Anish Sharma FSB201276188

Trends
What is a Trend?
A trend is a general movement of a security. There are three type of trends upward trend, downward trend or sideways trend.

Criteria
In order to confirm the trend three tops and three bottoms should be intersected by a semi log trend line. This should be done by the top of the charts as well from the bottom as seen in the figure.

Plotting
Once a semi log trend line is selected one should to connect maximum bottoms or maximum tops to derive a particular trend.

Scenario
From May 2012 to June 2013 a clear uptrend is spotted in ITC security.

Anish Sharma FSB201276188

Candlesticks Pattern
Piercing

What is piercing?
It is a trend reversing pattern. Piercing would be spotted in an existing downtrend. It consist of two candles.

Criteria
There should be a downtrend. Body of the 1st candle should be red and the body of the second candle should be green. The green candle should close more than halfway of red candle. Also the second day should open lower than the prior trading day.

Scenario
A piercing was spotted on 10/01/2013 which was confirmed by the uptrend later which continued till 4/02/2013.

Anish Sharma FSB201276188

Candlesticks Pattern
Bullish Harami

What is Bullish Harami?

It is a candle stick pattern in which a large candlestick is followed by a smaller candle stick. The harami signifies that the trend is over.

Criteria
The 1st candle should be red & the following candle should be green. There should be a down trend prior to the occurrence. For a reversal signal, further confirmation is required to indicate that the trend is now moving up.

Scenario
A bullish harami was spotted 24/06/2013 which led to a reversal and caused an uptrend till 23/07/2013.

Anish Sharma FSB201276188

Moving Averages
What is a Moving Averages?
Moving averages are exponential averages taken in order to understand the general direction of stock. In this two moving averages one of 10 week and the other of 20 week is taken and whenever the 10 week moving average cuts the 20 week moving average there is an uptrend as the 10 week moving average gives more weightage to the prices of last 10 week.

Scenario
5 times in this year has it happened that the 10 week moving average has cut the 20 week moving average line and hence an uptrend had been spotted all the 5 times.

Anish Sharma FSB201276188

Indicators
MACD, Stochastic, RSI & Parabolic SAR

What are Indicators?

A technical indicator is a mathematical formula applied to the securities price, volume or open interest. Indicators are broadly of two types LEADING & LAGGING. Leading Indicators are designed to lead price movements. They are early in generating the signals. Lagging indicators are indicators that would follow a trend then predicting a reversal. The details about various indicators are given below:

MACD
MACD stands for Moving Average Convergence/Divergence. It does not completely fall into either the trend-leading indicator or trend following indicator, its hybrid. It has two lines fast line and slow line. It is done by calculating 12 & 26 period exponential moving average, then subtracting the 26 period moving average.

Stochastic
The stochastic indicator compares where a securitys price closes over a selected number of period. The most commonly 14 period stochastic is used. The 0.666 signifies that todays close was at 66.6% level relative to its trading range over 14 days. Generally stochastic oscillation below 20 is considered oversold and above 80 is considered overbought.

RSI
RSI is a part of momentum oscillators. RSI is a momentum oscillator generally used in sideways or ranging markets where the price moves between support & resistance levels. The RSI is a price following oscillator that ranges in between 0 100 % generally 30% being oversold & 70% being overbought.

Parabolic SAR
As the security makes new highs/lows the parabolic SAR will rise/fall according to the SAR step size. For example, if the trade makes new highs for three consecutive days the SAR step increases by 0.02 each day.

Scenario
There are 5 scenario present in the below picture. There are 5 vertical lines present which are Buy signals based on moving average cross overs. Since the leading indicators are fast they would give a buy call each time before the cross over. The RSI was just above 30 & the Stochastic was a little above 20 whereas the MACD was approaching a positive level in all the 5 cases in the picture only E being slightly different.

Anish Sharma FSB201276188

Parabolic SAR

Anish Sharma FSB201276188

Fibonacci Retracements
What is Fibonacci Retracements?
Fibonacci retracement is a method of technical analysis for determining support and resistance levels. They are named after their use of the Fibonacci sequence. Fibonacci retracement is based on the idea that markets will retrace a predictable portion of a move, after which they will continue to move in the original direction.

Plotting
Fibonacci Retracement is plotted by drawing Fibonacci Retracement from the highest point to the lowest point.

Scenario
In the present case 1st it goes to 23.6% level and falls back to take a support at 50% again tries to break the resistance of 23.6% failing again to fall this time and take support at 61.8%. After a rise and fall it again tries against resistance at 23.6% twice and falls again. Presently it is going against the resistance at 61.8% and has done that for 3 consecutive times.

Anish Sharma FSB201276188

Fractal Breakout
What is a fractal Breakout?
A type of pattern used in technical analysis to predict a reversal in the current trend. A fractal pattern consists of five bars and is identified when the price meets the certain characteristics.

Criteria
A shift from a downtrend to an uptrend occurs when the lowest bar is located in the middle of the pattern and two bars with successively higher lows are positioned around it. A shift from an uptrend to a downtrend occurs when the highest bar is located in the middle of the pattern and two bars with successively lower highs are positioned around it.

Scenario
Yearly chart of ITC has been taken and there has been a fractal breakout with crossover happening just before the candle. Please note as the charts are early the moving average are also taken for a lesser duration 2 weeks & 5 weeks.

Anish Sharma FSB201276188

Double Top
What is Double Top?
A double top is a reversal patter which occurs following an extended uptrend. The name is given to the pair of peaks which is formed when price is unable to reach a new high. It is desired to sell when the price breaks below the reaction low that is formed between the two peaks.

Criteria
The 1st peak marks the highest point of the current trend. Once the 1st peak is reached a decline takes place in the range of 10%-20%.Post fall there is again a rise. The 2nd peak should be equal to in the range of 1st peak. Both the peaks should take support from the neck line below.

Breakout Expectations
Downside price target is calculated by subtracting the distance from the reaction low to the peak from the reaction low.

Anish Sharma FSB201276188

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Ascending Triangle
What is Ascending Triangles?
A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trend lines.

Criteria
In an ascending triangle, one trend line is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trend line connects a series of increasing troughs.

Breakout Expectations
Traders enter into long positions when the price of the asset breaks above the top resistance. The chart below is an example of an ascending triangle:

Anish Sharma FSB201276188

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