Demystify Techncial Analysissession 2
Transcript of Demystify Techncial Analysissession 2
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Techncial AnalysisTechncial Analysis
Demystify Technical Analysis
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2 Technical Analysis
Agenda
Identifying good Support and Resistance Level
What is good Support ? What is good Resistance ? Properties of good Support and Resistance .
Fibonacci Number and Ratio. Fibonacci Numbers and Ratio Retracement Extension
Identifying Chart Patterns. Double Top
Double Bottom Tripple Top Tripple Bottom Head and Shoulder and Inverted Head and Shoulder Pattern. Triangles (Ascending , Descending Symmetrical Triangles) Cup and Handle Pattern Wedges and Flags and Pennants
Candelstick Patterns Doji Bullish and Bearish Engulfing Hanging Man , Hammer Morning Star evening star The Dark Cloud Cover Island Reversal The Kicker
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3 Technical Analysis
What is Support
Support is the price level at which demand is thought to be strong enough to prevent the price
from declining further. The logic dictates that as the price declines towards support and getscheaper, buyers become more inclined to buy and sellers become less inclined to sell. By thetime the price reaches the support level, it is believed that demand will overcome supply andprevent the price from falling below support.
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4 Technical Analysis
Looking for Crucial Support
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5 Technical Analysis
Looking for Crucial Support
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6 Technical Analysis
What is Resistance
Resistance is the price level at which selling is thought to be strong enough to preventthe price from rising further. The logic dictates that as the price advances towardsresistance, sellers become more inclined to sell and buyers become less inclined tobuy. By the time the price reaches the resistance level, it is believed that supply willovercome demand and prevent the price from rising above resistance.
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7 Technical Analysis
More Example on Resistance
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Properties of Valid Support and Resistance
The Support and Resistance should not be broken for atleast for 1 month period.
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Number of Touches
The more number of touches the more the Valid Support/Resistance
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Number of Touches
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11 Technical Analysis
Why Resistance becomes support
Trader 1 : Trader is going Short at Crude oil at MCX @
3870-3900 and was having fun seeing the prices fall down.
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Resistance becoming Support
Trader 2 : Very Happy Buying MCX Crude @ 3400-3450 and
selling at 3900
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13 Technical Analysis
Resistance becomes the Support
Now the Market Break out of the Resistance Zone and AS
USUAL TRADERS WILL NOT PUT THEIR STOP LOSSEIN PLACE and they will be worried and sad to cover their
position. Turns buyer at Break even.
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14 Technical Analysis
Resistance becomes the Support
Longs are happy but sad because they did not bought more
so after break out near Previous Resistance they add moreposition
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15 Technical Analysis
Resistance becomes the Support
Then there were Guys like me who were justwaiting for breakout to happen once it is in place
we will try to Buy Market at Near new Support
Level
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16 Technical Analysis
Support Becomes Resistance
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17 Technical Analysis
What is Fibonacci number
Na..
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18 Technical Analysis
What is Fibonacci Number
The Fibonacci number sequence (1,2,3,5,8,13,21,34,55,89,144,...) isconstructed by adding the first two numbers to arrive at the third.
The ratio of any number to the next number is 61.8 percent, which is a
popular Fibonacci retracement number. The inverse of 61.8 percent is
38.2 percent, also used as a Fibonacci retracement number.
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19 Technical Analysis
Fibonacci Retracement
25%, 38.2% 50% 61.8% 100% are the commonly used
Retracements.
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Fibonacci Retracement
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Fibbonacci Extension
100%, 138.2%, 161.8% and 261.8% are the commonly
used Extension
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22 Technical Analysis
Patterns
Reversal Patterns
Head and Shoulder and Inverted Head and
Shoulder.
Double and Tripple Top
Double Bottom and Triple Bottom
Cup and Handle
Continuation Patterns Traingles ( Ascending, Descending and
Symmetrical )
Flag and Pole
Wadges
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Head and Shoulder
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Inverted Head and Shoulder
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Triple Top
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Triple Bottom
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Double Top
ecember 2007 February March April May June July August September October November December 2008 February March
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Stochastic Oscillator (25.9664)
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12Double Top
AUDCHF (0.96250, 0.96830, 0.95890, 0.96750, +0.00500)
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Double Bottom
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Double bottom (Contd)
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Cup and Handle
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Cup and Handle (Contd)
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Triangles
Symmetrical Triangle
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Ascending Triangle
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Descending Triangle
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CandelSticks
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Doji
A doji represents an equilibrium between supply and demand, a tug ofwar that neither the bulls nor bears are winning.
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Doji Star
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Doji Star
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Gravestone Doji
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Identify Long Legged Doji
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Identify Long Legged Doji
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Bullish and Bearish Engulfing
Bullish Engulfing : A chart pattern that forms when a small black candlestick is followedby a large white candlestick that completely engulfs" the previous day's candlestick.The shadows or tails of the small candlestick are short, which enables the body of thelarge candlestick to cover the entire candlestick from the previous day.
Bearish Engulfing : A chart pattern that consists of a small white candlestick withshort shadows or tails followed by a large black candlestick that eclipses or "engulfs" thesmall white one.
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Bullish Engulfing
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Bearish Engulfing Pattern
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Hammer and Hanging Man
Hammer : A price pattern in candlestick charting that occurs when a security trades significantly lowerthan its opening, but rallies later in the day to close either above or close to its opening price. Thispattern forms a hammer-shaped candlestick.
Hanging man :A bearish candlestick pattern that forms at the end of an uptrend. It is created whenthere is a significant sell-off near the market open, but buyers are able to push this stock back up sothat it closes at or near the opening price. Generally the large sell-off is seen as an early indicationthat the bulls (buyers) are losing control and demand for the asset is waning.
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Hanging Man
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Hammer
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Morning Star and Evening Star
Morning Star : bullish candlestick pattern that consists of three candles that have demonstrated the followingcharacteristics:
1. The first bar is a large red candlestick located within a defined downtrend.2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar'sbody.
Evening Star : A bearish candlestick pattern consisting of three candles that have demonstrated the followingcharacteristics:
1. The first bar is a large white candlestick located within an uptrend.
2. The middle bar is a small-bodied candle (red or white) that closes above the first white bar.3. The last bar is a large red candle that opens below the middle candle and closes near the center of the first bar's body.
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Kicker
Bullish Kicker : Previous days candle opens and regains its negative momentum in thesame direction of the market. After the Announcement, the alter its direction , opening at
the same level as the previous days open range or with Gap and moving up.
Bearish Kicker : Previous days candle opens and regains its momentum in the samedirection of the market. After the Announcement, the alter its direction , opening at thesame level as the previous days opening range and sliding down
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Bullish Kicker
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Bullish Kicker
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Bearish KKicker
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Session 3 Agenda
Different Kinds of Indicator. Leading Indicators
Lagging Indicators
Moving Averages . What is moving averages ? Different Types of Moving Averages. Simple Exponential Weighted. Properties of good Moving Average Strategies of Moving Average .
Benefits and Drawback of Indicators
Lagging Indicators Moving Averages
MACD Average Directional Index
Leading Indicators Relative Strenth Index Stochastic Rate of Change.
Volatility Indicators. Bollinger Bands
GAPS- Common Gaps- Breakout Gaps- Runaway Gaps- Exhaustion Gaps
Money Management- Martingale System- Anti Martingale System