TECHNICAL ANALYSIS –

CHARTS, TRENDS & PATTERNS

PRESENTED BY
JAYANTHI PREMKUMAR
0991014
 NEED FOR ANALYSIS

 Prices of securities in stock market fluctuate daily on account of

continuous buying and selling.
 Stock prices move in trends and cycles and are never stable.
 Two approaches of analysis – Fundamental and Technical
TWO SCHOOLS OF THOUGHT

FUNDAMENTAL TECHNICAL
* BSE - Sensex (14,219.25, 14,219.25, 13,884.53, 13,908.58, -320.300)
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Determine the true worth or Tracks the historical price data and
intrinsic value of a share based on uses technical tools to project the
the current and future earning likely price movement in future
capacity of the company.
Fundamental Analysis Technical Analysis

Finds reasons for the stock Assumes that the stock price
prices to move up or down factors in everything

Reasons follow later

TECHNICAL ANALYSIS

Analyzing a stock’s History & Possible future

Behavior by studying charts.

 BASIC PRINCIPLES

Study of Price Charts

Based on the law of Demand & Supply

Depicts what the masses think – Psychological and emotional

factors
 DOW THEORY

Formulated by Charles H.Dow

Hypothesis – Stock market does not move on a random basis but is
influenced by three distinct cyclical trends that guide its direction.

Primary movements
Secondary reactions
Minor movements

Three phases and three hypothesis

 TYPES OF CHART

PRICE CHART – Line chart

- Bar chart
- Japanese Candle stick chart
Four prices – Highest price of the day
- Lowest price of the day
- Opening price
- Closing price
Line Chart ( based on closing prices )
Bar Chart (based on highest, lowest and
closing price)

High

Close

Low
Candlestick Chart (based on high, low, opening and
closing price)
High

Close

Open

Low
Three types of Candlestick

White – Closing price higher than Opening price (Bullish market)

Black - Closing price lower than Opening price (Bearish market)
Doji - Closing and Opening price are same (Neutral)
 TREND
What is a Trend?

Direction in which the Markets move

 BULLISH TREND

Higher tops

Higher bottoms

Upward moving market

 BEARISH TREND

Lower tops

Lower bottoms

Downward moving market

FLAT TREND
 TREND REVERSAL

Change in the direction of trend

Reversal from rising trend to falling trend – Formation of lower top and
lower bottom (Sell the shares)
Reversal from falling trend to rising trend – Formation of higher top and
higher bottom (Purchase the shares)
 PATTERNS

Combination of price charts of several days leads to the

emergence of patterns

Types – Support and resistance

- Reversal
- Continuation
 SUPPORT AND RESISTANCE PATTERNS

Support:
Support Resistance:

A support A resistance
level is a level is a
level on the level on the
price chart price chart
from which from which
the stock the stock
price starts price starts
moving up moving
down
Head & Shoulders Reversal Pattern
(at market tops )
Inverse Head & Shoulders Reversal Pattern
( at market bottoms )
 CONTINUATION REVERSAL

Occurs in side way movements – Breathing time between earlier sharp

rise or fall.
Types – Triangles
- Flags
- Pennants
Triangles
Flag

Parallelogram
Penant

Symmetrical triangle