Demystify Techncial Analysissession 2

8/14/2019 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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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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Looking for Crucial Support


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Looking for Crucial Support


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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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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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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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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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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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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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Support Becomes Resistance


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What is Fibonacci number

Na..


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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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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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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

50

Stochastic Oscillator (25.9664)

0.92

0.93

0.94

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0.96

0.97

0.98

0.99

1.00

1.01

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1.03

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1.09

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

Demystify Techncial Analysissession 2

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