Presented by:

Mohit Jalan

Introduction
Analysis of statistics generated by market
activity such as past price and volume to come
up with reasonable outcome in future using
charts as a primary tool.
Should I take a long position? Should I take a
short position? What is going to be the price
tomorrow, next week or next year?

Assumptions
The market discounts everything
Prices move in trends
History tends to repeat itself

Type of Charts
Line chart

Type of Charts
Bar Chart

Type of Charts
Volume Bar Chart

Type of Charts

Candlestick Chart

Trends
The meaning of trend in finance isn't all that different from the
general definition of the term - a trend is really nothing more
than the general direction.
A trend represents a consistent change in prices (i.e. a change
in investors expectations)
A trendline is a simple charting technique that adds a line to a
chart to represent the trend in the market or a stock.

Types of Trend
Uptrends

Types of Trend
Downtrend

Types of Trend
Sideways Trend

Support and Resistance

Support level is a price level where the price tends to find
support as it is going down

Support and Resistance

Resistance Level is a price level where the price tends to
find resistance as it is going up

Importance of Support and

Resistance
Support and resistance analysis is an important part
of trends because it can be used to make trading
decisions and identify when a trend is reversing

Aware: Support and

Resistance levels
Support and Resistance levels are highly
volatile
Traders should not buy and sell directly at
these points as there may be breakout also

Breakout
The penetration of support and resistance level
is called breakout

Traders Remorse
Returning to the level of support or resistance
after a breakout is called traders remorse.

Traders Remorse

Resistance <-> Support

Indicators
A mathematical tool that can be applied on securitys
price giving a result that can be used to anticipate
trends, volatility and price
Indicators are used in two main ways: to confirm
price movement and to form buy and sell signals

Types of Indicator
Lagging
This indicator simply tells you what prices are
doing, they dont warn you of upcoming changes

Leading
This indicators attempt to make investment calls on
securities prior to actual price confirmation

Moving Averages

A simple moving average is calculated by taking

average of most recent closing prices of n time period

Exponential Moving average applies weighting

factors which decrease exponentially

Moving Averages

Moving Averages Convergence

Divergence

MACD is calculated by subtracting 26 days moving

average from moving average of 12 days

Trading using MACD

A 9 day moving average of MACD is plotted along

with MACD

Bollinger Bands

Bollinger bands are the envelopes plotted at standard

deviations above and below the moving average

Bollinger Bands can be used to measure the highness

or lowness of the price relative to previous trades

Bollinger Bands

Bollinger Bands

Elliot Wave Theory

Elliot

stated that stock market moves in

repetitive cycles

Impulse and Corrective

Patterns
The

impulse pattern consists of five waves, the

five waves can be in either direction, up or
down
Corrective patterns can be grouped into two
different categories:
Simple Correction( Zig-Zag )
Complex correction (Flat, Irregular, Triangle)

Fractal Structure
The

structures Elliott described meet the

common definition of a fractal ( self-similar
patterns appearing at every degree of trend)

Elliott Wave

patterns that show up on long

term charts are identical to, and will also show
up on short term charts

Fractal Structure

Fibonacci Retracement
Patterns
Stocks

often pull back or retrace a

percentage of the previous move
before reversing

Retracement

percentages follow a
Fibonacci ratio pattern, the key
Fibonacci ratios are 23.6, 38.2, 50,
61.8

Fibonacci Retracement
Patterns

Linear Regression Lines

When prices are below the Linear Regression Line,

this could be viewed as a good time to buy, and
when prices are above the Linear Regression Line,
a trader might sell

Linear Regression
Channel

A Linear Regression trendline shows where equilibrium exists

but Linear Regression Channels show the range prices can be
expected to deviate from a trendline

Relative Strength Index

It compares the magnitude of recent gains to recent losses in an

attempt to determine overbought and oversold conditions of an
asset
RSI= 100- 100/ (1+RS)
RS=EMA[U]/EMA[D] EMA- exponential moving
average
U= Sig (close (today)-close (yesterday))
D= Sig(close(yesterday)-close(today))

Relative Strength Index

Relative Strength Index

Stochastic Oscillator
Compares

where a securitys price closed

relative to its price range over a given time
period

Fast oscillator

Slow oscillator

%D = SMA(%K, N)

Stochastic Oscillator

Buy when the Oscillator (either %K or %D) falls below a specific level
(e.g., 20) and then rises above that level. Sell when the Oscillator rises
above a specific level (e.g., 80) and then falls below that level;
Buy when the %K line rises above the %D line and sell when the %K line
falls below the %D line

References

Technical Analysis A to Z by Steven B. Achelis

How to make money in Stocks By William J ONeil

Investopedia (www.investopedia.com)

Technical Analysis of Indian stock market BSE

Sensex Index (Tradersedge India)

Thank you

If you dont follow the stock market,

you are missing some amazing drama