MARKET ANALYSIS

Types of Market Analysis

1. Fundamental
2. Technical Analysis
3. Sentiment Analysis

Fundamental factors shapes or bring about sentiment or

Sentiment Analysis while Technical Analysis helps to see
those sentiment and use it to create our trade plans

TECHNICAL ANALYSIS
Candlestick Basics

BULLISH CANDLE

● The candle must close above the open (mostly green in color albeit the color doesn't
matter) with wicks forming highs and lows

BEARISH CANDLE

● The candle must close below the open

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Types of Candlestick

Spinning Top
Contains two candlesticks with a Long upper wick and long lower wick with small body (almost
the same heights and their colora doesn't really matter)

The pattern shows indecision btw buyers and sellers

When it forms during an uptrend

● This means no more buyers so a possible reversal to the downside might occur

When it forms during a Downtrend

● This means no more sellers so a possible reversal to the upside might occur

Marubozu
The candle usually don't have any wicks

It can form as either green or red candle

When Green Marubozu forms at the end of an uptrend

● It means a continuation to the upside is likely

When Green Marubozu forms at the end of a Downtrend

● It means a reversal to the upside is likely

When Red Marubozu forms at the end of a Downtrend

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 ● This means continuation to the downside is likely

When Red Marubozu forms at the end of an Uptrend

● This means reversal to the upside is likely

DOJIS
When a Doji forms on your chart pay attention to the candle before it. They generally show
indecision btw the buyers and sellers

E.g when it occurs after a green Marubozu forms ,it means the buyers are becoming tired so for
the price to continue moving up there has to be more buyers but no more buyers so this means

reversal might occur as sellers steps in and take control

The Hanging Man

Is a bearing reversal pattern with very Long lower wick and small body

It usually forms at the top as a resistance level

When price is rising or in an uptrend and the pattern forms,it shows that sellers are outweighing
the buyers so this will lead to a possible reversal to the downside

The Hammer
Is a bullish reversal pattern with very Long lower wick and small body

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It usually forms at the bottom as a key support level

When price is falling or in a downtrend and the pattern forms,it shows that buyers are
outweighing the sellers so this will lead to a possible reversal to the upside

The Shooting Star and The Inverted Hammer

They are y the opposite of the Hammer and the Hanging Man

The exception is that they both have a long upper wick

Shooting Star

● When price is rising or in an uptrend and the pattern forms,it shows that sellers are
outweighing the buyers so this will lead to a possible reversal to the downside

Inverted Hammer

● When price is falling or in a downtrend and the pattern forms,it shows that buyers are
outweighing the sellers so this will lead to a possible reversal to the upside

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Tweezers
It contains two candlesticks

The first candle is the same with the current trend up or down meaning the candle will be either
Bullish or bearish while the second candle is the opposite of the overall trend

Shadows of the candles should be of equal highs and lows

Morning Star
Contains three candles

First candle is bearish

Second candle is a Doji showing indecision

Third candle is a bullish candle confirming the reversal from the downside to the upside. It should
close above the second candle or half of the first candle

Evening Star
Is the opposite of the Morning Star above

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SUPPORT AND RESISTANCE LEVELS
Support is the area strong buying pressure

Resistance is the area of strong selling pressure

Fibonacci Retracement
It work on the theory that after a big price move,the price usually retrace a little before continuing
it's original trend.

The Retracement levels are 38% 50% and 61% levels

It works best when the market is trending

It's use as a potential area of support and Resistance. It's best when combined with key support
and resistance level

The idea is to go long on the fib Retracement level when it's at a support level

The idea is to go short on the fib Retracement level when it's at a resistance level

It can also be used in setting stop loss

In order to find the fib levels you need to find the significant swing highs and lows

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For a Downtrend, you draw from the recent swing low to the recent swing high

For an Uptrend, you draw from the recent swing high to the recent swing low

It's also best using trendline to confirm the fib Retracement levels. The fib Retracement should
align with a key trendline providing either support or resistance depending on the overall
trend.

You can also use exhaustive candles like Doji spinning tops to determine the Retracement

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Fibonacci Extension are use for taking profits .when in doubt know your way out

They are the 78% 100% 161% levels

TECHNICAL INDICATORS

Moving Averages
The moving average helps to smooth out make noises. It doesn't predict direction, it only show
the current market direction

When price action is above the moving average,it's an Uptrend

When price action is below the moving average,it's a Downtrend

The moving average can be used to enter trade by plotting more than one ma on the chart.
When this moving averages crosses in a point,it indicates reversal

Moving Average can also serve as support and resistance

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Bollinger Bands
It contains two upper and lower bands with a middle moving average

It's best used in ranging market to identify oversold and overbought conditions

Bollinger Bands squeeze is use in trading breakouts. When the bands squeezes or contracts,it
shows that a breakout is about to occur. .ie when it breakout to the downside it will continue to
go down and vice versa.

Bollinger Bands Bounce is when the price action keeps bouncing off and on the lower and upper
bands

Stochastic RSI
It tells us when the market is overbought or oversold. Reads from 0_100

When it's above 80 the market is overbought. You sell when the market is overbought

When it's below 20 the market is oversold. You buy when the market is oversold.

It can also be used in line with other indicators to confirm the price action e.g Bollinger Bands

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Usually when the price is at the bottom of bands in the Bollinger Bands and at the oversold line in
the Stochastic RSI, it's a good indication to go long or buy the market

U can combine one with other indicators to make sure they all have the same price action

CHART PATTERNS
Chart patterns helps you to find potential entry points in a trending market and also exit signals

Double Top and Bottom

Double Top is a reversal pattern that is formed after a big move to the upside. The big move
creates a strong resistance at the top. For it to be valid, it must contain two equal tops with a
neckline in the down part

Double Bottom is a reversal pattern that is formed after a big move to the downside. The big
move creates a strong support at the bottom. For it to be valid, it must contain two equal bottoms
with a neckline in the up part.

Head and Shoulders

It contains a high followed by a higher high and another high but this high is lower than the
higher high

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Wedges
Rising wedge is a Bearish pattern found in a downward trendline and the lines slopes up in an
uptrend

Falling Wedges is the opposite of rising wedge.

When it forms in an uptrend is a Bearish pattern but if it form

In a downtrend is a continuation pattern

Bearish Rectangle
It occurs when price consolidates for a while during a Downtrend

It occurs because sellers paused for awhile to catch their breath. So the price will likely continue
to the downside when the sellers step back in.

BULLLISH RECTANGLE is the the exact opposite

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Pennant
They usually form after a very big move. This causes a very small price pullback. After the
consolidation price continues in it's original trend

Triangle Patterns
They're generally considered to be continuation patterns meaning price will continue in it's
overall trend after the pattern completes.

It's considered valid after making at least five touches with both the up and down lines

They're

Symmetrical Triangle

Ascending Triangle

Descending Triangles

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Most of the times price can move in either direction after the consolidation

Chart patterns cheat sheet

mplementation

Differentiated Instruction

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