PHASE 2|TECHNICAL ANALYSIS

Project Report on ‘TECHNICAL ANALYSIS OF SBI LIFE INSURANCE COMPANY LTD.’

Submitted to
Vicky Khandelwal
Finance Trainee
Praedico Global Research limited

By
Godha Maniteja
Clg Name:-
IBS BANGALORE

MBA 2021-23

On
MARCH 26TH, 2022

DETAILS OF INDICATORS AND CANDLESTICKS

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PHASE 2

TECHNICAL ANALYSIS

TASK 1 AND 2 COMBINED

ABOUT TECHNICAL INDICATORS

MOVING AVERAGE INDICATOR

In statistics, a moving average is a calculation used to analyze data points by creating a series of
averages of different subsets of the full data set. In finance, a moving average (MA) is a stock
indicator that is commonly used in technical analysis. The reason for calculating the moving
average of a stock is to help smooth out the price data by creating a constantly updated price.
By calculating the moving average, the impacts of random, short-term fluctuations on the price
of a stock over a specified time frame are mitigated.

Moving averages (MA) are a common and often utilised technical indicator in financial markets.
In layman's terms, a moving average is an indicator that displays the average value of a stock's
price over a given time period (e.g., 10 days, 50 days, 200 days, etc.) and is typically displayed
alongside the closing price. Traders and market analysts frequently use many periods to create
moving averages in order to plot their charts. The 50-day, 100-day, and 200-day moving
averages are the most commonly used for determining significant, long-term support and
resistance levels, as well as overall trends.

IMPORTANT TAKEAWAYS

A moving average (MA) is a popular stock indicator in technical analysis.

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✓ The purpose of generating a stock's moving average is to smooth out price data over a set
period of time by creating a continually updated average price.
✓ A simple moving average (SMA) is a calculation that takes the arithmetic mean of a
given set of prices over a certain number of days in the past, such as 15, 30, 100, or 200
days.
✓ Exponential moving averages (EMA) are a weighted average that provides higher weight
to a stock's price in recent days, making it a more responsive indicator to fresh
information.

The moving average is calculated differently depending on whether it is a simple moving

average or an exponential moving average. We examine a simple moving average (SMA)
of a security with the following closing prices over a 15-day period below:
Week 1 (5 days): 20.22.24.25.23.
Week 2 (5 days): 26.28.26.29.27.28.29.27.29.27.29.27
Week 3 (5 days): 28-30-27-29-28
As the initial data point, a 10-day moving average would average out the closing prices
for the first ten days. The following data point would subtract the earliest price, add the
price on day 11, and average the two.
SBI Life Insurance Company Ltd. SMA/EMA (Moving Average)

Analysis

Indicator Value

30 Day SMA 1093.5

50 Day SMA 1148.7

100 Day SMA 1159.0

200 Day SMA 1137.1

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As in the above grah the red line is long term moving average of 200days and yellow line
is small term moving average of 9 days where this tell us we can saty in the market till
the yellow line is above the red when the yellow cuts or come below red line it incadicte
to come out of the market.

Bollinger bands:
Bollinger Bands are a trading technique that is used to calculate trade entry and exit
points. The bands are frequently used to identify overbought and oversold situations.
Trading with only the bands is a dangerous technique because the indicator focuses on
price and volatility while disregarding a lot of other important information. Bollinger
Bands are a sort of chart indication for technical analysis that has gained popularity
among traders in a variety of markets, including stocks, futures, and currencies. The
bands, invented by John Bollinger in the 1980s, provide unique insights on price and
volatility. 1 In reality, Bollinger Bands can be used to determine overbought and oversold
levels, as a trend following tool, and to monitor for breakouts.

IMPORTANT TAKEAWAYS

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✓ Bollinger Bands are a trading tool that can be used to determine trade entry and
exit positions.
✓ The bands are frequently used to identify overbought and oversold situations.
✓ Trading with only the bands is a dangerous technique because the indicator
focuses on price and volatility while disregarding a lot of other important
information.
✓ Bollinger Bands are a simple trading tool that is extremely popular among both
professional and at-home traders.

A compression technique is another strategy for using Bollinger Bands. A squeeze occurs when
the price has been moving quickly for some time and then begins to move laterally in a tight
consolidation.When the upper and lower bands of an asset's price move closer together, a trader
can visually identify when the price is consolidating. This indicates that the asset's volatility has
reduced. Following a period of consolidation, the price will frequently make a greater move in
either direction, ideally on heavy volume. Expansion of volume on a breakout indicates that
traders are voting with their dollars that the price will continue to move in the breakout
direction.When the price of the asset breaks through the upper or lower range, the trader buys or
sells it.

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The graphs tell us about the bollinger band where its has three line marks upper band ,middle
line and lower band wher they tell us when the market is just a middle line we can enter in to the
market and later when it comes below the middle line then we shuold exit the market here we
need to see the m shape in upper trend and w shaped in lower trend. If the upper and lower bands
are 1 standard deviation, this means that about 68% of price moves that have occurred recently
are CONTAINED within these bands. If the upper and lower bands are 2 standard deviations,
this means that about 95% of price moves that have occurred recently are CONTAINED within
these band

You’re probably falling asleep let’s hit you with an image.

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As you can see, the higher the value of SD you use for the bands, the more prices the bands
“capture”. You can try out different standard deviations for the bands once you become more
familiar with how they work. In all honesty, to get started, you don’t need to know most of this
stuff. We think it’s more important that we show you some ways you can apply the Bollinger
Bands to your trading. Note: If you really want to learn about the calculations of Bollinger
Bands, check out John’s book, Bollinger on Bollinger Bands, or check out our lovely Forexpedia
page on Bollinger Bands.

ADX INDICTOR

The ADX indicator is a moving average of price range values that are expanding. The ADX is a
component of Welles Wilder's Directional Movement System. Using the DMI+ and DMI-
indicators, as well as the ADX, this approach aims to evaluate the strength of price movement in
both positive and negative directions. Trading against a strong trend minimizes risk while
increasing reward possibilities. The average directional index (ADX) is used to assess whether
prices are significantly moving. It is the ultimate trend indicator in many circumstances. After
all, the trend may be your buddy, but knowing who your friends are is essential. In this post,
we'll look at the usefulness of the ADX as a trend strength indicator.

ADX Value Trend Strength

0-25 Absent or Weak Trend
25-50 Strong Trend
50-75 Very Strong Trend
75-100 Extremely Strong Trend

IMPORTANT TAKEAWAYS

✓ ADX does more than just identify trending circumstances.

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✓ It assists the trader in identifying the most promising patterns to trade.
✓ The ability to quantify trend strength gives traders a significant advantage.
✓ ADX also recognises range situations, preventing traders from getting stuck trying to
trend trade in sideways price action
➢ Important ADX concepts

Volatility and Volume: - The ADX is a useful tool because it focuses on the stock's trend and
strength. Extremely volatile equities, on the other hand, will not necessarily follow ADX values.
Stocks that respond positively to the ADX should have strong volume but low volatility.

Divergence: Unlike other indicators, divergence in ADX does not anticipate trend shift. As long
as the value is over 20, the trend will continue.

Trading the Current Trend

✓ If the price is rising and the ADX indicator is rising as well, with a value greater than 20
and +DI greater than -DI, it is a buy signal.
✓ If the price is falling and the ADX indicator is rising and is over 20, and the -DI is greater
than the +DI, it is sell signal.

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PSAR INDICATOR
Traders use the parabolic SAR indicator, created by J. Wells Wilder, to assess trend direction and
probable price reversals. To identify optimal exit and entry places, the indicator employs a
trailing stop and reverse mechanism known as "SAR," or stop and reverse. The indication is also
known as the parabolic stop and reverse, parabolic SAR, or PSAR by traders.The parabolic SAR
indication shows as a sequence of dots on a chart, either above or below an asset's price,
depending on the price's direction of movement. When the price is rising upward, a dot is placed
below the price, and when it is trending downward, a dot is placed above the price.

TAKEAWAYS IMPORTANT

✓ Technical traders utilise the parabolic SAR (stop and reverse) indicator to spot trends and
reversals.
✓ The indicator works by superimposing a system of dots onto a price chart.
✓ When these dots flip, a reversal occurs, however a reversal signal in the SAR does not
always imply a price reversal. The only thing a PSAR reversal signifies is that the price
and the indicator have crossed.

When the position of the dots goes from one side of the asset's price to the other, the parabolic
indicator generates buy or sell recommendations. When the dots move from above the price to
below the price, for example, a purchase signal is generated, whereas when the dots move from
below the price to above the price, a sell signal is generated.

The PSAR dots are often used by traders to set trailing stop loss orders. If the price is rising and
the PSAR is rising as well, the PSAR can be used as a possible exit if you're long. Exit the long

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bet if the price falls below the PSAR.

RSI INDICATOR
The relative strength index (RSI) is a technical analysis indicator that examines the size of recent
price fluctuations to determine if a stock or other asset is overbought or oversold. The RSI is
represented by an oscillator (a line graph that travels between two extremes) with a range of 0 to
100. J. Welles Wilder Jr. created the indicator and published it in his important 1978 book "New
Concepts in Technical Trading Systems." 1 Values of 70 or higher on the RSI, according to
traditional interpretation and usage, signal that an investment is becoming overbought or
overvalued, and may be ready for a trend reversal or corrective retreat in price. A reading of 30
or less on the RSI suggests that the market is oversold or undervalued.

IMPORTANT TAKEAWAYS

✓ The relative strength index (RSI), which was created in 1978, is a prominent momentum
oscillator.
✓ The RSI, which is commonly charted beneath the graph of an asset's price, offers
technical traders with clues regarding bullish and bearish price momentum.

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✓ When the RSI is above 70%, an asset is deemed overbought, and when it is below 30%, it
is considered oversold.

The stock or asset's primary trend is a useful tool for ensuring that the indicator's readings are
correctly comprehended. For example, well-known market expert Constance Brown, CMT, has
propagated the theory that an oversold RSI reading in an uptrend is likely much higher than 30%,
while an overbought RSI reading in a downtrend is likely much lower than 70%.

As shown in the chart below, during a downtrend, the RSI will peak near 50 percent rather than
70 percent, which can be utilised by investors to more consistently signal bearish conditions.
When a strong trend is in place, many investors would draw a horizontal trendline between 30%
and 70% to help them detect extremes. When the price of a stock or asset is in a long-term
horizontal channel, changing overbought or oversold levels is usually unnecessary.

Focusing on trade signals and strategies that conform to the trend is a related idea to employing
overbought or oversold levels relevant to the trend. To put it another way, employing bullish
indications when the price is in a bullish trend and bearish signals when the stock is in a bearish
trend will help you avoid the RSI's many false alarms.

Traders use the Relative Strength Index (RSI) to determine the price momentum of a stock or
other security. The RSI's primary concept is to track how quickly traders are bidding up or down
on a security's price. On a scale of 0 to 100, the RSI plots this outcome. Stocks with ratings

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below 30 are considered oversold, while those with readings above 70 are considered
overbought. Traders will frequently post this RSI chart alongside the security's price chart so that
they can compare the security's recent momentum to its market price. If a security's RSI reading
falls below 30, some traders consider it a "buy signal," implying that the security has been
oversold and is due for a rebound. However, the signal's dependability will be influenced by the
whole context. If the security is in a major decline, it may continue to trade at an oversold level
for a long time. Traders in that situation may decide to hold off on buying until they get
additional confirmation indications.

AS the all the indictor are been explained in the above pages and I have take the SBI LIFE
INSURANCE COMPANY LIM data from trading view to explain in deatil and I have applied
all the indicators to the company and comapre with the interpreation in above pages. I have
expalied till where I had my idea in the indicators

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TASK 2
TYPES OF CANDLESTICKS

Firstly we should what is a candlestick means so candlestick means A candlestick is a form of

technical analysis price chart that shows the high, low, open, and closing prices of a securities
over time.

Know the below are some types of candle stick patterns and which are take from trading view of
SBI LIFE INSURANCE COMPANY LTM STOCKS.

THE 4 PRIC DOJI is like is does not have any wick on it and they high ,low ,open and close
like in it and it is a ultimate indecision.

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SHOOTING STAR pattern can mainly seen in the up trends of market and have positive
impact and in the next pattern we can predict that it can have down wards trend in the market
arfter the shooting star is seen.

BULLISH HARMI this we can find when the market is in down wards trend and the body of
the pattern should be inside the other body then only we can say it is a bullish harmi

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BULLISH SPINNING TOP

BEARISH SPINNING TOP is shows the equal buy and sell pressure in market and it is a
indecisive

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DOJI STAR it is a constant market where the opening and colosing price of stock would be
equally in this pattern or candle

THREE BLACK CROWS when the market is in down wards trends we find this candle and we
can say the next market may rise in up wards trend to

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HAMMER can be seen in the down wards trend of market and a hammer can be identify by it
stick which should twice the body

THREE WHITE SOLIDERS this would be seen in the up trends of market and they would be
decrease trend in future when we find this candle

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GRAVESSTONE DOJI it appears in top of up trends and shoes the rejection of higher price
and has bearish signal

DRAGONFLY DOJI is can be seen in the bottom of down wards trend of market it shoes the
rejection of lower price and It gives the bullish signal

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HANGING MAN it will appear when the market is in the up wards trend and it give the signal
of bearish market

STOOING STAR is same as hanging man only but the different is the stick where they are
reserves in the candle pattern all the activity are same as hanging man .

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INVERTED HAMMER it is same as hammer candle where the candle shape is different in the
market

bearish engulfing
candle

BEARISH ENGULFING CANDLE it appears on the up wards trend of market and ti gives
signal of downwards trends in market
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BULLISH ENGULFING CANDLE it appears in the bottom line of down wards trend of
market and gives signal of up wards trend in future date

MARUBOZU OPEN

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BEARISH SPINNING TOP it show the small body with long shadows and its is generally the
indecisive even it is same for the bullish spinning top.

MORNING STAR CANDLE STICK it appears in down wards trends of market and the first
candle should have red color second can be any color the third candle is green and its bullish
trend. It is more effective when backed with higher volume.

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EVENING STAR CANDLESTICK it appears in up wards trend of market and the long first
candle body the third candle body closes into body of first candle.

PIERCING PARTTERN it appears in downtrend and the first candle should be equally of 50%
to second candle and the gap should be in the second candle.

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DARK CLOUD PARTTERN it is same as piercing pattern but the different is the gap where it
has in the second candle in upside and it should also have 50% close of day 2 greater than of day
1 bull candle and it appears in up wards trend of market and is gives signal of down wards trends
in stock for future date.

THE ABOVE ALL THE CANDLES STICK PATTERN ARE TAKE IN TIME FARME OF 5
AND 15 MINTUES DATA FOR SBI LIFE INSURANCE COMPANY LLD.

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