Category Archives: Technical Analysis

Technical Analysis: The Main Figures of Style

Technical Analysis Guide

There are three main families of technical configurations: the continuity figures that indicate the continuation of the upward or downward trend of the title, the congestion figures that reflect an uncertainty on the evolution of prices and those of reversal that signal a reversal of the trend.

Figures of continuity

These configurations make it possible to identify a trend (the “trend”) that is bullish, bearish or neutral.

Lines of support and oblique resistance

The upward resistances and supports are the logical consequence of the short-term cyclical movements which animate the prices and which produce hollows and vertices … When one can draw on a stock chart an oblique line inclined upwards between several hollows situated each time higher than the others, then we are in the presence of an ascending support . This one will tend to support the rise of the title each time that this one will display a weakness and will come to lean on the line. If we can draw a descending downward down ward line between several high points on a title each lower down each other, then we are in the presence of an oblique line of resistance.

Canals

A channel is formed by two parallel straight lines (support line and resistance line) which frame the bullish or bearish evolution of the market. It can be of two types. Tilted upwards, this is a bullish channel: the trend is buoyant as long as the price does not go down the support, represented by the lower terminal of the canal…

Moving averages

Moving averages are not strictly speaking graphical indicators, they are technical indicators. They are calculated from historical data, applying a weighting that eliminates insignificant price changes. In doing so, they give a good indication of the trend. They are calculated over a predetermined period. Generally, the chartists use the moving averages at 20, 50, 100 and 200 trading days, knowing that these are the last two most relevant to evaluate the heavy trend of the concerned value. Moving averages can be used alone, in combination with the action graph or mixed with each other…

By itself, moving averages have the advantage of quickly giving direction to the trend knowing that, by their nature, they always have a time lag on the share price. The higher they are, the more bullish. Conversely, the more the moving average is tilted down, the more the trend will be bearish. If the moving average is overwritten then the value will be without trend.

Moving averages are also used by comparing them to price movements. The bottom line for the chartist will then be to detect when the stock chart and moving averages intersect. When this happens, it is usually a buy or sell signal. The rule is this: when the price crosses the moving average from the top, it reflects a buy signal. When the price sinks below the moving average, then it gives a sell signal.

Congestion figures

They mark a momentary halt to the upward or downward movement. During the consolidation period, the courses are without trend. It is only when the congestion figures are invalidated (crossing the support or the resistance) that the upward or downward trend can resume…

Horizontal Channel or Trading Zone

This type of channel reflects a neutral trend … It is characterized by two horizontal parallel lines connecting for one of the high points between them, and for the other low points between them. In other words, the course is framed by a support and the other by a resistance. If we detect a trading range means that the orientation of the title remains without general movement as long as the price does not come out of one of the two channel limits.

If the lower bound is crossed, this gives a priori a sell signal on a title. Conversely, if the upper threshold is exceeded, it is a buy signal. This figure is ideal for making round trips between the two terminals.

Isosceles triangles of consolidation

After a sharp rise or fall, the stock often moves into a neutral trend with reduced volatility. The title can then mark a form of isosceles triangle. This means that the market is wondering about future developments, considering that the previous bullish or bearish movement may have been too fast. This figure is formed of two straight lines, one bullish, the other bearish, whose slopes are of opposite sign but with an identical degree of inclination. It is characterized by high volumes when the triangle begins to form and a decrease in its transactions as we move towards an exit of the isosceles triangle.

The exit of this configuration, from the top or the bottom, is in principle an important buy or sell signal. However, transaction volumes must be important. Otherwise, it can act as a false signal.

Ascending and descending triangles

Ascending and descending triangles are continuation figures; they reflect a momentary slowing down of the trend. When the trend is bullish, the formation of an ascending triangle will reflect a temporary congestion of prices pending a return of the rise. In the same way, the descending triangle translates a temporary stabilization before the continuation of the correction. The ascending triangle is characterized by horizontal resistance and upward support. The descending triangle is formed by horizontal support and oblique resistance.

In theory, the crossing of resistance in an ascending triangle is accompanied by a swelling of volumes. Likewise for the breaking of the support in the configuration of the descending triangle: transactions are normally increasing…

Turning figures

The inversion of a background trend will be reflected by some figures characteristic of the technical analysis. They intervene almost systematically during major inflections of the market, hence the importance of identifying them.

The double hollow

The figure of the double hollow or “W” marks an inversion of the downward trend … As the name suggests, it is characterized by two successive hollows, the second being at the same level as the first, or even higher. In detail, the title that is in the bearish phase inscribed a first low point and then bounced to form a small peak. It then goes back down to quickly register a new low, preferably higher than the previous one. During the rebound, when the title crosses the horizontal line corresponding to the last peak, it gives a buy signal, the title validating its inflection of trend.

The “double top”

This is the exact opposite figure to that of the double hollow. The title achieves an “inverted W, so an M” with two successive peaks, the second being normally lower than the first … This figure reflects the end of a bullish phase and the beginning of a downtrend. So that the figure of the double top is validated, it is necessary that during the second withdrawal, the title crosses the horizontal line corresponding to the hollow of the middle of the inverted W.

Head and shoulders

More difficult to detect than the double top, the head and shoulders figure also marks the end of a bullish period and the beginning of a downward movement. It takes place in three phases. In the first, the rising of the title produces a first peak (a “shoulder”) then folds to form a first hollow. In the second, a higher peak is inscribed (the “head”). It follows a significant withdrawal to a second hollow. The horizontal line formed of the two hollows is called the neck line. In the third phase, a rebound occurs leading to a high point (the second shoulder) lower than the head, then a new fold. If during this last decline, the title breaks the neck line, a sales signal is given.

Head and shoulders reversed

This figure is the same as the head and shoulder, but returned … It marks the end of a phase of decline and the beginning of an uptrend. The head is actually a “hollow”. The neck line between the two peaks can be drawn in the rebound phases inscribed on each side of the head. The crossing upward of the neck line, which is this time a resistance, gives a buy signal…

Technical Analysis: Mathematical Indicators

Technical Analysis

The main reason of going public is to raise good amount of cash through the various financial avenues that are offered.

As purely mathematical tools, technical indicators are the ideal complement to graphical analysis. They seek to measure the strength of stock market movements, thus making it possible to anticipate major market trends.

The RSI (Relative Strength Index)

This indicator determines areas of “overbought” or “oversold” for a security or a stock index … The RSI is determined for a given period, typically 14 days. The RSI is bounded, that is to say that it oscillates in an interval between 0 and 100. It is precisely the movements of the RSI between these two terminals which interest the followers of the technical analysis. In principle, a buy signal is given when the RSI comes out of the top of the “oversold” zone…

The Momentum

Momentum estimates the strength of a trend. The calculation is made by subtracting, session after session, the last stock market price corresponding to the session of the chosen interval … The reference period is in principle 10 days, the momentum thus representing the last price at which the take away the course of ten days ago. Having no bounds like the RSI, this indicator can be positive or negative. The higher it is, the more it indicates that the uptrend is strong. The more negative he is, the more he indicates that the downtrend is strong.

Things to Know about IPO Investment

However, momentum really finds its interest in detecting trend reversals. This happens when the momentum moves, in a trend, in the opposite direction of the share price. These divergences generally predict an inflection of the short or medium term trend.

The MACD (Moving Average Convergence Divergence)

The MACD is best used in trend markets … More complex than the RSI and Momentum, it combines a moving average and a moving average oscillator. By nature, its method of calculation makes it possible to smooth the courses. The MACD makes it possible to signal reversals before the hour, especially when a trend is well established … The signals are obtained each time the MACD crosses the line O. When the crossing takes place on the rise, it is a buy signal. When he does it down, it’s a sell signal…

WHAT IS TECHNICAL ANALYSIS

WHAT IS TECHNICAL ANALYSIS

Surely we have already heard it but really what is technical analysis? As its name indicates it is a tool designed to analyze any type of market; stocks, indices, commodities, etc. The objective of the technical analysis is to predict the future evolution of the quotation of an asset based on the behavior that has been presenting this quotation in the past. So let’s not confuse the technical analysis with the fundamental value of the asset it analyzes. Because it does not try to estimate whether the stock, index or raw material it studies is expensive or cheap from the fundamental point of view, it only tries to predict the future evolution of its price, not its value.

Price is the point where buyers and sellers of a particular asset are at a given time. The price is not the value of the asset.

From the technical analysis, we can highlight that it is the division of two different disciplines or types of analysis; the graphical analysis (or chartist) and the technical analysis. Both integrate very well and in most cases are handled in an integrated way as a single whole, called the whole technical analysis.

In the graphical analysis, we study the graphic figures that the prices of the asset (stock, index, raw material, etc.) are drawn over time. The trend lines belong to the graphics analysis, the channels, the triangles, the shoulder-head-shoulders, etc.

The technical analysis tries to objectivize and automate the analysis of the price movements through mathematical calculations that are manifested in indicators like Stochastic, MACD, RSI, ADX, etc.

The technical analysis only studies the price of the asset and the negotiated volume. It considers that all the information (accounts of results, balance sheets, GDP, inflation, flows of money, etc.) concerning that market is perfectly reflected in those two only variables. This assertion is based on the fact that all that knowledge represented by each one of the information that is not the price or the volume, is in the distributed power of each one of the people that operate in that market. Consequently, all those who operate in that market have already taken into account each of that information at the moment they give their purchase and sale orders at the prices of those who have done so. In conclusion, prices already reflect everything related to fundamental data, macroeconomics, etc. through the decisions (purchases and sales) that have taken the people who have analyzed each one of that information. For the same reason, one could say that the price of an asset is the “result” of the knowledge of all the people who have studied that asset from every possible point of view.

A very important result of the above is that the technical analysis is designed to study very liquid markets in which no operator has dominant power over the others. If the market is illiquid (few purchases and sales) the price would only reflect the opinion of a few people and the related knowledge of all of them could be quite imperfect. On the other hand, if an operator has a dominant power over a market the price will be reflected largely by the opinion of one person, detracting from the opinion of others. If that operator with dominant power is wrong in its analysis the price will show a wrong reality, similar to the wrong opinion of that dominant operator.

That is why when using technical analysis to analyze a market, it is essential to study the liquidity of that market and if there is a large investor that monopolizes most of the operations performed.

This is also not to say that the technical analysis indicators cannot operate in liquid markets or with a dominant operator. What can happen is that the probabilities that they work as expected are reduced, which increases the risk of the investor using technical analysis in these cases.

Stock Market Analysis Courses

Dhanashri Academy provides Stock Market Technical Analysis Books, PDF, Courses, Online Education, and Videos in Hindi, English and Marathi Language. Contact us for more details and information.

Technical Analysis Training

Technical Analysis Training

Valuable Considerations on Ways to Improve You’re Trading By Means Of Technical Analysis Training

Technical analysis training can provide you with the required skills and practical knowledge required to make money from this market month after month. Having said that, without an in-depth comprehension of technical analysis you will end up trading blind, completely unaware of the countless opportunities that pass by.

All skilled traders have undertaken comprehensive technical analysis training, because it is obligatory at all trading companies for first time personnel. These novice traders are forced to take 2 week to three month trading programs, depending on the firm, before they can actually begin to trade with real cash. This demonstrates precisely how critical technical analysis actually is.

An effective technical analysis program provides comprehensive step by step instructions to master chart patterns, market sentiment, volume analysis, precisely when and the way to trade, the way to remove your feelings from your own trading and a lot of other things.

Technical Analysis Courses IndiaTechnical analysis can easily be applied to any financial chart time-frame and investment vehicle no matter if it is a stock, ETF, option, currency or commodity. The single best way to beat the financial marketplace is through a thorough perception of technical analysis.

One talent that cannot be overstated is basically that you must be able to take control of your emotions. Self-discipline is very significant and extensive training will educate you on how to transform emotionally driven trading straight into a rule-based trading model.

The technical training shows you the foundations of higher probability trading setups, patterns, launching candlestick analysis, Fibonacci and a thorough perception of the importance of market cycles. What’s more, it combines the wider influences which affect quite a few traders including the importance of psychology, market sentiment and in depth tips on risk management. When the foundation of technical analysis has been dealt with then we move on to the advanced trading strategies.

Once you have undertaken a technical analysis program you’ll learn the way to identify high probability trade set-ups, trend lines, the way to trade morning gaps, handle open positions, study market sentiment plus much more. Such coaching opens the door to a great number of trading methods and trading possibilities letting you profit from almost any market situation.

Proper use of technical analysis provides the foundation for a profitable trading profession. It is tough to imagine trading without this expertise and the perception this extraordinary understanding delivers. If you wish to improve your trading or produce your own personal methods as a trader, then technical analysis training is the best answer.

To avail more information regarding Technical Analysis Course in Share Market, visit Dhanashri Academy Website where you will get a lot of courses in share market.

Technical Analysis for Short and Long Term Traders

Technical Analysis

The current economic unrest adds to the highly volatile stock market trading, drawing companies and traders to work critically over time. Every trader must have a market decision based on the recent trend. But how should a market decision be made? When must a trader enter or exit in a certain market trading? When is the proper time to trade the market? Technical Analysis is one of the most basic and precise way to track the short term as well as the long term trends of the market. Financial markets, volume, stock charts and prices: these are the main elements that comprise Technical Analysis. It tracks that all information is reflected already in the stock price. Identifiable trends or conditions and investors’ emotional responses to price movement’s results to established price chart patterns. Compatible and predictable price patterns appear because past performance of the markets repeats itself time and again. If you want to find out what stock to buy and at what price, then Technical Analysis could possibly help you. Finding good companies with strong earnings and long term sustainability investors can be determined using Technical Analysis. Some of the best companies can lose value based on traders’ emotions to the price charts. In turn, there are companies that are not valued highly that can do really well on any given day.

-->