Technical analysis vmt
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Technical analysis involves analyzing stock price data to identify trends and patterns that can be used to inform trading decisions. The document discusses reasons for performing technical analysis, assumptions of technical analysis, different chart types used including line charts, bar charts and candlestick charts. It then describes different candlestick patterns such as marubozu, spinning tops, and doji that can indicate bullish or bearish market movements. The document emphasizes looking for patterns within the context of prior trends and being flexible in interpreting patterns.
Technical analysis vmt
- 1. Technical Analysis Dr. V. M. Tidake
- 2. Technical Analysis Reasons to do analysis in Stock Market- a. Buying and/or Selling Price, b. Risk Involved c. Expected Reward d. Expected Holding Period Points to Understand before entering T.A.: a. Short term Trades Only b. No High Returns but Frequent Returns Please c. Small Holding Period Only d. TA is same for any Asset Class e. Time Series Data Required f. Four data points required (OHLC)
- 3. Assumptions in Technical Analysis a. Markets Discounts everything, b. How is more important than Why, c. Price moves in Trend, d. History tends to repeat itself,
- 4. Chart Types a. Line Chart b. Bar Chart, c. Candlestick Chart etc.
- 6. b. Bar Chart
- 8. c. Draw a Candlestick Day Open High Low Close Day 1 430 444 425 438 Day 2 445 455 438 450 Day 3 445 455 430 437
- 9. Time Frame Types of Time Frames: • Monthly Charts • Weekly charts • Daily or End of day charts • Intraday charts – 30 Mins, 15 mins and 5 minutes Purpose of Time Frame: A Successful Trader looks for Information and discards Noise.
- 10. Types of Candlestick Pattern Single Candlestick Patterns Multiple Candlestick Patterns
- 11. Single Candlestick Pattern Marubozu (Bullish & Bearish) Spinning Tops Doji Paper Umbrella (Hammer & Hanging Man) Shooting Star
- 12. Multiple Candlestick Pattern Engulfing Pattern (Bullish & Bearish) Harami (Bullish & Bearish) Piercing Pattern Dark Cloud Cover Morning Star Evening Star d Cover
- 13. Few Assumptions Specific to Candlestick Buy Blue Day - Sell Red Day Be flexible with patterns (Quantify & Verify) Look for a prior trend
- 14. Marubozu: (Bald) Types: Bearish Marubozu: Open = High and Close = Low Bullish Marubozu: Open = Low and High = close
- 15. Bullish Marubozu
- 16. Bearish Marubozu
- 17. Marubozu Rules: 1. Marubozu is the only pattern which violates rule number 3 i.e Look for prior trend 2. A bullish marubozu indicates bullishness a) Buy around the closing price of a bullish marubozu. b) Keep the low of the marubozu as the stoploss 3. A bearish marubozu indicates bearishness a) Sell around the closing price of a bearish marubozu b) Keep the high of the marubozu as the stoploss 4. An aggressive trader can place the trade on the same day as the pattern forms 5. Risk averse traders can place the trade on the next day after ensuring that it obeys rule number 1 i.e Buy strength, and Sell weakness 6. Trade Trap: Presence of Abnormal Candle Lengths (Short Below 1%) & Long (Above 100%) a) An abnormal candle lengths should not be traded b) Short candle indicates subdued activity c) Long candle indicates extreme activity, however placing stoploss becomes an issue.
- 18. Spinning Top • A spinning top candlestick pattern reflects indecision in the market which simply means that buyer and sellers are pretty much at even. Spinning top is a candlestick pattern a substantially shorter body surrounded on both sides by two long candlestick wicks. • In other words, a spinning top candlestick if often regarded as a neutral candlestick.
- 19. Spinning Top
- 20. SpinningTop • You have to think in terms of where it forms: • if a “green” spinning top forms on a resistance level, it should be considered a potential bearish signal even thought it is bullish(green). • You apply the same logic if you see a “red” spinning top form on a support level: it should be considered a potential bullish signal even though it is bearish (red). • These two charts below explain what I’m talking about here. • Lets assume that on the first chart on the left, price is going up and hits a resistance level and moves down and the next chart to it on the right, price is going down and hits a support level and bounces up. At each of these two situations, the turning point was the formation of a green spinning top candlestick pattern. This chart shows the “green” situation: •