Technical analysis is a method of forecasting the direction of prices through the study of past market data, such as historical prices and trading volumes. It assumes that market behavior repeats itself, and that current prices already reflect all known information. Technical analysts use various methods and tools like charts, indicators and patterns to identify trends and trend reversals in the market. Some of the common technical analysis techniques include Dow theory, Elliott wave theory, and the use of charts like line charts, bar charts and Japanese candlestick charts to identify patterns in price movements over time.

1. TECHNICAL; ANALYSIS

2. CONCEPT
 Technical analysis is used to mean fairly wide range
of techniques, all based on the concept that past
information on prices and trading volume of stocks
gives a picture of what lies ahead.
 It attempt to explain forecast changes in security
prices by studying only the market data rather than
information about a company.
 The technical analyst believe that the price of a
stock depends on supply and demand in the market
place.

3. CON..
 Technical analyst concentrate the movement of
share prices.
 Forecasting technique that utilize historical share
price data.

4. SEVERAL WAYS THE TECHNICIAN THINKS
 Technician believe that behind the fundamental are
important factor
 Technicians are not committed to buy and hold
policy
 Technician do not separate income from capital
gains.
 Technician act more quickly to make commitments
and take profits and losses
 Technician insist that the market always repeats

5. DOW THEORY
 Formulated by Charles H.Dow
 He formulated a hypothesis that the stock market
does not move on a random basis.
 According to Dow theory the market has three
movements.
 Primary movement, secondary movement and
minor movements.

6.  The primary movement is the long range cycle that
carries the entire market up or down, this is the long
term trend in the market.
 The secondary reaction act as a restraining force
on the primary movement. These are in opposite
direction to the primary movement.
 The minor movements which are the day-to-day
fluctuations in the market.
 According to Dow theory the price movements in
the market can be identified by means of line chart.

7.  In line chart the closing prices of shares or the
closing values of market index may be plotted
against the corresponding trading day.

8.  Bullish trend
 In the first phase the prices would advance with the
revival of confidence in the future of business.
 This will prompt the investor to buy shares of
companies.
 Bearish trend
 In the first phase prices begin to fall due to
abandonment of hopes.
 Second phase companies start lower profit
 Third phase, prices fall still further due to distress
selling.

9. BASIC PRINCIPLES OF TECHNICAL ANALYSIS
 The market value of a security is related to demand
and supply factors.
 Trends in stock prices have been seen to change
when there is shift in the demand and supply factor.

10. PRICE CHART
 Graphical representation id very basis of technical
analysis.
 Security prices are charted.
 A share may be traded in the market at different
prices on the same day.
 Four prices are important, they are
 highest price of the day
 Lowest price of the day
 Opening price and
 Closing price.

11. BHARTI INFRA- MARKET PRICE MOVEMENT
Date
Open
Price
High
Price
Low
Price
Last
Traded
Price
Close
Price
28-Dec-12 200 200.85 188.65 191 191.65
31-Dec-12 191.85 195.5 188.25 193.65 193.7
1-Jan-13 194.7 199.8 194 197.65 197.75
2-Jan-13 198.3 204.35 197 202.2 201.5
3-Jan-13 200 206.5 200 204.7 204.35
4-Jan-13 205 210 202.35 207 207.15
7-Jan-13 207.85 209 206.1 207 207.4
8-Jan-13 207.55 211.05 201.7 203.2 202.95
9-Jan-13 204.25 207.9 203.3 204.95 205.05
10-Jan-13 205 207 203 205 205.1
Source :www.nseindia.com

12. CONT..
 The closing price is very important price because
that is used in most analysis.
 The prices are plotted in XY graph, where X
represent trading days and Y axis represent the
prices.

13. CONT..
180
185
190
195
200
205
210
Bharti Infra- price movement
Series1

14. PRICE CHARTS
 Line Chart
 Bar chart
 Japanese Candlestick Chart

15. LINE CHART
 The closing price of a share is plotted on the XV
graph on a day to day basis.
 The closing price of each day would be represented
by point on XY graph.
 All these points would be connected by a straight
line would indicate the trend of the market.

16. BAR CHART
In this chart the highest, lowest and closing price of each
day are plotted.
A bar is formed by joining the highest and the lowest price
of a particular day by a vertical line.
The top of the bar represent highest price of the day, the
bottom of the bar represent the lowest price of the
day.
A small horizontal hash on the right of the bar is used to
represent the closing price of the day

17. CHART TYPES – BAR CHART
 Vertical line represents highs/lows of the day
 Horizontal line represents closing price
 Red = down
 Blue/Black = up
Daily High
Daily Low
Closing Price
Price Gap

18. JAPANESE CANDLESTICK CHART
 This chart shows the highest, lowest price, opening
price and closing price of shares on a day-to-day
basis.
 The highest price and lowest price of a day are
joined by a vertical bar.
 The opening and closing price of the day which
would fall between the highest and lowest prices
which is represented by a rectangle.

19.  Three types of candlesticks,
 White candle stick
 Black candle stick and
 Doji candlestick

20. CON..
 A white candlestick is used to represent a situation
where the closing price of the day is higher than the
opening price.
 A black candlestick represents the closing price of
the day is lower than the opening price.
 A Doji candlestick is the one where the opening and
closing price of the day is same.

21. ELLIOT WAVE THEORY
 The theory was formulated by Elliot after analyzing
seventy five years of stock price movements and
charts.
 He concluded that the market movement was quite
orderly and followed a pattern of waves.
 The waves are the result of buying and selling
impulses emerging from the demand and supply of
the market.

22. CONT..
 According to this theory, the market moves in
waves.
 A movement in a particular direction can be
represented by five distinct waves.
 In this five waves three waves are in the direction of
movement and are termed as impulse waves.
 Two waves are against the direction of movement
and are termed as corrective or reaction waves.