSUMING. 1. QUICK STUDY.
2. STUDY OF CAUSE. 2. STUDY OF EFFECT.
3. INTRINSIC VALUE. 3. STUDY OF CHARTS.
4. INCLUDES ECONOMIC,
INDUSTRY AND COMPANY
ANALYSIS.
5. APPLIED FOR FEW
MARKETS UNDER STUDY.
4. PRICE, VOLUME AND OPEN
INTEREST ANALYSIS.
5. CAN BE APPLIED TO ANY
MARKET AND INSTRUMENT.
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DIFFERENCES IN APPLICABILITY:Technical analysis as applied to stock
Markets is same to even derivative markets.
However the following things shall be kept
In mind:
Pricing Structure.
Time period.
Margin requirements.
Timing is everything in futures market,
where buy and hold strategy does not work.
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DOW THEORY:
Ideas of Charles Dow, propounded by NELSON
and William P Hamilton.
Assumptions of Dow theory:
a) The Market indices (Averages) discounts
everything.
b) Individual securities generally move along with
the market trend.
c) The market has 3 trends, namely:
1. Primary Trend. (Major trend).
2. Secondary Trend. (Intermediate trend).
3. Minor Trend. (Short term trend).
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STUDY OF VARIOUS TRENDS:
1. THE PRIMARY OR MAJOR TREND:
Dow compares the major trend to a TIDE, where
a major uptrend is represented by patterns of
rising peaks and troughs and a downtrend is
characterized by lower peaks and troughs.
A MAJOR TREND LASTS FOR MORE THAN AN
YEAR OR SEVERAL YEARS.
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PRIMARY TREND:
A Bull market is represented by an Uptrend in the
Primary trend and a Bear market is represented by
a Downtrend in the Primary Market.
They represent extreme and extensive
movements on either side with atleast a 20%
change in the price.
A long term investor is concerned only with
primary trend reversal and will try to catch the
bull or bear market early.
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STUDY OF VARIOUS TRENDS:
2. THE SECONDARY OR INTERMEDIATE TREND:
DOW compares the intermediate trend to
waves that makeup tides and they represents
correction in the Primary trend.
AN INTERMEDIATE TREND GENERALLY
LASTS FOR THREE WEEKS TO THREE
MONTHS. THESE INTERMEDIARY
CORRECTIONS GENERALLY RETRACES 1/3 OR
1/2 OR 2/3 OF THE PREVIOUS MOVE.
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STUDY OF VARIOUS TRENDS:
3. THE MINOR OR SHORT TERM TREND:
DOW compares the minor or short term
trend to ripples on the waves. Minor
trend represents fluctuations in the
intermediate trends.
A MINOR TREND GENERALLY LASTS FOR LESS
THAN THREE WEEKS.
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FOCUS ON MAJOR TRENDS:
Dow suggests to focus on the big picture
i.e. to focus on the MAJOR TREND.
The major trend consists of three phases
Namely:
a) ACCUMULATION PHASE.
b) PUBLIC PARTICIPATION PHASE.
c) DISTRIBUTION PHASE.
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Primary Trend:
Accumulation stage is generally caught only by
farsighted investors, technical traders catch the Public
participation phase and markets have said to have
reached the distribution phase when markets boil
with financial good news making the front page. It is
also indicated by high speculation stage with cats and
dog shares moving with high volumes and price
without fundamental backing.
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VOLUME MUST CONFIRM THE TREND!!!
According to DOW, Volume must confirm
Uptrend by expanding as Price moves
Higher and diminishes with decrease in
Price.
In a Downtrend, Volume should expand as
Price drops and diminish as they rally.
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A trend is said to be at effect until it gives definite
signals that it has reversed:
A trend in motion continues to be in motion until
any external force causes it to change direction.
Various technical tools help the analyst to identify
signals of trend reversals.
A trend before reversing, slows down and then
changes direction.
Volume confirmation of a trends direction reversal is
to be considered.
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CRITICISMS OF DOW THEORY:
Dow theory generally misses 20% to 25% of a move before
generating a signal.
Use of closing prices (Line charts).
Signals in Dow theory are generally generated during the
second phase of the uptrend.
It was primarily used as an indicator of Economy which was
substituted to stocks and other underlying assets.
Subjectivity and difficulty in distinguishing the various
phases of trends.
An investor is more concerned on his investments, rather
than just depending upon the movements in market returns.
It may not help a trader following intermediate trend.
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CHART CONSTRUCTION:
Price and Volume data are generally studied by
using graphical representations called charts.
Different types of charts include;
a) LINE CHARTS.
b) BAR CHARTS.
c) CANDLE STICKS.
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OPEN INTEREST:
Open Interest is the total number of outstanding
future contract that are held by the market
participants at the end of the day.
Open interest is the number of outstanding
contracts held by the longs or the shorts and not the
total of the both.
Generally Volume and Open interests will be small
at the early stages of futures contract life and
expands as it reaches the maturity period and again
drop during close to expiration stage.
For trading purpose, avoid stocks with lower
volumes and lower open interest.
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TREND ANALYSIS:
“ALWAYS TRADE IN THE DIRECTION OF
THE TREND”
“TREND IS YOUR FRIEND”
“NEVER BUCK THE TREND”
It is the direction of the PEAKS and TROUGHS
that constitutes market trend.
A Trend is simply the indicator of the direction
of the market.
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TYPES OF TREND:
AN UPTREND.
Series of successive higher peaks and
troughs.
A DOWN TREND.
Series of declining peaks and troughs.
SIDEWAYS TREND.
Series of Horizontal peaks and troughs.
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TREND STRATEGY:
In an Uptrend, go LONG (BULLISH).
In a Downtrend, go SHORT (BEARISH).
In a Sideways trend, DO NOTHING.
Trend is classified into 3 categories
based on their time period:
a) Major Trend.
b) Intermediate Trend.
c) Minor Trend.
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SUPPORT AND RESISTANCE:
SUPPORT:
It is an area or level on the chart where buying
interest is sufficiently strong to overcome selling
pressure i.e. Demand > Supply. In short, the
troughs or reaction lows are called as Support.
For an Uptrend to continue, each successive lows,
(Supports) must be greater than the preceding
low.
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SUPPORT AND RESISTANCE:
RESISTANCE:
It is an area or level on the chart where Selling
pressure is sufficiently strong enough to
overcome buying interest i.e. Supply > Demand.
In short, the peaks or reaction highs are called as
Resistance.
For an Uptrend to continue, each successive
highs, (Resistances) must be greater than the
preceding highs.
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SUPPORT AND RESISTANCE:
CAUTION:
If the corrective dip in an uptrend
comes all the way to previous low or
breaches it, it is an early signal of
reversal of a trend (downward move)
or beginning of sideway movement.
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SUPPORT AND RESISTANCE:
BETTER CONFIRMATION:
More the trading that takes place in the
Support or Resistance area, more significant it
becomes.
Amount of time spent in the support or
resistance area is a sign of better confirmation.
Volume also acts as a pivotal point in
determination of better future prices and
confirms better the support or resistance levels.
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SUPPORT AND RESISTANCE:
Support becomes resistance and vice versa if a
Support level is penetrated (Broken out) with a
significant margin and similarly in case of a
break out of resistance levels.
In an uptrend, previous resistance levels which
have been broken by a significant margin become
supports.
In a downtrend, violated support levels
becomes resistance levels on subsequent
bounces.
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TREND LINES:
It is a simple but very valuable technical tool.
Uptrend:
It is a straight line drawn from left to right
along with every successive lows.
Downtrend:
It is a straight line drawn from left to right.
along with every successive highs.
AN UPTREND OR A DOWNTREND SHALL BE
CONFIRMED BY JOINING OF ATLEAST
3POINTS.
Days low or highs shall be considered for drawing a trend line.
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TREND LINES:
Trendline shall include all price action.
Trendline break on a closing basis is considered
more valid than on intraday basis.
Valid trend line break is generally considered with
a limit of 3% to 5% from the neckline.
Deciding the levels of tolerance is left to the risk
levels of the investor.
A minimum 2day close below or above the trend
line break is also generally considered.
Few of them even consider a weekly break of trend
line as a valid signal.
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FAN PRINCIPLE:
Sometimes after the violation of an uptrend line,
prices will decline a bit before rallying back to the
bottom of the old uptrend line, which is now acting
as the resistance.
The breaking of the 3rd
trend line in an UPTREND
signals the reversal of the trend. Generally the
broken trend line 1 and 2 becomes the Resistance
levels.
The breaking of the 3rd trend line in a
DOWNTREND signals the reversal of the trend.
Generally the broken trend line 1 and 2 becomes the
Support levels.
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CHANNEL LINES:
Channel line also called as Return line is an area
between two parallel lines i.e. the basic trendline and
the channel line drawn parallel to the basic trendline.
Generally on an Upward trendline, supports form the
basic trendline and the resistance the upper channel.
Confirmation of an existence of channel is proved by
the price action within the two parallel lines.
Failure to reach the channel line in an upward trend
is an early signal of beginning of weakness.
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CHANNEL LINES:
Once a breakout occurs from an existing price
channel, prices usually travel a distance equal to the
width of the channel from the point at which trend line
is broken.
Out of the 2 trendlines constituting a channel, the
basic trendline is by far the most important and
reliable one.
The Channel line is a secondary use of the trendline
technique.
The failure to reach the upper end of the channel
line is an early warning that the lower line (Basic trend
line) may be broken in the near future.
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PERCENTAGE RETRACEMENT LINES:
After a particular move, Prices generally retrace
a portion of the previous move, before resuming
the trend in the original direction.
These counter trend moves are called as
retracements and are generally to the extent of
50% of the previous move.
Besides 50% retracements, there are minimum
(1/3) and maximum (2/3) retracements too.
Percentage retracements are applicable to all
types of trends.
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PERCENTAGE RETRACEMENT LINES:
If the prior trend is to be maintained,
66.67% or 2/3 retracement is a critical point
not to be breached.
66.67% retracement is low risk area to buy
in an uptrend or to sell on a downtrend.
If prices move beyond the 66.67%
retracement, then the odds favour a trend
reversal rather than just a retracement. The
move in such situations usually retrace 100%
of the previous trend.
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SIGNIFICANT REVERSAL DAYS:
REVERSAL DAYS ARE MORE KEENLY WATCHED ON
WEEKLY AS WELL AS MONTHLY CHARTS.
CHARTISTS GIVE MORE SIGNIFICANCE TO WEEKLY
CHART REVERSAL THAN DAILY CHART REVERSAL AND
MORE SIGNIFICANCE TO MONTHLY THAN WEEKLY.
VOLUME CONFIRMATION ON A REVERSAL DAY IS ALSO
SEEN FOR BETTER PREDICTIONS.
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GAPS:
It is the area on the bar chart where no trading has taken
place.
UPSIDE GAPS are gaps opened due to Open price being
greater than the previous days high and that upside gap
opened are not filled in during the day.
DOWN SIDE GAPS are gaps opened due to days high
price being below the previous days low.
Upside gaps are signs of Market strength whereas
Downside gaps are signs of market weakness.
Gaps on weekly and monthly charts are considered more
significant to that of gaps on a daily chart.
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BREAKAWAY GAPS:
It usually occurs at the end of an important price
pattern and signifies beginning of an important
market move.
The breaking of an important RESISTANCE or
SUPPORT through a breakaway gap is a solid
confirmation of a beginning of a major and steep up
move or a downward move.
Break away gaps usually occur with heavy volumes.
Break away gaps are generally not filled.
Break away gaps on the upside acts as an support
and on a downtrend acts as resistance.
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RUNAWAY GAPS:
It is also called as Measuring gaps which usually
occurs at the midway of a major move.
It is a signal of markets moving effortlessly with
comfortable volumes.
It signifies the continuation of the major move
which started with the Breakaway gap.
It is also used to set up price targets.
Run away gaps are also not filled.
Run away gaps on the upside acts as an support and
on a downtrend acts as resistance.
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EXHAUSTION GAPS:
It usually occurs at the END of a major move.
An analyst should expect runaway gaps after break
away and Exhaustion gap after Run away gaps.
It signifies the END of the major move which started
with the Breakaway gap and continued with a Run
away gap.
It is used to exit positions on the either side.
Exhaustion gaps are generally filled.
Exhaustion gaps on the upside or downside acts as
the neckline and breach of the same is a strong signal
of reversal.
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ISLAND REVERSAL:
It occurs after an exhaustion gap, generally with a
time period of 2 days or weeks.
An Exhaustion gap to the upside followed by a
breakaway gap to the downside completes the ISLAND
REVERSAL PATTERN and indicates reversal of trend.
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CHART PATTERNS:
It is a formation that appears on a price chart that
can be classified into different categories which have
future predictive value.
Chart Patterns can be classified into 2 broad
categories, namely:
a) Reversal Patterns.
b) Continuation Patterns.
Volume plays a very important role in confirming
the above pattern formations and future predictions.
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REVERSAL PATTERNS:
HEAD AND SHOULDER:
There shall exist a prior Uptrend before the
formation of an Head and Shoulder pattern.
The peak of the head shall be higher than the peaks
of the either shoulders.
Generally peaks are with heavy volumes and troughs
with lighter volumes.
Generally rally into the newer highs is on lighter
volumes in comparison with the previous highs rally.
Breach of neckline which forms the support line is
important.
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REVERSAL PATTERNS:
Breach of neckline is considered on the closing basis and
not on intraday basis.
Volume should increase on the breaking of the neckline.
3% to 5% breach below the neckline is also considered for
better confirmation.
Usually a Return move develops which is a bounce back to
the bottom of the neckline (support) breached, now acting
as a stiff Resistance.
If the initial breaking of the neckline is on heavy volumes,
the probability of bounce back or the return move is less
and vice versa.
After the breach of neckline, prices should not re-cross
the neckline again, if crossed it is a failure pattern.
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HEAD AND SHOULDER:
MEASURING IMPLICATIONS:
Price Objective is based on the Height of the Pattern.
The distance from the top of the head to the neckline
(Vertical line) is the expected price downtrend from the
point of breach of the neckline.
The above Price objective is a minimum target and the
maximum price target might be the retracement of the
full previous move. (100% RETRACEMENT OF PREVIOUS
MOVE)
½ and 2/3 retracements of previous move can also be
considered for the price targets to adjust.
Gaps, Previous trends break, Previous supports and
resistances shall also be considered while fixing the
price target.
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INVERSE HEAD AND SHOULDER:
It is a mirror image of the Head and
Shoulder top Pattern.
The volume from the head should see
heavier volumes and a burst of volumes in
breaking of the neckline.
Return move back to the neckline
acting as support line is seen more often
in a inverse pattern rather on top pattern.
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INVERSE HEAD AND SHOULDER:
MEASURING IMPLICATIONS:
Price Objective is based on the Height of the Pattern.
The distance from the top of the inverted head to the
neckline (Vertical line) is the expected price upside from
the point of breach of the neckline.
The above Price objective is a minimum target and the
maximum price target might be the retracement of the
full previous move. (100% RETRACEMENT OF PREVIOUS
MOVE)
½ and 2/3 retracements of previous move can also be
considered for the price targets to adjust.
Gaps, Previous trends break, Previous supports and
resistances shall also be considered while fixing the
price target.
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COMPLEX HEAD AND SHOULDER PATTERNS:
It is a variation of Head and Shoulder Pattern which are
rarely found.
These are patterns where 2heads may appear along with
a right and a left shoulder.
It can also be a double left and a double right shoulder.
They have the same forecasting implications to that of
Normal Head and shoulder pattern.
A lot of anticipatory buying takes place during the
formation of the right shoulder and aggressive traders take
positions before the confirmation of the pattern itself.
If the initial positions prove right, additional positions
can be added at the breach of neckline.
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CAUTION:
HEAD AND SHOULDER PATTERN CANHEAD AND SHOULDER PATTERN CAN
ALSO ACT AS A CONSOLIDATIONALSO ACT AS A CONSOLIDATION
PATTERN, RATHER THAN REVERSALPATTERN, RATHER THAN REVERSAL
PATTERN.PATTERN.
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TRIPLE TOPS AND BOTTOMS:
It is a slight variation of Head and Shoulder pattern
which is very rare as a chart pattern.
The three Peaks or Troughs in the Triple Top or a Triple
bottom formation is at the same level.
Volumes tend to decline with each successive peaks and
increase at the breakout point.
The measuring technique and the return move is same as
that of the Head and Shoulder Pattern.
A Triple bottom is a mirror image of triple top.
Study of previous trend before the formation of a triple
top or a triple bottom is crucial.
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DOUBLE TOPS AND BOTTOMS:
It is a common reversal chart pattern found very
frequently.
This pattern must have two peaks at about the same
level.
Volumes is generally low on the second peak and picks
up on the break of the neckline.
The measuring technique and the return move is same as
that of the Head and Shoulder Pattern.
A Double bottom is a mirror image of double top.
Study of previous trend before the formation of a double
top or a double bottom is crucial.
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DOUBLE TOPS AND BOTTOMS:
A double top is commonly referred to as “M” formation
and a double bottom as “W” formation.
A normal pull back from a previous peak before the
resumption of the uptrend should not be studied as
Double top formation. (Till the breach of neckline, the
double top formation is not complete)
The longer the time period between the peaks or
bottoms and greater the height, more reliable is the chart
pattern.
Generally Valid Double tops and bottoms should at least
have a months gap between the two peaks or troughs.
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VARIATIONS FROM THE IDEAL PATTERNS:
Use of filters by traders to deal with variations in chart
patterns.
On occasions the second peak will not reach the levels of
first peak.
Most chartists want a close beyond the previous
resistance on a closing basis and not on intra day basis.
Percentage penetration criteria of 3% to 5% is also
considered.
The two day penetration rule is also used as a time filter.
A Friday close beyond the previous peak is also
considered.
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SAUCERS AND SPIKES:
It is also called as rounding bottoms.
It is a very slow and gradual turn from down to side ways
and then to an uptrend.
Longer they last, more significant they are.
Spikes are “V” patterns that happens very quickly with
little or no transition period.
They usually occur in markets which so over extended,
that a sudden piece of adverse news will turn the trend
abruptly without giving signals of slowing down or a turn
in trend.
Volumes is the only tool that can help in predicting a
“Spike”.
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CONTINUATION PATTERNS:
It is an indication of a sideways price action, which is a
pause in the prevailing trend and the next move will be in
the same direction of the trend which preceded the
formation.
Continuation patterns are generally of a shorter duration
in comparison to that of reversal patterns.
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TRIANGLES:
Triangle patterns are generally considered as
Continuation patterns even though sometimes they act
as Reversal Patterns.
There are 3 types of triangles, namely:
a) SYMMETRICAL TRIANGLES.
b)ASCENDING TRIANGLES.
c) DESCENDING TRIANGLES.
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SYMMETRICAL TRIANGLES:
Symmetric Triangles are also called as “COILS”
These triangles show 2 Converging trend lines, the Upper line
descending and the Lower line ascending.
The Vertical line measuring the height of the pattern is referred to
as “BASE”. (AB)
The point of intersection of the above 2 trend lines is called as the
“APEX”. (C)
A close outside either of the trend lines, completes the pattern.
B
A
C
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ASCENDING TRIANGLES:
It is similar to that of a Symmetric Triangle with a rising lower line
except for the flat or horizontal Upper line.
The Vertical line measuring the height of the pattern is referred to
as “BASE”.
The point of intersection of the above 2 trend lines is called as the
“APEX”.
A close outside either of the trend lines, completes the pattern.
This is generally a “Bullish Pattern”.
B
A
C
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DESCENDING TRIANGLES:
It is similar to that of a Symmetric Triangle with a declining Upper
line except for the flat or horizontal Down line.
The Vertical line measuring the height of the pattern is referred to
as “BASE”.
The point of intersection of the above 2 trend lines is called as the
“APEX”.
A close outside either of the trend lines, completes the pattern.
This is generally a “Bearish Pattern”.
B
A
C
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TRIANGLES:
A Symmetric triangle pattern is a continuation pattern
which represents pause in the existing trend after which
the previous trend continues.
The study of previous trend before the formation of a
triangle is highly significant for accurate interpretation.
If the previous trend were to be an uptrend, the
implications of symmetric triangle is bullish and if it
were to be a down trend, it would have bearish
implications.
A triangle should have minimum 4 reversal points i.e.
each trend line must be touched at least twice. Few of
them also have 6 reversal points.
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MEASUREMENT OF TRIANGLES:
As a general rule prices should break out in the direction
of the Prior Trend somewhere between 2/3 to 3/4 of the
Horizontal width of the triangle.
Horizontal width is the distance between the BASE at the
left of the pattern to the APEX at the right of the pattern.
If prices remain within the triangle beyond the 3/4 point,
then the triangle loses its significance and prices may
reach to the APEX point.
Trend reversal is given by closing penetration of one of
the trendlines.
Return move is rarely found in Triangles, and the broken
line acts as Support in an up trend and resistance in a
down trend.
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TRIANGLES:
Volume should diminish as the price swings narrow
within the triangle.
Volume should pick up noticeably at the penetration
point.
Measurement of symmetrical triangles are based on the
Height of the BASE or by drawing a parallel line upward
from the top of the BASE, parallel to the lower line.
B
A
C
D
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VOLUME PATTERNS ON TRIANGLES:
In an Ascending Triangle pattern, volumes
tend to increase on bounces and contracts
on dips.
In a Descending Triangle, Volumes should
be heavier on the downside and lighter
during the bounces.
A Triangle is considered to be an
intermediate continuation pattern which
generally take a month to 3months for its
formation.
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BROADENING PATTERNS:
It is an inverted triangle or triangle turned backwards.
A Broadening pattern should not show a converging
trend line Pattern.
Volume tend to behave the opposite way as to a triangle
wherein it tends to expand along with the wider price
swings.
It usually occurs at market tops which shows three
successive higher peaks and two declining troughs.
The violation of the second trough completes the
formation of the Broadening pattern.
An Expanding pattern is generally a bearish signal as it
appears at the market top.
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FLAGS AND PENNANTS PATTERNS:
They represent brief pauses in Dynamic market
moves.
It is preceded by a sharp or straight line move
before its formation.
A Flag usually occurs after a sharp move and
represent pause in the trend. The flag should
slope against the trend.
Volume should dry up on the formation and
burst on the breakout.
A Flag generally occurs near the midpoint of a
move.
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FLAGS AND PENNANTS PATTERNS:
Both patterns are relatively short term and
should be completed within 1 to 3 weeks.
It can also form on a down trend (Inverted flag
and pennant) signifying continuation of the
previous trend.
Both patterns occur about the midpoint of the
previous up move or down move signifying half
the previous way remaining from the breakout.
Both patterns take less time to form in a down
trend.
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FLAGS AND PENNANTS PATTERNS:
A Pennant represents the formation of a
small symmetric triangle preceded by a
sharp up move.
Volume should be light on the formation
and burst on the breakout.
A Pennant is identified by 2 Converging
trend lines.
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On Balance Volume (OBV):
If Prices are on the downtrend with a flat
or raising OBV, it is a signal of bullishness
and if Prices are on the upside with a flat
or falling OBV, is a signal of bearishness.
A big spike in the OBV line indicates some
big news, and unless it is sustained by
further accumulation on the higher levels,
it should be studied as “Doubtful move”.
OBV can be considered as an indicator of
insider information.
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1. OBV.
2. MFI.
3. MOVING AVERAGE.
4. BOLLINGER BANDS.
5. 4 WEEK RULE.
6. OSCILLATORS.
7. CCI
8. RSI
9. STOCASTICS
10. MACD
11. ACCUMULATION – DISTRIBUTION
12. ATR.
13. WILLIAMS % R.
14. WILLIAMS A/D
15. CHAIKIN OSCILLATORS
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MOVING AVERAGES:
It is a simple trend analysis technique
which averages out the prices for a
particular period of time.
In short it is a Curving Trend line which
helps in identifying the beginning of a
new trend line or end of a old trend line.
It is only an indicator tool and not a
leading tool. It only reacts and never
anticipates.
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MOVING AVERAGES:
Moving averages lag the market price
action and smoothens the noise in price
action.
Shorter term Moving Averages are more
sensitive to price action in comparison to
longer duration moving averages.
Moving averages can be Simple or
Weighted or Exponential Moving
averages.
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Oscillators:
Crossing of Zero line is considered as a trading signal
where crossing above the zero line is a buy signal and
below the zero line is a sell signal.
Oscillators signals should not be used against the
basic price trend. i.e. buy positions should be initiated
on crossing above the zero line only if the market
trend is up and vice-versa.
Similarly Short positions should be initiated only if the
crossing below the zero line is complemented with a
basic down trend in prices.
AN OSCILLATOR IS A LEADING INDICATOR WHICH
TURNS EARLY TO THAT OF THE PRICE LINE.
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Oscillators:
The upper and lower boundary limits can be fixed
based on the previous momentum history.
There are 3 types of Oscillators:
1. Momentum Oscillators. (V-Vx)
2. Rate of change Oscillators. (V/Vx)
3. Moving Average Oscillators. (Histogram)
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RELATIVE STRENGTH INDEX:
RSI technique was developed by J.Welles Wilder.
It is the most popular and trusted Oscillator tool
used by most of the traders, which smoothens the
noise found in most of the other Oscillator tools.
RSI = 100 – 100 / (1+RS)
RS = Average of x days UP close
Average of x days DOWN close
14days is popularly used for the calculation of RSI and
14weeks in case of a Weekly chart being used. However
variations of 14 days are also used. Shorter the time
period, more sensitive the oscillator becomes and wider
is its amplitude.
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RELATIVE STRENGTH INDEX:
RSI works best at the extreme points of the band.
5,7 and 9 days are used as variations of the shorter
time period RSI and 21 or 28 days is used for the
longer time duration.
The 14 days RSI becomes Over bought above 70 and
oversold below 30.
The study of chart patterns are equally applicable to
even RSI as they are drawn to regular price charts.
RSI – PRICE Divergence:
If prices are rising or flat and RSI is decreasing, look
for turn down in prices. If prices are declining or flat
and RSI is increasing, expect prices to move higher.
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STOCHASTICS:
It is based on the observation that as price
increases, closing price will be closer to day’s
high on an uptrend and on a downtrend, closing
price will be closer to day’s low.
%K line and %D line are the two lines used in
Stochastics.
Stochastic observes where the most recent
closing price is in relation to the price range for a
chosen time period. (14days is generally used)
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Accumulation-Distribution Pattern:
It is a variation of On balancing Volume which
attempts to confirm changes in prices by
comparing the volumes associated with it.
It is a momentum indicator which associates
changes in Price and Volume.
The indicator is based on the premise that more
the volume that accompanies a price move, more
significant is the move.
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Accumulation-Distribution Pattern:
Σ {(C - L) – (H – C)} * Volume
(H – L)
Where:
C = Close.
L = Low.
H = High.
The nearer the close is to the high’s of the day, more
volume is added to the cumulative total and vice-versa.
If the close is exactly between the days high and low,
then nothing is added or deducted to the cumulative
total.
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Accumulation-Distribution Pattern:
When security is being accumulated, the A/D
moves up and when the security is being
distributed, the A/D moves downwards.
When a Negative Divergence occurs between
Price and A/D pattern, Price will usually change
to confirm the A/D.
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ELLIOTT THEORY:
Proposed by Ralph Nelson Elliott, Wave theory was
improvised by Charles J Collins.
Elliot was very much influenced by the Dow theory.
Through constant observations and nature of markets,
Elliott concluded that the movements of stocks can be
predicted by observing repetitive patterns of waves.
There are 3 basic tenants of Elliott wave theory:
a)Pattern.
b)Ratio.
c) Time.
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BAR CHARTS VS CANDLE STICKS
Studies market psychology much faster and easier
than bar charts. A candles extended real body
demonstrate definite bullishness or bearishness.
However a small real body indicates indecision or a
tug of war between the bulls and the bears with no
definite winner.
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INTRODUCTION
Candle Sticks predict the strong psychology of the
markets, its emotions and future expectations.
“What is important in market fluctuations are not the
events themselves, but the HUMAN REACTIONS to
these events”.
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INTRODUCTION
The use of Candle Stick charts originated in JAPAN
when RICE was the medium of exchange.
Munehisa Homma is considered as the father of Candle
Sticks.
“NEVER PLACE A TRADE WITH A CANDLE SIGNAL
WITHOUT CONSIDERING THE RISK-REWARD
RATIO OF THE POTENT TRADE”
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LIMITATIONS
They need a Close to confirm the Candle Signal.
They don’t give PRICE TARGETS.
Candle Patterns cannot be used in isolation to effect
trades.
Cannot be used on tick charts.
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DEFINTIONS
REAL BODY:
It is the rectangle portion of the Candle that represents
the range between the Opening and Closing Price.
WHITE (GREEN) REAL BODY:
It represents Close being higher than Open.
BLACK (RED) REAL BODY:
It represents Close being lower than Open.
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DEFINTIONS
SHADOW:
It is the Vertical line that extends above and below the
real body called as Upper and Lower Shadows.
The Top of the Upper shadow is the sessions high and
the Bottom being the sessions low.
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DEFINTIONS
SHAVEN HEAD AND BOTTOM:
If the Close is at the High’s of the session, it has no
upper shadow and hence it has a “Shaven Head”.
If the Close is at the Low’s of the session, it has no
lower shadow and hence it has a “Shaven Bottom”.
The top of the upper shadow and the bottom of the
lower shadow represents the high’s and low’s of the
session, whether the real body is White (Green) or
Black (Red).
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TIME FRAMELike BARS, each CANDLE represents action for a
specific time frame. On a daily chart, each candle
represents price action for a day, on a weekly chart for a
week and on a 15 minute intra day chart, a 15 minute
unit of time.
A Long body (either Green or Red) indicate strong
market participation, whereas a Small body indicates
no market participation.
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SIGNALS
EXAMPLE OF A CANDLE
A Long Green real body indicate, extremely POSITIVE
or BULLISH sentiments as the close is many points
above its open and near to its day high.
A Long Red real body indicate, extremely NEGATIVE
or BEARISH sentiments as the close is many points
below its open and near to its day low.
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SIGNALS
The upper shadow indicates that the day’s high
could not be maintained by the Bull’s because of
selling pressure at higher levels or lack of buying
interest at higher levels.
The lower shadow indicates that the Buying came
at lower levels to support the stock price not to go
further below.
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SIGNALS
They believe that the first
hour of the day sets the
tone of the day’s market.
“It is said that the amateur
opens the market and the
professional closes it”.
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STUDY OF SINGLE CANDLES
SPINNING TOPS:
It refers to a Candle (either Green or Red) with
a Small Real Body. Spinning Tops may have
Upper and Lower Shadows or none at all.
A Spinning Top indicate that Bulls and Bears
are battling it out in a tug of war with neither
the bulls nor bears being able to take dominant
control.
Spinning top helps a trader to cover old
positions and not to initiate new positions.
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STUDY OF SINGLE CANDLESHIGH WAVE CANDLES:
They also have diminutive real body (either green
or red) like spinning top but also longer upper and
lower shadows. The Upper and Lower shadows
need not be of same size, but should be
substantially long.
High wave candles indicate outright CONFUSION
in the minds of bulls and bears.
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TREND ANALYSIS THRU SPINNING TOPS AND
HIGH WAVE CANDLES
UPTREND:
In an Uptrend supported by long green real
body, small real body (either green or red)
exerts caution on the long side.
Spinning tops are warnings not to follow this
market on the long side and are more powerful
in a market which are becoming over extended
and are nearing resistance levels. A trend shift
or reversal may be in the offering.
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TREND ANALYSIS THRU SPINNING TOPS AND
HIGH WAVE CANDLES
SIDEWAYS TREND:
In a Sideways trend or a Box Range, Spinning Tops
and High Wave candles have no implications of
trend reversal or shift. It indicates markets simply
resting before it breaks up or down from the price
range.
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TREND ANALYSIS THRU SPINNING TOPS AND
HIGH WAVE CANDLES
DOWN TREND:
In an Down trend supported by long red real
body, small real body (either green or red)
exerts caution on the short side.
Spinning tops are warnings not to follow this
market on the short side and are more
powerful in a market which are becoming over
sold and are nearing Support levels. A trend
shift or reversal may be in the offering.
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HAMMER AND HANGING MAN
The Hammer and Hanging man candles
have small real body (whether green or red)
and should have long single sided shadow.
An HAMMER appears on a down trend at or
near the bottom which suggests that the
market is hammering out a base.
An HANGING MAN appears on an uptrend
at or near the top which suggests that the
market is creating a top. One must wait for
a close under the Hanging man’s real body
before becoming BEARISH.
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SHOOTING STAR
A Shooting Star is a top reversal line just like the
Hanging man. A Shooting Star displays a long
upper shadow and its small real body is at or
near the lows of the session.
A Shooting Star shows trouble overhead.
Because of the Shooting Stars long bearish upper
shadow, we don’t need any confirmation like the
Hanging man.
A Shooting Star is a bearish reversal signal and it
must appear during a rally (Uptrend).
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STAR PATTERN:
A Star is a small real body that
gaps away from the long real body
preceding it in an uptrend or
downtrend. The 3rd
candle should
also gap away from that of the
Star’s real body, leaving the star’s
real body isolated.
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STAR PATTERN:
Star patterns are of 2 types:
1. Morning Star:
It is a bottom reversal pattern which is a
bullish signal. It is a pattern followed by a
prior down trend and a long red candle
develops confirming the control of bears
being intact is followed by a small real body
(Green or red) gapping down and a gap up
green long real body completes the
morning star pattern.
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STAR PATTERN:
1. Evening Star:
It is a top reversal pattern which is a bearish
signal. It is a pattern followed by a prior up
trend and a long green candle develops
confirming the control of bulls being intact is
followed by a small real body (Green or red)
gapping up and a gap down red long real body
completes the evening star pattern.
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THE TWEEZER PATTERN:
Tweezers represents two or more candle lines
with matching highs or lows.
The tweezer top occurs in a rising market and a
tweezer bottom in a falling market.
Generally the first candle in a tweezer will be a
long real body and the second being a small real
body.
A Tweezer too is a strong reversal pattern.
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THE THREE BLACK CROWS:
It appears in the context of high
price levels and a matured uptrend.
It is also called as three winged
crows.
It consists of three consecutive red
candles that should close at or near
their lows.
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THE THREE BLACK CROWS:
The appearance of three black
crows on a weekly chart is an early
signal of reversal of long term trend
and it should be even confirmed by
other technical indicators for a
better confirmation.
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THE THREE WHITE SOLDIERS:
It is a Continuation pattern where
consecutive three long green
candles appear, signaling strength in
the previous uptrend.
Each green candle should close at
or near its high.
Each candle should open within or
close to the prior candles real body.
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THE THREE WHITE SOLDIERS:
The previous trend is not critical for
the above pattern.
The soldiers may begin an upward
rise out of a downside reversal or
may emerge during a rally.
The three white soldiers indicate
positive momentum ahead.
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THE THREE WHITE SOLDIERS:
The three white soldiers should
necessarily not be studied as a buy
signal since overbought markets
generally consolidate or retrace
after prolonged price rises.
Thus the best entry point may be
considered after a pull back to the
support levels.
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THE WINDOW PATTERNS:
They are also called as Disjointed
candles which are continuation
patterns.
They are synonymous with that of
western technical patterns known as
gaps.
A Window is a price zone where no
trade takes place. It is called as
PRICE VACCUM.
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THE WINDOW PATTERNS:
RAISING WINDOW:
A Raising window appears with a
price vacuum between the prior
candles high and the current
sessions low.
A Raising window is a Bullish signal
and hence long positions can be
initiated with it. It indicates Bulls
being in control willing to pay high.
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THE WINDOW PATTERNS:
FALLING WINDOW:
A Falling window appears with a price vacuum
between the prior candles low and the current
sessions high.
A Falling window is a Bearish signal and hence
short positions can be initiated with it. It indicates
bears driving the markets down with no
competition from the bulls.
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THE WINDOW PATTERNS:
oAs windows are Continuation
patterns, it is advisable to trade in
the direction of the window.
oIt is wrong to study the gap of real
bodies as windows. It should be the
gaps of shadows and price vacuum
should be created for a window to
occur.