Technical analysis is the forecasting of security prices based on past price movements. It uses various charts like line charts, bar charts, and candlestick charts to identify trends and patterns in prices over time. Key assumptions of technical analysis include that markets move in trends, and that history repeats itself. Common techniques include analyzing support and resistance levels, moving averages, and identifying continuation and reversal patterns. The goal is to anticipate future price movements based on historical price data.
The document discusses various technical analysis techniques used to analyze historical stock price movements and predict future price trends. It describes Dow theory and Elliott wave theory, which analyze long-term price cycles. It also covers concepts like trends, support/resistance levels, indicators like RSI and MACD, and chart types like candlestick charts. The document provides an overview of the key assumptions, tools, and approaches of technical analysis.
The document discusses India's depository system for electronic trading and settlement of securities. It describes how the earlier physical system was inefficient and led to problems. To address this, the Depositories Act of 1996 was passed to dematerialize securities and facilitate electronic transfers through depositories like NSDL and CDSL (National Securities Depository Limited and Central Depository Services Limited). The system aims to make transfers faster, more accurate and secure by maintaining electronic records of ownership rather than physical certificates.
Fundamental analysis is a method of evaluating securities by examining related economic, financial and other qualitative and quantitative factors to measure a security's intrinsic value. It involves analyzing the overall economy, industries, and individual companies. Some techniques of fundamental analysis include analyzing demand and supply, price elasticity, balance tables, and regression analysis. The goal is to determine a security's true value and identify if it is underpriced or overpriced in order to make buy and sell decisions.
This document provides an overview of corporate governance in India. It defines corporate governance and outlines the key players, principles, and objectives. It discusses the development of corporate governance in India, including economic reforms in the 1990s. It also summarizes the role of the Securities Exchange Board of India in regulating markets after major scandals in the 1990s and 2000s, including the introduction of Clause 49 to strengthen board oversight. Finally, it provides details of the large Satyam scandal of 2009 that damaged investor trust.
Board committees are small groups formed by the board to support specific work. The Companies Act 2013 mandates four committees: Audit, Nomination and Remuneration, Corporate Social Responsibility, and Stakeholders Relationship. The Audit Committee oversees financial reporting and auditing. The Nomination and Remuneration Committee handles director nominations and compensation. The CSR Committee recommends CSR spending and monitoring. The Stakeholders Relationship Committee addresses shareholder grievances. Committees must have the proper composition and meet requirements to avoid penalties.
The Securities and Exchange Board of India (SEBI) was established in 1988 as an interim administration body and given statutory powers in 1992 through the SEBI Act. SEBI is chaired by C B Bhave and is responsible for regulating the securities market and protecting investors. SEBI's objectives include regulating stock exchanges, controlling insider trading, and protecting investors. It undertakes regulatory functions like registering intermediaries and developmental functions like investor education. SEBI has guidelines for primary and secondary markets and regulates foreign institutional investors. It faces challenges from cross-border trading and demanding investors.
This document provides an overview of the Indian financial system. It discusses the key components of the system including financial institutions, markets, instruments, and services. Financial institutions include banks, non-banking institutions, and intermediaries that link savers and investors. The markets are organized and unorganized, with the organized market including the capital market and money market. Financial instruments are traded assets like cash, securities, and ownership entities. Services within the financial system manage money and provide credit, banking, insurance, and investment opportunities. Overall, the financial system plays a vital role in allocating resources and facilitating economic development in India.
This presentation covers Merchant Banking History; Categories; Services provided by them; Methods of placement; underwriting; Issue management & SEBI guidelines.
The document discusses various technical analysis techniques used to analyze historical stock price movements and predict future price trends. It describes Dow theory and Elliott wave theory, which analyze long-term price cycles. It also covers concepts like trends, support/resistance levels, indicators like RSI and MACD, and chart types like candlestick charts. The document provides an overview of the key assumptions, tools, and approaches of technical analysis.
The document discusses India's depository system for electronic trading and settlement of securities. It describes how the earlier physical system was inefficient and led to problems. To address this, the Depositories Act of 1996 was passed to dematerialize securities and facilitate electronic transfers through depositories like NSDL and CDSL (National Securities Depository Limited and Central Depository Services Limited). The system aims to make transfers faster, more accurate and secure by maintaining electronic records of ownership rather than physical certificates.
Fundamental analysis is a method of evaluating securities by examining related economic, financial and other qualitative and quantitative factors to measure a security's intrinsic value. It involves analyzing the overall economy, industries, and individual companies. Some techniques of fundamental analysis include analyzing demand and supply, price elasticity, balance tables, and regression analysis. The goal is to determine a security's true value and identify if it is underpriced or overpriced in order to make buy and sell decisions.
This document provides an overview of corporate governance in India. It defines corporate governance and outlines the key players, principles, and objectives. It discusses the development of corporate governance in India, including economic reforms in the 1990s. It also summarizes the role of the Securities Exchange Board of India in regulating markets after major scandals in the 1990s and 2000s, including the introduction of Clause 49 to strengthen board oversight. Finally, it provides details of the large Satyam scandal of 2009 that damaged investor trust.
Board committees are small groups formed by the board to support specific work. The Companies Act 2013 mandates four committees: Audit, Nomination and Remuneration, Corporate Social Responsibility, and Stakeholders Relationship. The Audit Committee oversees financial reporting and auditing. The Nomination and Remuneration Committee handles director nominations and compensation. The CSR Committee recommends CSR spending and monitoring. The Stakeholders Relationship Committee addresses shareholder grievances. Committees must have the proper composition and meet requirements to avoid penalties.
The Securities and Exchange Board of India (SEBI) was established in 1988 as an interim administration body and given statutory powers in 1992 through the SEBI Act. SEBI is chaired by C B Bhave and is responsible for regulating the securities market and protecting investors. SEBI's objectives include regulating stock exchanges, controlling insider trading, and protecting investors. It undertakes regulatory functions like registering intermediaries and developmental functions like investor education. SEBI has guidelines for primary and secondary markets and regulates foreign institutional investors. It faces challenges from cross-border trading and demanding investors.
This document provides an overview of the Indian financial system. It discusses the key components of the system including financial institutions, markets, instruments, and services. Financial institutions include banks, non-banking institutions, and intermediaries that link savers and investors. The markets are organized and unorganized, with the organized market including the capital market and money market. Financial instruments are traded assets like cash, securities, and ownership entities. Services within the financial system manage money and provide credit, banking, insurance, and investment opportunities. Overall, the financial system plays a vital role in allocating resources and facilitating economic development in India.
This presentation covers Merchant Banking History; Categories; Services provided by them; Methods of placement; underwriting; Issue management & SEBI guidelines.
The document discusses the regulation of stock trading in India. It provides an overview of the Bombay Stock Exchange and National Stock Exchange, and describes the establishment of SEBI in 1992 to protect investors and regulate the securities market. It outlines SEBI's powers and responsibilities, as well as the key laws governing the security market: the SEBI Act, Companies Act, Securities Contract Act, and Depositories Act. The document also discusses rules around trading hours and providing market information to clients.
Regulatory framework for financial services in INDIAayushmaan singh
Financial services refers to services provided by the finance market such as banking, insurance, and investment. Financial regulation subjects financial institutions to requirements and guidelines to maintain integrity in the financial system. It influences banking by increasing available financial products. NABARD was established in 1982 to oversee agricultural credit and rural development. Its roles include providing credit and refinancing to rural banks, identifying credit potential, monitoring credit plans, and inspecting regional rural banks to regulate the rural banking sector.
SEBI (Securities and Exchange Board of India) was established in 1988 to regulate the securities market in India. SEBI aims to protect investors, maintain orderly markets, and promote market development. It oversees stock exchanges, registers market intermediaries like brokers and merchant bankers, and regulates substantial acquisitions of shares and takeovers. SEBI is divided into departments and has offices across major Indian cities. It works with advisory committees to achieve its goals of regulating primary and secondary markets and protecting investors.
This document outlines the course syllabus for BA7034 Industrial Relations and Labour Welfare. It is divided into 5 units that will be covered over 45 class periods. Unit I discusses concepts of industrial relations, importance, problems in the public sector, and growth of trade unions. Unit II covers industrial conflicts, their impact and causes, strikes, prevention methods, and government machinery for resolution. Unit III focuses on concepts of labour welfare, objectives, scope, need, voluntary and statutory welfare measures. Unit IV addresses industrial safety, accident prevention, health, hygiene, hazards, and statutory provisions. Unit V examines welfare for special categories of labour such as children, women, contract workers, and persons with disabilities.
Recent trends and development in Securities MarketJyotsna Gupta
The document summarizes recent trends and developments in the Indian securities market from 1992 to 2009. Some of the key developments include the establishment of SEBI as the securities market regulator in 1992, the introduction of screen-based trading and a T+2 settlement cycle to increase efficiency, permitting equity derivatives and short selling to improve liquidity and price discovery, establishing clearing corporations like NSCCL to eliminate counterparty risk, and allowing facilities like ASBA, securities lending/borrowing and currency/interest rate futures to develop the market. Overall the securities market in India has grown exponentially in terms of resources mobilized, intermediaries, listed stocks, and investor population through these reforms and developments over the period.
This document discusses the evolution of corporate governance in India. It describes three main periods:
1) The Managing Agency System from 1850-1955, where British merchants managed companies and provided financial and managerial expertise.
2) The Promoter System from 1956-1991, where the government passed laws to eliminate managing agencies and safeguard shareholder rights after India gained independence.
3) The Anglo-American System from 1992 onwards, where concepts like shareholder rights and control, and maximizing shareholder value were introduced through organizations like SEBI and new company laws.
Forecasting and decision making are important for businesses to plan effectively amid risk and uncertainty. Economic forecasting helps businesses understand changes in the broader environment so they can formulate strategies. Demand forecasting also allows businesses to predict sales and allocate resources appropriately. Qualitative techniques like expert opinions and surveys, and quantitative techniques like time series analysis are commonly used for demand forecasting. The results of forecasting assist both businesses and governments in planning investments and policies.
This presentation gives you an overview of technical analysis. Technical Analysis basically suggests us "WHEN" to invest. This presentation will give a brief idea of Dow's Theory and different types of graphs used in share market to demonstrate a specific stock (5 types of graphs).
The Code of Corporate Governance establishes rules for listed companies in Pakistan regarding their board of directors, financial reporting, auditing, and corporate ownership structure. It requires boards to include independent directors, sets qualifications for directors and financial officers, and mandates quarterly financial reporting, audit committees, and limits on auditor share ownership. The code aims to improve transparency, accountability, and protections for investors in Pakistani public companies.
SEBI was established in 1988 and upgraded to a statutory body in 1992 through the SEBI Act. It is headquartered in Mumbai and regulates stock exchanges and other market intermediaries. SEBI aims to protect investors, ensure fair practices, and promote an efficient securities market. It has regulatory and developmental functions, including licensing market intermediaries and promoting research and investor education.
This document summarizes a presentation on strategic control. It outlines 5 questions involved in assessing a strategy's success, including whether the organization is moving in the right direction and if objectives are being met. It defines strategic control as focused on achieving future goals rather than past performance, and tracking a strategy as it is implemented. The characteristics, process, and 4 types of strategic control are described: premise control, implementation control, strategic surveillance, and special alert control. Operational control is also briefly discussed.
This document discusses various techniques for organizational and financial appraisal. It begins by introducing performance appraisal as a system to measure employee effectiveness and efficiency. Traditional methods of performance appraisal focused on personal qualities like knowledge and initiative, using techniques like ranking, rating scales, and critical incidents. Modern methods aimed to reduce bias, including management by objectives, behaviorally anchored rating scales, and human resource accounting. Additional techniques discussed include assessment centers, 360/720-degree feedback, and financial analysis methods like ratio, trend, and funds flow analysis. The document concludes that the best technique depends on the organization's needs as each has pros and cons.
The Industrial Finance Corporation of India (IFCI) was established in 1948 as the first all-India term-lending institution to provide medium and long-term credit to industry. It is headquartered in New Delhi and sources funds from paid-up capital, reserves, market borrowings, government loans, and foreign credit lines. The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 and is headquartered in Mumbai. It provides various financial services including project financing, banking, asset management, and mutual funds to Indian businesses. The Industrial Development Bank of India (IDBI) was established in 1964 and is headquartered in Mumbai. It aims to promote and develop industries by providing financial and technical
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.
This document discusses financial statement analysis through the use of ratios. It describes the types of ratios used - liquidity, leverage, activity, and profitability - and what each can indicate about a firm's financial position and performance. Ratios are compared over time and against industry benchmarks to evaluate a firm's liquidity, use of debt, asset efficiency, and overall earnings power. While ratios provide useful information, their analysis requires caution due to differences between firms and changing economic conditions.
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 provides an overview of capital markets, including its definition, objectives, key components and functions. It discusses the primary and secondary markets, and the major players in capital markets such as brokers, investment bankers, stock exchanges, underwriters, credit rating agencies, corporations, banks/financial institutions, and foreign investors.
The document provides an introduction to the Indian financial system, which includes both formal/organized and informal/unorganized components. It describes the various subsystems that make up the formal financial system, including financial institutions, markets, instruments, and services. It also discusses the roles and interactions of different elements like banks, non-banking institutions, money markets, capital markets, primary markets, and secondary markets.
The document defines foreign exchange and foreign exchange markets. It discusses the key participants in foreign exchange markets including individuals, firms, banks, governments, and international agencies. It also outlines some of the main functions and determinants of foreign exchange markets. Long-term determinants include balance of payments, relative economic strength, interest rates, inflation, money supply, and national income. Short-term determinants include central bank intervention, export/import payments and flows, foreign investment flows, political factors, speculation, and capital movements. The document also provides context on the Foreign Exchange Management Act (FEMA) in India.
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.
The document provides an overview of topics that will be covered in an ECL Learnings introduction session. The session will cover:
1) Basics of market functioning, including stock exchanges, orders, and terminology.
2) Understanding candlestick patterns and technical indicators for analyzing stock movements.
3) Developing intraday, short-term, and medium-term trading strategies using tools like moving averages, Bollinger Bands, and MACD.
The session aims to educate attendees on market analysis and building their own trading strategies.
The document discusses the regulation of stock trading in India. It provides an overview of the Bombay Stock Exchange and National Stock Exchange, and describes the establishment of SEBI in 1992 to protect investors and regulate the securities market. It outlines SEBI's powers and responsibilities, as well as the key laws governing the security market: the SEBI Act, Companies Act, Securities Contract Act, and Depositories Act. The document also discusses rules around trading hours and providing market information to clients.
Regulatory framework for financial services in INDIAayushmaan singh
Financial services refers to services provided by the finance market such as banking, insurance, and investment. Financial regulation subjects financial institutions to requirements and guidelines to maintain integrity in the financial system. It influences banking by increasing available financial products. NABARD was established in 1982 to oversee agricultural credit and rural development. Its roles include providing credit and refinancing to rural banks, identifying credit potential, monitoring credit plans, and inspecting regional rural banks to regulate the rural banking sector.
SEBI (Securities and Exchange Board of India) was established in 1988 to regulate the securities market in India. SEBI aims to protect investors, maintain orderly markets, and promote market development. It oversees stock exchanges, registers market intermediaries like brokers and merchant bankers, and regulates substantial acquisitions of shares and takeovers. SEBI is divided into departments and has offices across major Indian cities. It works with advisory committees to achieve its goals of regulating primary and secondary markets and protecting investors.
This document outlines the course syllabus for BA7034 Industrial Relations and Labour Welfare. It is divided into 5 units that will be covered over 45 class periods. Unit I discusses concepts of industrial relations, importance, problems in the public sector, and growth of trade unions. Unit II covers industrial conflicts, their impact and causes, strikes, prevention methods, and government machinery for resolution. Unit III focuses on concepts of labour welfare, objectives, scope, need, voluntary and statutory welfare measures. Unit IV addresses industrial safety, accident prevention, health, hygiene, hazards, and statutory provisions. Unit V examines welfare for special categories of labour such as children, women, contract workers, and persons with disabilities.
Recent trends and development in Securities MarketJyotsna Gupta
The document summarizes recent trends and developments in the Indian securities market from 1992 to 2009. Some of the key developments include the establishment of SEBI as the securities market regulator in 1992, the introduction of screen-based trading and a T+2 settlement cycle to increase efficiency, permitting equity derivatives and short selling to improve liquidity and price discovery, establishing clearing corporations like NSCCL to eliminate counterparty risk, and allowing facilities like ASBA, securities lending/borrowing and currency/interest rate futures to develop the market. Overall the securities market in India has grown exponentially in terms of resources mobilized, intermediaries, listed stocks, and investor population through these reforms and developments over the period.
This document discusses the evolution of corporate governance in India. It describes three main periods:
1) The Managing Agency System from 1850-1955, where British merchants managed companies and provided financial and managerial expertise.
2) The Promoter System from 1956-1991, where the government passed laws to eliminate managing agencies and safeguard shareholder rights after India gained independence.
3) The Anglo-American System from 1992 onwards, where concepts like shareholder rights and control, and maximizing shareholder value were introduced through organizations like SEBI and new company laws.
Forecasting and decision making are important for businesses to plan effectively amid risk and uncertainty. Economic forecasting helps businesses understand changes in the broader environment so they can formulate strategies. Demand forecasting also allows businesses to predict sales and allocate resources appropriately. Qualitative techniques like expert opinions and surveys, and quantitative techniques like time series analysis are commonly used for demand forecasting. The results of forecasting assist both businesses and governments in planning investments and policies.
This presentation gives you an overview of technical analysis. Technical Analysis basically suggests us "WHEN" to invest. This presentation will give a brief idea of Dow's Theory and different types of graphs used in share market to demonstrate a specific stock (5 types of graphs).
The Code of Corporate Governance establishes rules for listed companies in Pakistan regarding their board of directors, financial reporting, auditing, and corporate ownership structure. It requires boards to include independent directors, sets qualifications for directors and financial officers, and mandates quarterly financial reporting, audit committees, and limits on auditor share ownership. The code aims to improve transparency, accountability, and protections for investors in Pakistani public companies.
SEBI was established in 1988 and upgraded to a statutory body in 1992 through the SEBI Act. It is headquartered in Mumbai and regulates stock exchanges and other market intermediaries. SEBI aims to protect investors, ensure fair practices, and promote an efficient securities market. It has regulatory and developmental functions, including licensing market intermediaries and promoting research and investor education.
This document summarizes a presentation on strategic control. It outlines 5 questions involved in assessing a strategy's success, including whether the organization is moving in the right direction and if objectives are being met. It defines strategic control as focused on achieving future goals rather than past performance, and tracking a strategy as it is implemented. The characteristics, process, and 4 types of strategic control are described: premise control, implementation control, strategic surveillance, and special alert control. Operational control is also briefly discussed.
This document discusses various techniques for organizational and financial appraisal. It begins by introducing performance appraisal as a system to measure employee effectiveness and efficiency. Traditional methods of performance appraisal focused on personal qualities like knowledge and initiative, using techniques like ranking, rating scales, and critical incidents. Modern methods aimed to reduce bias, including management by objectives, behaviorally anchored rating scales, and human resource accounting. Additional techniques discussed include assessment centers, 360/720-degree feedback, and financial analysis methods like ratio, trend, and funds flow analysis. The document concludes that the best technique depends on the organization's needs as each has pros and cons.
The Industrial Finance Corporation of India (IFCI) was established in 1948 as the first all-India term-lending institution to provide medium and long-term credit to industry. It is headquartered in New Delhi and sources funds from paid-up capital, reserves, market borrowings, government loans, and foreign credit lines. The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 and is headquartered in Mumbai. It provides various financial services including project financing, banking, asset management, and mutual funds to Indian businesses. The Industrial Development Bank of India (IDBI) was established in 1964 and is headquartered in Mumbai. It aims to promote and develop industries by providing financial and technical
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.
This document discusses financial statement analysis through the use of ratios. It describes the types of ratios used - liquidity, leverage, activity, and profitability - and what each can indicate about a firm's financial position and performance. Ratios are compared over time and against industry benchmarks to evaluate a firm's liquidity, use of debt, asset efficiency, and overall earnings power. While ratios provide useful information, their analysis requires caution due to differences between firms and changing economic conditions.
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 provides an overview of capital markets, including its definition, objectives, key components and functions. It discusses the primary and secondary markets, and the major players in capital markets such as brokers, investment bankers, stock exchanges, underwriters, credit rating agencies, corporations, banks/financial institutions, and foreign investors.
The document provides an introduction to the Indian financial system, which includes both formal/organized and informal/unorganized components. It describes the various subsystems that make up the formal financial system, including financial institutions, markets, instruments, and services. It also discusses the roles and interactions of different elements like banks, non-banking institutions, money markets, capital markets, primary markets, and secondary markets.
The document defines foreign exchange and foreign exchange markets. It discusses the key participants in foreign exchange markets including individuals, firms, banks, governments, and international agencies. It also outlines some of the main functions and determinants of foreign exchange markets. Long-term determinants include balance of payments, relative economic strength, interest rates, inflation, money supply, and national income. Short-term determinants include central bank intervention, export/import payments and flows, foreign investment flows, political factors, speculation, and capital movements. The document also provides context on the Foreign Exchange Management Act (FEMA) in India.
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.
The document provides an overview of topics that will be covered in an ECL Learnings introduction session. The session will cover:
1) Basics of market functioning, including stock exchanges, orders, and terminology.
2) Understanding candlestick patterns and technical indicators for analyzing stock movements.
3) Developing intraday, short-term, and medium-term trading strategies using tools like moving averages, Bollinger Bands, and MACD.
The session aims to educate attendees on market analysis and building their own trading strategies.
Technical analysis is the study of historical market data like prices and volumes to identify patterns and trends that can be used to predict future market behavior. The objectives of technical analysis include accurately determining the current market condition, identifying trends, reducing risks, setting targets and exits, and avoiding false trades. Common technical analysis strategies involve identifying trends, momentum, support and resistance levels, and analyzing indicators like moving averages, oscillators, and volume measures.
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.
Better understand technical analysis and some indicatorsAbdirahmanYusuf14
This document provides an overview of technical analysis and some common indicators used in currency trading. It describes how technical analysis uses historical price data and trends to identify signals for profitable trades. Several technical indicators are explained, including moving averages, MACD, Bollinger Bands, Fibonacci retracement, and RSI, which analyze trends, momentum, and overbought/oversold conditions to provide buy and sell signals. The document emphasizes the importance of combining multiple indicators and trading with the trend and within one's risk tolerance.
- 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.
Quality trend analysis is an effective way to predict equity price movements. But, it requires a good understanding of the market and its movements. The reason to use this approach in investment and trading is to predict future prices.
Intraday or day trading can be challenging for newcomers. To get an advantage over others, traders must keep an eye on various key aspects. Chart patterns, technical indicators, open interest, market news, and so on are examples of these variables. The most significant indicators for intraday trading will be discussed in this post. These indications will aid you in maintaining a high success rate and a favorable risk-reward ratio.
Price Action Trading Best 100% Successful Strategies used by Investors.pdfNazim Khan
What is meant by price action?
The movement of a security’s price plotted over time is known as price action. All technical analysis of a stock, commodity, or other asset chart is based on price activity. Many short-term traders base all of their trading choices solely on price movement and the formations and trends that can be drawn from it. Since it employs previous prices in calculations that can then be used to advise trading decisions, technical analysis as a practice is a derivative of price action.
A method for speculating on the financial markets called “price action trading” involves analyzing the fundamental changes in price over time. It is frequently used by institutional traders, hedge fund managers, and a large number of retail traders to forecast the future direction of the price of securities or financial markets.
In other words, price action trading is a ‘pure’ form of technical analysis because it doesn’t use any indicators that are derived from previous prices. The only data a market generates about itself that price action traders are interested in is price movement over time.
Price action analysis enables a trader to comprehend market price movement and offers explanations that help the trader create an image in their minds of how the market is currently structured. A market’s ‘gut feel’ and the experience of seasoned price action traders are frequently cited as the main drivers of their trading success.
A trader can attempt to interpret the human thought process underlying a market’s movement using the price action of the market. As they trade, each participant in a market leaves ‘clues’ in the form of price action on the price chart of that market. These clues can be analyzed and used to try to predict the next move in a market.
What Can You Learn from Price Action?
Charts that show price changes over time can be used to observe and interpret price action. To better identify and understand trends, breakouts, and reversals, traders’ use various chart compositions. Since candlestick charts show the open, high, low, and close values in the context of up or down sessions, they aid in the better visualization of price movements and are popular among traders.
Price action can be visually interpreted using candlestick patterns like the Harami cross, engulfing pattern, and three white soldiers. Many more candlestick formations can be created based on price action to predict what will happen next. Other chart types, such as point-and-figure charts, box charts, box plots, and others, can use the same formations.
Many technical analysts calculate technical indicators using price action data in addition to the visual formations on the chart. The objective is to uncover order in a price’s occasionally seeming random movement. For instance, the price action indicates that bulls have attempted a breakout on multiple occasions and have gained momentum each time, so an ascending triangle pattern created by applying trend lines to a price ac
Technical analysis, market efficiency, and behavioral financeBabasab Patil
Technical analysis uses patterns in stock prices and trading volume to predict future market movements and identify trading opportunities. The efficient market hypothesis states that stock prices instantly reflect all available information, making technical analysis ineffective. However, behavioral finance suggests psychological factors influence investor decisions and market anomalies exist, challenging the notion of complete market efficiency.
Technical analysis is a method of evaluating investments using historical price patterns and trends. It uses tools like trend lines, support and resistance levels, moving averages, trading volume, chart patterns, candlesticks, and indicators to identify potential opportunities. The key principles of technical analysis are that price action reflects all known information, trends tend to persist until disruptions occur, and historical patterns often repeat. Technical analysts believe studying these tools can help forecast future price movements.
The document discusses using simple moving averages (SMAs) as a leading rather than lagging indicator. It argues that SMAs can help identify support and resistance levels when used with techniques like point and figure charting to reduce noise. The document provides examples showing how SMAs of different time periods overlaid on a chart, along with other indicators like Bollinger Bands, can help traders analyze trends and potential entry and exit points.
A fundamental study on Technical AnalysisJay Sadhwani
Technical analysis is the use of historical price and volume data to forecast future price movements. It is based on the assumptions that market prices reflect all known information, that prices trend, and that history repeats itself. There are various chart types used including line charts, bar charts, candlestick charts, and point and figure charts. Key aspects of technical analysis include identifying trends, measuring trend strength, finding low risk entry points, using stop losses, and exiting when trends reverse. Technical analysis focuses on price movements to predict the future, while weaknesses include subjectivity and interpretation of 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.
Technical Analysis Explained
Trends in Technical Analysis
Trend Classifications
Support & Resistance
Technical Analysis Indicators
Using the MACD to trade the EUR/USD
The document provides guidance on using an effective swing trading strategy in forex markets. It discusses identifying trends using techniques like moving averages and trendlines. Traders are advised to use support and resistance levels as well as technical indicators to identify potential entry and exit points. Clear rules for entering and exiting trades based on factors like moving average crossovers and stop losses are also recommended. The document stresses the importance of risk management and staying informed about market news and events to help swing traders make profitable decisions.
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
Forex trading strategies describe how you enter and exit transactions using technical indicators to identify critical price levels. While there are hundreds of techniques to choose from, we’ve produced a list of the most popular forex trading strategies.
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This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptxEduSkills OECD
Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
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2. Technical Analysis
Technical Analysis is the forecasting of future financial
price movements based on an examination of past price
movements. technical analysis can help investors anticipate
what is "likely" to happen to prices over time. Technical
analysis uses a wide variety of charts that how price over
time.
Definition 1: A method of evaluating future security prices
and market directions based on statistical analysis of
variables such as trading volume, price changes, etc., to
identify patterns.
Definition 2: Analysis applied to the price action of the market
to develop trading decisions, irrespective of fundamental
factors.
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3. Assumptions of Technical
Analysis
Market Action discounts everything
Supply Vs. Demand factors.
Fundamental, Political and Psychological factors.
Prices move in trends
Identify new and existing trend.
Prices move in trends– Trend in motion is more
likely to continue than to reverse.
History repeats itself
Future is the repetition of past
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4. Technical Analysis
Most Significant Assumptions:
Stock prices move in trends that persist for long periods
These trends can be detected in charts
Thus past trends in market movements can be used to
forecast or understand the future.
The lag between the time a technical analyst perceives a
change in the value of a security and when the investing
public ultimately assesses this change provides a profit
opportunity to the chartist
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5. Technical Vs. Fundamental
Fundamental:
Study the cause of market movement.
Supply-demand factor.
Government interventions.
Technical:
Study the effect of movement.
Charts, price, volume, Trend
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6. Advantages Of Technical Analysis :
•Its quick and easy
• It does not involve data and accounting problems
• It incorporates psychological as well as economic
reasons behind price changes
• It tells when to buy ; not why investors are buying
Disadvantages Of Technical Analysis :
• Efficient market followers say it doesn’t work
• If it worked it would self destruct.
• It is too subjective to be of any real use
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7. Technical Analysis
Tools to project future market movements
Charting
Key indicator series
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8. Theories Supports Technical
Analysis
Dow Theory
Assumptions:
Averages discounts everything.
The market has three trends.
Major trend have three phases.
Volume must confirm the trend.
ElliotWave Theory
Elliott Wave Theory, which states that security prices are
governed by cycles founded upon the Fibonacci series (1-2-
3- 5-8-13-21...).
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9. Technical Analysis
Use of Charting
Often linked to development of the Dow Theory in the late
1890s by Charles Dow
Generally believed successful in signaling the market crash
of 1929
Essential Elements of the Dow Theory
There are 3 major movements in the market:
1. Daily fluctuations
2. Secondary movements (two weeks to a month)
3. Primary trends (long term)
May be bullish or bearish in nature
Daily fluctuations and secondary movements only
important to extent they reflect on the persistence of
the long term primary trend4/10/2013 Babasabpatilfreepptmba.com
11. Presentation of the Dow Theory:
Example of use to analyze a trend
Chart shows positive
primary trend despite two
secondary downward
trends
Bullish primary trend is
confirmed by the increases
in the levels of secondary
lows and highs
Pattern assumed to persist
long term but
ultimately to end
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13. Presentation of the Dow Theory:
Market reversal and confirmation
Ultimate end of a bullish trend
detected by a new pattern:
Recovery fails to exceed
previous high (Abortive
recovery) +
New low penetrates a
previous low +
New pattern confirmed by
subsequent movement in
Dow Jones Transportation
Average
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14. Types of Charts
Line Chart.
Candlesticks chart.
Bar Chart.
Point & Figure Chart.
Candlesticks charts have become very popular among all chartist.
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15. Line Chart.
Line graph represents a continuous line, connecting the closing prices
Line graph is also used when considering the volume and open interest
indicators.
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17. The Bar Chart
(Continued)
Some of the most
popular type of
charts
Advantage is that it
show the high, low,
open and close for
each day
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20. Candle Stick Charting
(Continued)
Been around for hundreds of years
Often referred to as ―Japanese Candles‖ because the
Japanese would use them to analyze the price of rice
contracts
Similar to bar chart, but uses color to show if stock was up
(green) or down (red) over the day
More than 20 patterns are used by technicians for
candlestick charting. Some of the most popular include the
following.
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22. Candle Stick Charting
(Continued)
Green is an example
of a bullish pattern,
the stock opened at (or
near) its low and
closed near its high
Red is an example of a
bearish pattern. The
stock opened at (or
near) its high and
dropped substantially
to close near its low
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23. Candle Stick Charting
(Continued)
Top example is called a
hammer and is a bullish
pattern only if it occurs
after the stock price has
dropped for several
days.
Theory is that pattern
indicates a reversal
Bottom is an example of
a star, typically indicating
a reversal and/or
indecision.
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25. Point & Figure chart
X's represent increasing prices . O's represent decreasing prices.
Does not consider open and close prices.
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26. Point and Figure Chart
Somewhat rare
Plots day-to-day increases and declines in price.
A rising stack of XXXX‘s represents increases
A rising stack of OOOO‘s represents decreases.
Typically used for intraday charting
If used for multi-day study, only closing prices will be used
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27. Point and Figure Chart
(continued)
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28. Point and Figure Chart
(continued)
Helps to filter out less-significant price movements
allowing analyst to focus on most important trends
Used to keep track of emerging price patterns
No time dimension
Two attributes affecting the appearance of a point
& figure chart
Box size
Reversal amount
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29. What are moving averages?
An average of a number of specified historical time periods from the
point on the chart. Moving averages offer an indication of the clear
direction and slope of the trend in the market.
The two most popular types of moving averages are the Simple Moving
Average (SMA) and the Exponential Moving Average (EMA).
SMA is formed by computing the average (mean) price of a security over
a specified number of periods. While it is possible to create moving
averages from the Open, the High, and the Low data points, most
moving averages are created using the closing price.
EMA in order to reduce the lag in simple moving averages, technicians
often use exponential moving averages (also called exponentially
weighted moving averages).
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30. Using the Moving Average
Shows the average value of a security‘s price over a
period of time
Using compared or used in conjunction with EMA (see
discussion below)
The most commonly used averages are of 20,30,50,
100 and 200 days
The longer the time span, the less sensitive the moving
average to daily price changes
Moving averages are used to emphasize the direction of
a trend and smooth out price and volume fluctuations
(―noise‖).
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32. Moving Average (Continued)
Notice in April when the stock price dropped well
below its 5-day average (the green line).
Bearish signal
February it rose above its 50-day average and
continued to rise for several weeks
Bullish signal
Typically, when a stock moves below its moving
average it is a bad sign, above it is a good sign
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33. Moving Average (Continued)
What do the different days mean?
20 days - choppy line. It isn't the most accurate, but is
probably the most useful for short term traders.
30 day - similar to 20 day but provides a bit more
certainty for the trend.
50 day - moving averages provide a much less volatile,
smooth line. This can be used to detect somewhat longer
term trends.
100 day - similar to the 50 day, it is less volatile, and one
of the most widely used for long term trends.
200 day - even less volatile, more of a rolling chart or
smooth line. It doesn't react to quick movements in the
stock price therefore it is rarely used.
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34. Strategies for Moving Averages
Filters
Used to increase confidence about an indicator
No set rules or things to look out for when filtering, just
whatever makes you confident enough to invest your money
For example you might want to wait until a security crosses
through its moving average and is at least 10% above the
average to make sure that it is a true crossover.
Remember, setting the percentile too high could result in "missing
the boat" and buying the stock at its peak.
Another filter is to wait a day or two after the security crosses
over, this can be used to make sure that the rise in the security
isn't a fluke or unsustained.
Again, the downside is if you wait too long then you could end up
missing some big profits.
When current price crosses the average a trading signal occurs
Bullish signal when the current price rises above the moving average
Bearish sign when the current price falls below the moving average
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35. Strategies for Moving Averages
(Continued)
Crossovers
Not as easy as filtering
Several different types of crossover's, but all of them
involve two or more moving averages.
In a double crossover you are looking for a situation where the
shortest MA crosses through the longer one. This is almost
always considered to be a buying signal since the longer average
is somewhat of a support level for the stock price.
For extra insurance you can use a triple crossover, whereby the
shortest moving average must pass through the two higher ones.
This is considered to be an even stronger buying indicator.
Notice this happened in May for APPX
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36. Exponential Moving Averages
(EMA)
Calculated by applying a percentage of today's closing price
to yesterday's moving average value.
Use an exponential moving average to place more weight on
recent prices.
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37. SMA & EMA Chart..
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38. Approaches of Technical
Analysis
Supports & Resistances
Pivot Analysis
Trend Channel Supports & Resistances
Trend line theory
Fibonacci method
GANN Theory
Bollinger Band
Patterns
Continuation and Reversal
Market Indicators
Volume indicators
Momentum indicators
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39. Support and Resistance Levels
Price levels at which movement should stop and reverse
direction.
Act as floor and ceiling
Different strengths (major and minor)
Support
Price level below the current market price at which
buying interest should be able to overcome selling
pressure and thus keep the price from going any lower
Resistance
Price level above the current market price, at which
selling pressure should be strong enough to overcome
buying pressure and thus keep the price from going any
higher
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40. Resistance and Support
One of two things can happen when stock approaches
resistance/support
Can act as a reversal
point
When price drops to a
support level, it will go
back up
When price rises to a
resistance level, it will
go back down
Support/Resistance
reverse roles once
penetrated.
Market price falls
below a support level,
then the former
support level becomes
a resistance level
when the market later
trades back up to that
level
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41. Trend Channel Supports &
Resistances
AMZN retraces from a monstrous rally to
$60
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42. Support Breakdowns
SELL if support “breaks down”, because it
signifies that BUYERS no longer overpower
SELLERS.
Breakdowns are a BEARISH SELL signal.
You should have sold here,
at the BREAK DOWN.
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43. Chart Analysis : Resistance
Price at which SELLERS overwhelm
BUYERS consistently.
When a stock makes a new high and
then retraces, sellers who missed out @
the previous peak will feel pressured to sell
when price climbs back to that level.
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45. Trend line theory
Fibonacci Theory:
The Fibonacci numbers are 0, 1, 1, 2, 3, 5, 8, 13, ...
The series proceeds, any given number is 1.618
times the preceding number and 0.618% of the next
number. (34/55 = 55/89 = 144/233 =0.618) (55/34
=89/55 =233/144 =1.618), and1.618 =1/0.618.
The other Fibonacci numbers are 0.382 and 0.50
commonly used in technical analysis have a less
impressive background but are just as powerful in
Technical analysis.
0.382=(1-.618)=(0.618*0.618), and 0.5 is the mean of
the two numbers.
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46. Fibonacci numbers are commonly used in Technical Analysis with or
without a knowledge of Elliot wave analysis to determine potential
support, resistance, and price objectives
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47. GANN Theory
Features:
Price, time and range are the only three factors to consider
The markets are cyclical in nature
Based on these three premises, Gann's strategies revolved
around three general areas of prediction
Price study– This uses support and resistance lines, pivot
points and angles.
Time study – This looks at historically reoccurring dates,
derived by natural and social means
Pattern study – This looks at market swings using trend
lines and reversal patterns
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48. GANN Theory
Gann noted that there was a relationship between the extent of
a price movement and the time the price took to reach its
new level. If a share price moves one unit of price per one
unit of time this results in a trend line of 45 . Gann
described this as a 1 x 1 relationship or squaring of price
and time.
Gann reasoned that if the price breaks through the trend line
the new trend line will have a mathematical relationship
with the original one. For example, it could be 2x, 3x or 4x
the price or it could be 1/2, 1/3, or 1/4 of the original.
A Gann chart uses a series of parallel horizontal lines which
act as price targets together with a series of trend lines
which fan out at the various Gann ratios from the start of a
trend.
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51. Bollinger Band
Identify overbought & oversold markets.
Used in combination with oscillator for buy/sell
signals.
With other indicators they can warn of impending
price moves.
With other indicators they can signal potential tops
& bottoms.
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53. Bollinger Band
A simple moving average in the middle (sometimes
omitted)
An upper band (SMA plus 2 standard deviations)
A lower band (SMA minus 2 standard deviations)
Standard deviation is a statistical tool that provides
a good indication of volatility. The bands react
quickly and reflect periods of high and low
volatility.
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54. Bollinger Band
Closing prices are most often used to compute Bollinger Bands.
Other variations, including typical and weighted prices, can also
be used.
Typical Price = (high + low + close)/3
Weighted Price = (high + low + close + close)/4
Bollinger recommends using a 20-day simple moving average for
the center band and 2 standard deviations for the outer bands.
The length of the moving average and number of deviations can
be adjusted to better suit individual preferences and specific
characteristics of an instrument
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55. Bollinger Band chart
Double bottom buy: A double bottom buy signal is given
when prices penetrate the lower band and remain above the
lower band after a subsequent low forms.
Double top sell: A sell signal is given when prices peak
above the upper band and a subsequent peak fails to break
above the upper band. The bearish setup is confirmed when
prices decline below the middle band
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56. Chart Patterns….
Identifying chart patterns is simply a form of
technical analysis
Research has proven that some chart patterns have
high forecasting probabilities.
Two types of chart pattern…
Continuation.
Reversal.
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57. Continuation Pattern…
Continuation pattern is nothing but
continuation of the trend.
Triangles.
(Ascending, Descending & Symmetric)
Flags & Pennants.
GAP Theory.
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58. Ascending Triangle:
Ascending triangles are
generally considered
bullish and are most
reliable when found in an
uptrend.
The top part of the triangle
appears flat, while the
bottom part of the triangle
has an upward slant
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59. Descending Triangle:
The descending triangle is
generally considered to be
bearish and is usually
found in downtrends.
The top part of the triangle
has a downward slant and
the bottom is flat.
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60. Symmetric Triangle.
Symmetrical triangles can
be characterized as areas of
indecision.
A market pauses and future
direction is questioned.
Eventually, this indecision
is met with resolve and
usually explodes out of this
formation (often on heavy
volume.)
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61. Flags & Pennants…
Flags and pennants can be categorized as continuation
patterns.
Usually represent only brief pauses in a dynamic market.
They are typically seen right after a big, quick move.
The market then usually takes off again in the same
direction.
Bullish flags are characterized by lower tops and lower
bottoms, with the pattern slanting against the trend. But
unlike wedges, their trend lines run parallel.
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62. Flags & Pennants…
Bearish flags are comprised of higher tops and
higher bottoms. "Bear― flags also have a tendency
to slope against the trend.
Pennants look very much like symmetrical
triangles. But pennants are typically smaller in size
(volatility) and duration.
Volume generally contracts during the pause with
an increase on the breakout.
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64. GAP Theory…
A gap is an area on a price chart in which there were no
trades.
Normally this occurs after the close of the market on one
day and the next day's open.
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65. Types of Gaps…
Common Gaps
A trading gap or an area gap, the common gap is usually
uneventful.
They appear in trading range or congestion area.
Continued…
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66. Breakaway Gaps
Occur when the price action is breaking out of their trading
range or congestion area. (Price range in which market has
traded for some period of time.)
Volume increases instantly.
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67. Runaway Gaps
Increase interest in the security. Represents traders who
failed to get into the security during initial move.
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68. Exhaustion Gaps
Starts near the end of a good up or down trend.
Signals the end of the move.
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70. Double top
Double Tops appear on a chart in the shape of the letter "M"
and are quite common.
Volume is important to confirm the formation. (Greater
volume in the 1st peak than the 2nd one.
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71. Double bottom
A double bottom is the opposite of a double top and appears
as a letter "W" on a chart.
Volume (Greater volume in the 2nd peak than the 1st one.)
Occurs when a stock price drops to a similar price level
twice within a few weeks or months
Buy when the price passes the highest point in the handle.
In a perfect double bottom, the second decline should
normally go slightly lower than the first decline to create a
shakeout of jittery investors
The middle point of the ―W‖ should not go into new high
ground.
This is a very bullish indicator
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73. Rounding tops/ Bottom
The rounding top reflects the market's perception that the
underlying
fundamentals driving the prices are changing, but the turn is
markedly slow.
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74. Triple top/bottom
The triple top is a reversal pattern made up of three equal
highs followed by a
break below support. In contrast to the bottom.
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75. Cup and Handle
Pattern on bar chart as short as 7 weeks or as long as 65
weeks
Cup in the shape of a U; Handle has a slight downward
drift
Right hand side of pattern has low trading volume
As the stock comes up to test old highs, the stock will
incur selling pressure by the people who bought at or
near the old high
Selling pressure will take the stock price sideways for 4
days to 4 weeks, then it takes off
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77. Head & Shoulder.
A technical analysis term used to describe a chart formation
in which a stock‗s price:
1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again
declines.
3. And finally, rises again, but not to the second peak, and
declines once more.
The first and third peaks are shoulders, and the second peak
forms the head.
The "head-and-shoulders" pattern is believed to be one of
the most reliable trend-reversal patterns.
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78. Head and Shoulders Patterns
Head and shoulders is a reversal pattern that, when formed,
signals the security is likely to move against its previous
trend.
The signal appears to be most reliable (?) in detecting a
reversal of an uptrend.
A Head and Shoulders pattern consists of four distinct parts:
The left shoulder, the head, the right shoulder, and the
neckline. Each of these four must be present for the
formation to exist.
In addition, the volume pattern must also meet strict
requirements. Volume must show a peak on the left
shoulder, a lower peak at the head, and then an even lower
level at the right shoulder.
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79. Head and Shoulder Formation
Left Shoulder: A high volume rally and top
followed by a minor reaction with
significantly less volume than during the rise
and top.
Head: Another high volume rally with the
top reaching a higher level than the left
shoulder, followed by a another reaction on
less volume that takes the price to a level near
the bottom of the previous reaction.
Right Shoulder: A third rally on noticeably
less volume that fails to reach the top of the
head.
Neckline: A decline in prices from the top of
the right shoulder which falls below the line
formed when connecting the bottoms of the
left shoulder and head by at least 2-3% of the
stock's market value.
Head and Shoulders as a Reversal
Pattern in an Uptrend
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82. Key Indicator Series
A number of technical indicator series may
be watched for bearish ( )and bullish ( )
trends
Contrary opinion rules
Smart money rules
Overall market indicators
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83. Suggest observing unsuccessful market
behavior and choosing a contrary position:
Odd-lot Theory
Short Sales Position
Investment Advisory Recommendations
Put-Call Ratio
Contrary Opinion Rules
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84. Contrary Opinion Rules:
Odd-Lot Theory
An odd-lot trade is one of less than 100 shares —
only small investors tend to engage in odd-lot
transactions
This theory suggests watching what the small
investor is doing and then do the opposite
The weekly Barron’s reports odd-lot trading on a
daily basis in its ―Market Laboratory – Stocks‖
section
It is easy to construct a ratio of odd-lot purchases to
odd-lot sales
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85. Contrary Opinion Rules:
Odd-Lot Theory
Here, the odd-lot trader is
on the correct path as the
market is going up (net
selling position) but
becomes a net buyer
preceding a fall in the
market
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86. The odd-lot trader is also presumed to be a strong seller
right before the bottom of a bear market
A corollary to the odd-lot theory says that Monday odd-lot
trades are particularly suspect
The theory actually suggests the small trader does all right
most of the time but badly misses on key market turns
While the odd-lot theory appeared to have some validity in
the 1950s and 1960s, it was not particularly valuable in
more recent decades.
However, odd-lot traders outguessed many professional
traders in the mid-1970s and late 1980s as well as in
October 1997 and in the fall of 2003
Contrary Opinion Rules:
Odd-Lot Theory
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87. A rule based on the volume of short sales in the
market
[A short sale represents the selling of a security
you do not own with the anticipation of
purchasing the security in the future to cover
your short position]
The contrary opinion stems from two sources:
Short seller are sometimes emotional and may
overreact to the market, and more importantly
There is now a built-in demand for stocks that have
been sold short by investors who will have to
repurchase shares to cover their short positions
Contrary Opinion Rules:
Short Sales Position
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88. When the number of short sellers is large (i.e., they are
bearish), this is thought to be a bullish signal
Technical analysts compute a ratio of
total short sales positions on an exchange to average daily
exchange volume for the month
Normal ratio is between 2.0 and 3.0
A ratio of 2.5 indicates current short sales are equal to 2
½ times the day‘s average trading volume
As the ratio (called the short interest ratio) approaches
the higher end of the normal range, this would be
considered bullish
Use of the ratio has produced mixed results
Contrary Opinion Rules:
Short Sales Position
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89. A further contrary opinion rule:
Watch the predictions
of investment advisory services
and do the opposite
Investors Intelligence has formalized this into an Index of
Bearish Sentiment:
When 60% or more of advisory services are bearish, expect
a market upturn
When only 15% or fewer are bearish, expect a decline in the
market
Contrary Opinion Rules:
Investment Advisory Recommendations
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90. Contrary Opinion Rules:
Put-Call Ratio
ILL-CONCEIVED speculation in the options market suggests
that a ―put-call‖ ratio may tell you to do the opposite of
what option traders are doing
Puts and calls represent options to buy or sell stock over a
specified period of time at a given price:
A put is an option to sell
A call is an option to buy
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91. Contrary Opinion Rules:
Put-Call Ratio
The ratio of put (sell) to call (buy) options is normally about
0.60 – there are generally fewer traders of put options than
call options
When the ratio gets up to 0.65 to 0.70 or higher, this
indicates increasing pessimism by option traders and the
contrary rules suggests a buy signal
When the ratio goes down to 0.40, decreasing pessimism
(increasing optimism) may indicate that it is time to sell if
you are a contrarian
The put-call ratio has a better than average record for calling
market turns.
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92. Smart Money Rules
Market technicians have long attempted to track the pattern of
sophisticated traders in the hope that they might provide
unusual insight into the future:
Theories related to bond market traders (e.g., Barron‘s
Confidence Index), and
Theories related to stock market specialists (e.g., short sales
by specialists)
Barron‘s Confidence Index=
Yield on 10 top-grade corporate bonds X 100
Yield on 40 intermediate-grade bonds
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93. Smart Money Rules:
Barron’s Confidence Index
This index is used to observe the trading pattern of investors
in the bond market on the premise that they are more
sophisticated than stock traders and pick up trends more
quickly
The theory suggests that a person who can figure out what
bond traders are doing today may be able to determine what
stock market investors will be doing in the near future
As top-grade bonds pay smaller yields than intermediate-
grade bonds, the Confidence Index is always below 100%
Normal trading range is between 80 and 96
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94. Smart Money Rules:
Barron’s Confidence Index
If bond investors are bullish about future economic
prosperity, they are rather indifferent between
holding top-grade and intermediate-grade bonds
the yield differences between the two categories
will be relatively small
Confidence Index near 96
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95. Smart Money Rules:
Barron’s Confidence Index
10 Top Grade Bonds yielding 8.4% while 40
Intermediate Grade Bonds yield 9.1%:
Barron’s Confidence Index = x 100 = 92%
Investors become quite concerned about the
economy‘s future health and will invest in lower-
quality bond issues only at a sufficiently high yield
differential to justify the risk – the gap widens:
Barron’s Confidence Index = x 100 = 83%
8.4%
9.1%
8.9%
10.7%
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96. Smart Money Rules:
Barron’s Confidence Index
Market technicians assume there are a few months of lead
time between what happens to the Confidence Index and
what happens to the economy and stock market
The Confidence Index has a mixed record of predicting
future events
This mixed record may partly be due to the fact that the
supply of new bond issues can influence yields as much as
investor attitudes (demand)
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97. Smart Money Rules:
Short Sales By Specialists
Because of the uniquely close position of specialists to the
action on Wall Street, market technicians ascribe unusual
importance to their decisions
Frequently monitored is the ratio of specialists‘ short sales
to the total amount of short sales
The normal ratio of specialists‘ short sales to the total
amount of short sales on an exchange is about 45%
If the ratio goes above 50%, technicians interpret this as a
bearish signal
If the ratio falls below 40%, technicians consider this bullish
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98. Overall Market Rules
Breadth of the Market
Attempts to measure what a broad range of securities
are doing compared to a market average
Advance-declines are often compared with movement of
a popular market average
Cash Position of Mutual Funds
Indicates their buying potential
Is generally representative of the purchasing potential of
other large institutional investors
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99. Breadth of the Market
Compare advance-declines:
The number of stock prices which are rising compared
to those declining relative to movements in a stock
market average as a potential signal of a turning point
in the market
E.g., if the Dow-Jones Industrial Average (DJIA) is
rising while the number of daily declines consistently
exceeds the number of daily advances, this might
signal the end of a bull market. Why? Although
conservative investors are investing in blue-chip
stocks, there is a lack of a broad-based confidence in
the market
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100. future weakness in
the market is signaled
by a strength in the
DJIA that is not
reflected in the
advance-decline data
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101. When the DJIA is going down but advanced
consistently lead declines, the market may be posed
for recovery
Weighted averages calculated of daily
advances/declines are also used
Comparisons may provide insights but also false
signals – care in interpretation should include a look
at a wide range of variables
Decimalization of stock prices in 2001 may have
caused the advance-decline measure to lose some of
its usefulness as an advance or decline of only a
penny is all that is now needed to make the list
(You could, with effort, make up your own
measures)
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102. Cash Position of Mutual Funds
Between 5 - 20% as a percent of total assets
At the lower end of this range, mutual funds appear to be
fully invested and can provide little in the way of
additional purchasing power
As their cash position goes to 15% or higher, this might
represent significant purchasing power that might help
trigger a market upturn
While the overall premise is valid, problems arise in
identifying significant cash positions for mutual funds in
a given market cycle
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103. Market Indicators
Volume Indicators:
Volume Price Trend Indicator (VPT): A technical indicator
consisting of a cumulative volume line that adds or subtracts
a multiple of the percentage change in security prices trend
and current volume, depending upon their upward or
downward movements.
This indicator is used to determine the balance between a
security‘s demand and supply. The percentage change in the
share price trend denotes the relative supply or demand of a
particular security, while volume indicates the actual size of
the forces
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104. Momentum Indicators:
Momentum is the changing velocity of a price when related
to security analysis. Momentum indicators are designed to
track momentum in the price of a tradable to help identify
the relative enthusiasm of buyers and sellers involved in the
price trend development.
Types of Momentum indicators:
Relative Strength Index (RSI)
Moving Average Convergence and Divergence (MACD)
Stochastic Oscillator
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105. Relative Strength Index:
A technical momentum indicator that compares the
magnitude of recent gains to recent losses in an attempt to
determine overbought and oversold conditions of an asset.
100
formula: RSI = 100 - ---------
1+RS
RS = Average of x days' up closes / Average of x days'
down closes
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106. Relative Strength Index:
The RSI ranges from 0 to 100. An asset is deemed to be
overbought once the RSI approaches the 70 level, meaning
that it may be getting overvalued and is a good candidate for
a pullback. Likewise, if the RSI approaches 30, it is an
indication that the asset may be getting oversold and
therefore likely to become undervalued
When talking about the strength of a stock there are a few
different interpretations, one of which is the RSI. The RSI is
a comparison between the days that a stock finishes up
against the days it finishes down.
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107. Relative Strength Index:
The RSI ranges from 0 to 100. A stock is considered
overbought around the 70 level and you should consider
selling. This number is not written in stone, in a bull market
some believe that 80 is a better level to indicate an
overbought stock since stocks often trade at higher
valuations during bull markets.
Likewise, if the RSI approaches 30 a stock is considered
oversold and you should consider buying. Again, make the
adjustment to 20 in a bear market.
The shorter number of days used, the more volatile the RSI
is and the more often it will hit extremes. A longer term RSI
is more rolling, fluctuating a lot less. Different sectors and
industries have varying threshold levels when it comes to
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108. Relative Strength Index:
Stocks in some industries will go as high as 75-80 before
dropping back and others have a tough time breaking past
70.
A good rule is to watch the RSI over the long term (1 year
or more) to determine what level the historical RSI has
traded at and how the stock reacted when it reached those
levels.
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110. Money Flow Index
Measures the strength of money flowing into and out of a
stock
Difference between money flow index and RSI is that RSI
only looks at prices, Money Flow also looks at volume
Ranges from 0 to 100
Overbought at 70
Oversold at 30
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112. MACD…
The most popular formula for the "standard" MACD is the difference
between a security's 26-day and 12-day exponential moving averages.
Usually, a 9-day EMA of MACD is plotted along side to act as a trigger
line.
A bullish crossover occurs when MACD moves above its 9-day EMA
and a bearish crossover occurs when MACD moves below its 9-day
EMA
The Moving Average Convergence / Divergence (MACD) is a trend
following momentum indicator that shows the relationship between
two moving averages of prices.
The basic MACD trading rule is to sell when the MACD falls below
its 9 day signal line and to buy when the MACD rises above the 9 day
signal line.
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113. MACD…
The MACD is the difference between a 26-day and 12-day
exponential moving average. A 9-day exponential moving average,
called the "signal" (or "trigger") line is plotted on top of the MACD to
show buy/sell opportunities.
Three Ways of Interpreting the MACD:
1. Crossovers - When the MACD falls below the signal line it is a
signal to sell. Vice versa when the MACD rises above the signal
line.
2. Divergence - When the security diverges from the MACD it
signals the end of the current trend.
3. Overbought/Oversold - When the MACD rises dramatically
(shorter moving average pulling away from longer term moving
average) it is a signal the security is overbought and will soon
return to normal levels.
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115. Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator that
shows the location of the current close relative to the
high/low range over a set number of periods. Closing levels
that are consistently near the top of the range
indicate accumulation (buying pressure) and those near the
bottom of the range indicate distribution (selling pressure).
Three types of Stochastics: Fast (%k), Slow (%D) and Full.
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