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Technical Analysis For Beginners - New

This document provides an agenda for a technical analysis training session for beginners. It covers the following topics: identifying trends using trendlines and channels, common patterns like head and shoulders and triangles, using the RSI indicator to identify strength and weakness, applying Fibonacci ratios, and reviewing USD and commodity cycles. The session instructs participants to be in a quiet space, mute their microphones, and use the chat to ask questions. Charts will be shared to demonstrate the technical analysis concepts discussed.

Uploaded by

Nitin Kumar
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280 views16 pages

Technical Analysis For Beginners - New

This document provides an agenda for a technical analysis training session for beginners. It covers the following topics: identifying trends using trendlines and channels, common patterns like head and shoulders and triangles, using the RSI indicator to identify strength and weakness, applying Fibonacci ratios, and reviewing USD and commodity cycles. The session instructs participants to be in a quiet space, mute their microphones, and use the chat to ask questions. Charts will be shared to demonstrate the technical analysis concepts discussed.

Uploaded by

Nitin Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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TECHNICAL ANALYSIS

FOR BEGINNERS

Nishant Kumar

N K Charts
Bringing Financial Markets Closer to you….
Thank you for joining!! While we wait for the others….
• Please make sure you are in a noise free zone
• Please mute your microphones
• Make sure you are connected from a laptop or a
desktop computer and not on a mobile phone. I would be
sharing charts and the experience would not be good on a
mobile phone.
• I would pause at the end of a module to take questions.
So please note them down in a notepad till then
• When prompted, please use the chat window to post
your questions
• Please keep a notepad with you to take down notes

2
Agenda
▪ Portal for charting, Toolbars, Time frames, indicators. Draw
trend-lines (identify trends - short & long term), Channel
formation, Identify Price action support/resistance

▪ Patterns - Head & Shoulder, Flag, Pennant, Rising Wedge,


Falling Wedge, Cup & Handle, VCP, Expanding triangle

▪ Using RSI to figure out strength/Weakness and then take positions

▪ Fibonacci (Multiple TFs)

▪ USD & Commodity Cycle

3
Topic 1: Trendlines & Channels

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Trendlines : What is a Trendline ?
• Trendlines are easily recognizable lines that traders draw on charts to
connect a series of prices together or show some data's best fit. The
resulting line is then used to give the trader a good idea of the direction in
which an investment's value might move.
• A trendline is a line drawn over swing highs or under swing lows to show the
prevailing direction of price. Trendlines are a visual representation of
support and resistance in any time frame. They show direction and speed of
price, and also describe patterns during periods of price contraction.

• Support is a price point or series of price points that normally fall in a line and
help identify demand zone for the equity. It is identified by joining multiple
swing/pivot lows on a chart.

• Resistance, which is the opposite of a Support, are a series of points where the
supply (selling) of equity is visible. In simple words they are zones where equity
might have made swing/pivot highs previously. A support level when broken also
becomes a resistance zone when the price tries to recover from the fall.

*Courtesy Investopedia.com 5
Trendlines & Channels

*Charts Courtesy in.investing.com 6


Topic 2: Patterns

7
Continuation Patterns : Pennants, Flags, Wedges
• Pennants are drawn with two trendlines that
eventually converge. A key characteristic of
pennants is that the trendlines move in two
directions—that is, one will be a down
trendline and the other an up trendline.
• Often, volume will decrease during the
formation of the pennant, followed by an
increase when price eventually breaks out.

• Flags are constructed using two parallel


trendlines that can slope up, down or
sideways (horizontal). A flag with a
downward bias shows a break during an up
trending market.
• Typically, the formation of the flag is
accompanied by a period of declining
volume, which recovers as price breaks out
of the flag formation.

*Charts Courtesy in.investing.com/ Text – investopedia.com 8


Continuation Patterns : Pennants, Flags, Wedges

• Wedges are similar to pennants in that they are drawn using two converging trendlines;
however, a wedge is characterized by the fact that both trendlines are moving in the same
direction, either up or down. A wedge that is angled down represents a pause during a
uptrend.
• As with pennants and flags, volume typically tapers off during the formation of the pattern,
only to increase once price breaks above the wedge pattern.

*Charts Courtesy in.investing.com/ Text – investopedia.com 9


Reversal Patterns : H&S And Inverse H&S
• Head and shoulders patterns can appear at
market tops or bottoms as a series of three
pushes: an initial peak or trough, followed by
a second and larger one and then a third
push that mimics the first.
• Volume may decline as the pattern
develops and spring back once price breaks
above

• An uptrend that is interrupted by a head and


shoulders top pattern may experience a
trend reversal, resulting in a downtrend.
Conversely, a downtrend that results in a
head and shoulders bottom (or an inverse
head and shoulders) will likely experience a
trend reversal to the upside.
• Horizontal or slightly sloped trendlines can
be drawn connecting the peaks and troughs
that appear between the head and shoulders
*Charts Courtesy in.investing.com/ Text – investopedia.com 10
Patterns : Rising Wedge

• Conversely to a falling wedge that is a bullish pattern, a rising wedge is a bearish


formation which is usually followed by a pullback/correction in the price.
• When such a pattern is formed in Wave 1 of Elliott Wave theory, it’s called as a
Leading Diagonal. When it forms in Wave 5 (last wave up), it is called as Ending
Diagonal.

*Charts Courtesy in.investing.com/ Text – investopedia.com 11


Patterns : Ascending & Descending Triangles
• Ascending triangles are
characterized by a flat upper trend
line and a rising lower trend line
and suggest a breakout higher is
likely.
• It is important to wait for a
breakout before taking positions.

• Descending triangles have a flat lower


trend line and a descending upper trend
line that suggests a breakdown is likely to
occur. The magnitude of the breakouts or
breakdowns is typically the same as the
height of the left vertical side of the
• It is important to wait for a breakdown
before taking positions.

*Charts Courtesy in.investing.com/ Text – investopedia.com 12


Topic 3: RSI & Fibonacci Ratios

13
Fibonacci Ratios

• Fibonacci Numbers – 3, 5, 8, 13, 21…..Sum of previous two numbers gives us the next number

• The numbers on the charts are ratios and are derived as follows:

➢ 0.618 (Golden Ratio) – Fib#/Next Fib# (E.g. 8/13, 13/21, etc.)

➢ 0.786 – Square Root of 0.618

➢ 0.382 – Fib#/Next+1 Fib#

➢ 0.236 – Fib#/Next+2 Fib#

➢ 0.5 – Is not a true Fib ratio and is a psychological ratio

➢ 1.0 – Fib#/Itself

➢ 1.618 (Extensions) – Fib#/Previous Fib#


14
Topic 4: USD & Commodity Cycle

15
Q&A

16

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