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TECHNICAL ANALYSIS-KNOW HOW

Basics of Technical Analysis

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Technical analysis is used to forecast stock prices on the basis of market-derived

data.

Technicians (also known as quantitative analysts or chartists) usually stare at price,

volume and psychological indicators over time.

They look for trends and patterns in the data that indicate future price movements.

TA is useful with various Aspects and in Various ways

Trends for Coming Days.

Trends mean whether it is Up trend or Down Trend

TA is mostly used in West and Some Asian Countries like Japan for More

than 125 to 150 Years Back.

In India, it is popular from last 20 to 25 years.

Why Technical Analysis

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Fundamental vs. Technical

The Difference between TA and FA is that, FA finds the reasons for stock to move up/Down due to result. Whether TA is not concern with the reason.

In TA, sometimes reason may come afterward for stocks to move up or down.

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The Logic of Technical Analysis

Supply and demand determine prices

Changes in supply and demand cause changes in prices

Prices can be projected with charts and other technical tools

The logic behind Technical Analysis

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• Human behavior is often erratic and driven by emotion.

• Market trends and patterns reflect irrational human behavior.

• Trends and patterns repeat themselves and are thus predictable.

Assumptions of Technical Analysis

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Position

Charts

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Candle Stic

k Char

tBar Char

t

Line Char

t

Line charts are familiar to all types of analysts and are a simple graphic display of price trends over time. Usually, the chart is a plot of data points, such as share price, with a line connecting these points.

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Line Chart

A bar chart, in contrast, has four bits of data in each entry—the high and low price encountered during the time interval plus the opening and closing prices

Bar Chart

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Green Candle and Red candle. There are four price in candle. Open High Low Close.If Open to close is high it is a green candle.If open to close Below it is a Red candle.

(*) Candel Stick

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Candle Stick ChartsCandel Stick

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Price and Volume

Price Is Trending Higher or Lower

Volume Is Increasing

Confirmation: Trend Will Continue

Volume Is Decreasing

Divergence: Trend Will End

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Trend Analysis

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• A low price range in which buying activity is sufficient to stop a decline in priceSupport

• A high price range in which selling activity is sufficient to stop a rise in priceResistance

• Once a resistance level is breached, it becomes a support levelChange in Polarity

Support and Resistance

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Chart Patterns

Chart Patterns

Reversal PatternsHead and

Shoulders

or Inverse Head and

Shoulders

Double Tops

or Double

Bottoms

Triple Tops

or Triple

Bottoms

Continuation Patterns

Triangles Rectangles

Flags and Pennants

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Construction of Charts:- There are two Axis 1. X-Axis and 2. Y-Axis. X-Axis - Shows Time period of the Stocks. Y-Axis – Shows Value of the Stocks. Time Period Means:- Price can be plotted on the charts from Minute

to year

Types of Charts

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Types of Charts 

Minute-to-Minute Charts. Daily Charts. Weekly Charts. Monthly Charts. Yearly Charts.

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Types of Charts

Up Trend

Down Trend

Flat or Sideways Trend

Types of Trends

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In Up Trend , stocks prices move in upward direction. Formation is higher top and higher bottom. One should buy at

every decline.

Up trend

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Up trend

2) Down Trend:-

In down trend, stocks prices move in downward direction. Formation lower bottom and lower top. One should sell at every rise

Down Trend

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Trend Analysis

3) Flat or Sideways Trends:- In sideways trends, stocks prices move in narrow range neither going

up wards nor down wards. Here, one should have to wait for the clear trend whether up or

down.

Sideways Trend

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Technical Indicators

Price-Based

Indicators

Momentum

Oscillators

Sentiment

Indicators

Flow-of-Funds

Indicators

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Price-Based Indicator: Moving Average

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Price-Based Indicator: Bollinger Band

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THANK YOU ALL

1st Indian Institute for LiveMarket Training

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