Scribd
Upload
48 views

Technical Analysis

Technical analysis is a trading discipline that evaluates investments by analyzing statistical trends from trading activities, focusing on price movements and volume. It originated from Charles Dow's Dow Theory in the late 1800s and has evolved to include various patterns and signals. Key principles include market discounting, trends, and the influence of trader psychology, while tools such as charts and indicators are used to identify trading opportunities.

Uploaded by

Anjli Gupta Official
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
48 views

Technical Analysis

Technical analysis is a trading discipline that evaluates investments by analyzing statistical trends from trading activities, focusing on price movements and volume. It originated from Charles Dow's Dow Theory in the late 1800s and has evolved to include various patterns and signals. Key principles include market discounting, trends, and the influence of trader psychology, while tools such as charts and indicators are used to identify trading opportunities.

Uploaded by

Anjli Gupta Official
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 38

Technical Analysis

Technical analysis is a trading discipline


employed to evaluate investments and identify
trading opportunities by analyzing statistical
trends gathered from trading activity, such as
price movement and volume.
Origin
Technical analysis as we know it today
was first introduced by Charles Dow and the
Dow Theory in the late 1800s. Several
researchers including William P. Hamilton,
Robert Rhea, Edson Gould and John Magee
further contributed to Dow Theory concepts
helping to form its basis. In modern day,
technical analysis has evolved to included
hundreds of patterns and signals developed
through years of research.
Assumptions of Technical
Analysis
1. Markets Discount Everything.
2. The ‘how’ is More than ‘Why’.
3. Price moves in Trend.
4. History Trends to Repeat Itself.
5. Changes in trends in stock prices are caused whenever
there is a shift in the demand and supply factors.
6. The security prices move in trends which can be both
upward and downward depending upon the sentiments,
psychology and emotions of traders.
7. Shifts in demand and supply, no matter when and why
they occur, can be detected with the help of charts and
technical analysis.
8. Future prices are influenced by past trends.
Fundamental Principles of Technical
Analysis
1. Discounting Mechanism of the Market.
2. Price move in Trends.
3. History Tends to Repeat Itself.
4. Emotion is One Powerful Force in the Market.
5. Market has Structures in Itself.
6. Multiple Timeframes Exist in the Market
Simultaneously.
7. Price, volume and Time are the Key Data for
Analysis.
Procedure of Technical Analysis

1. Knowledge of various resources.


2. Spotting the Trend.
3. Finding Support and Resistance.
4. Review
Importance of Technical
Analysis

1. Focus on Price.
2. Supply, Demand and Price Action.
3. Support/Resistance.
4. Pictorial Price History.
Tools and Techniques of Technical
Analysis
1. Charting.

a). Line Chart.


b). Bar Chart.
c). Point and Figure Chart.
d). Candlestick Chart.
Line Chart
Bar Chart
Point and Figure Chart
Candlestick Chart
2. Trends
2. Trends
3. Moving Average Analysis
4. New High and New Lows
5. Reversal Effect.
6. Relative Strength.
7. The Filter Rules
8. Resistance and Support
Levels
9. Heads and Shoulders Pattern
10. Double Top
Formation
11. Double Bottom
Formation
12. Mutual fund Activity
13. Confidence Index
14. Trading Volume Indicators.
Theories of Technical
Analysis
1.Dow Theory.
2.Advance Decline Theory.
3.Short Selling Theory.
4.Credit Balance Theory.
5.Break Out Theory.
6.Elliot Wave Theory.
7.Odd-Lot Theory.
1. Dow Theory
The Dow Theory was proposed by Charles Dow in
1900 is one of the oldest technical method still
widely followed.

According to Charles Dow. “The market is always


considered as having three movements, all going
at the same time. The first is the narrow
movement from day to day, second is short swing,
running from two weeks to a month or more and
the third is the main movement, covering at least
four years in its duration.”
Bull Market Trend
Bear Market Trend
5. Break-Out Theory
6. Elliot Wave Theory
Types of Price Indicators
1. Dow Theory.
2. Charts.
3. Trend and Trend Lines.
4. New Highs and New Lows.
5. Confidence Indicators.
6. Elliot Wave Theory.
7. Chart/Price Pattern Analysis.
8. Breadth of Market.
9. Market sentiments indicators.
10.Moving Average Analysis.
11.Oscillators.
7. Types of Chart Pattern

1. Reversal Patterns.
a). Head and Shoulder Formation.
b). Inverse Head and Shoulder Formation.

2. Continuation Patterns.
a). Triangles.
b). Flags and Pennants.
a). Head and Shoulder
Formation.
b). Inverse Head and Shoulder
Formation
a). Triangles
b). Flags and Pennants.
b). Flags and Pennants.
Other Market Indicators

1. Credit Balance Theory.


2. Mutual-Fund Activity.
Terminology of Technical
Analysis
1. Line Charts. 11. Oscillator.
2. Bar Charts. 12. Patterns.
3. Candlestick Charts. 13. Triangle Pattern.
4. Support. 14. Rectangle Pattern.
5. Resistance. 15. Head and Shoulder Pattern.
6. Reversal Pattern. 16. Double Top and Bottoms.
7. Trend. 17. Triple Tops and Bottoms.
8. Uptrend. 18. Simple Moving Average.
9. Downtrend. 19. Volume.
10.Sideways Trend. 20. Relative Strength Index.
Arguments Against Technical
Analysis
1.Subjective and Biased.
2.Subjective Interpretations.
3.Timing the Market.
4.Historical Data.
5.False Signals.
6.Ambiguity.
7.Self Defeating Concepts.
Thank You 

You might also like