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Chart Analysis
Chart Analysis
A
Let's say if a chart wants to move from point A to point B,
it moves in a particular way, studying this movement of the chart is called PRICE ACTION
To understand and
predict price action
we use some tools and indicators
Candlesticks
Support & Resistance (Market structure)
Trendlines
Chart Patterns
Indicators
Strategies
Candlesticks
Candlestick is a type of chart pattern
that tells you the movement of
a price in a particular time frame.
If a candlestick is of 5 minutes,
it means it shows the open , close , high
and low of that particular 5 minutes
There are 3 types of candlesticks.
Bullish
Bearish
Neutral
BULLISH CANDLE
When the closing price of a candlestick is higher than the opening price,
it's a bullish candlestick
BEARISH CANDLE
When the closing price of a candlestick is lower than the opening price,
it's a bearish candlestick
NEUTRAL CANDLE
When the opening price of a candlestick is the same as the closing price,
it's a neutral candle, also known as a DOJI
TYPES OF CANDLESTICKS
PATTERN
1- HAMMER
2- HANGING MAN
3- INVERTED HAMMER
4- SHOOTING STAR
5- BULLISH ENGULFING
6- BEARISH ENGULFING
7- MORNING STAR
8 - EVENING STAR
1- HAMMER Things to be considered before a hammer
1- The price must be in a downtrend before hammer forms
5 - Colour of the hanging man does not matter although a red colour is
more powerful than green
5 - The colour of the hanging man does not matter although a green color
is more powerful than red
5 - The colour of the shooting star does not matter although a red
colour is more powerful than green
The third candle shows that the bulls have taken the control
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
8 – EVENING STAR
Evening start is a 3 candle pattern that forms at the top
of an uptrend
3 - The third candle shows that the bears have taken the control
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
2 MOST IMPORTANT CANDLESTICKS
1- BIG BAR CANDLE 2 - WICK BAR CANDLE
STILL UP TREND
(NO HIGHER LOW BREAK)
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
DOWN-TREND
A downtrend is a type of market structure in which lower lows [LL] and lower
highs [LH] are formed
sometimes lower lows are not formed but as long as lower highs are forming,
it's still an uptrend.
STILL DOWN TREND
(NO LOWER HIGH BREAK)
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
SIDEWAYS
Sideways also called consolidation
is a type of market structure in which stock gets stuck within a price range.
[between supply zone and demand zone]
look for a breakout when stock is in consolidation
HOW TREND CHANGES
The basic psychology behind a trend change is when either more buyers come
into play or more sellers come into play
HOW UPTREND CHANGE
SUPPORT RESISTANCE
Support is a price level where Resistance is a price level
demand is more than the where supply is more than the
supply, which means there are demand, which means there are
more buyers than sellers that more sellers than buyers that
leads the price to the upside leads the price to the downside
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
HOW SUPPORT BECOMES RESISTANCE
VICE – VERSA
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
TRENDLINES/HOW TO TRADE THEM
TWO TYPES OF TRENDLINE
1- Reversal Patterns
2 – Continuation Patterns
3 – Bilateral Patterns
1- Reversal Patterns
are those patterns that reverse(change) a trend.
These patterns are created because when a stock
reaches a particular point the pressure of either seller or
buyers increases.
DOUBLE TOP AND BOTTOM
HOW TO TRADE THEM
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
HOW TO TRADE
DOUBLE BOTTOM AND TOP
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
HEAD AND SHOULDER
HOW TO TRADE THEM
EX-1
EX-2
EX-3
EX-4
EX-5
HOW TO TRADE
HEAD AND SHOULDER
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
FALLING AND RISING WEDGE
HOW TO TRADE THEM
EX-1
EX-2
EX-3
EX-4
EX-5
HOW TO TRADE
RISING AND FALLING
WEDGE
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
2 - Continuation Patterns
are those patterns that continue a trend.
These patterns show an opportunity to ride the trend.
It is like a stop that an ongoing trend takes and fills
sellers or buyers to continue its movement.
BULLISH / BEARISH FLAG
HOW TO TRADE THEM
Continuation
EX-1
EX-2
EX-3
EX-4
EX-5
HOW TO TRADE
FLAG PATTERN
Continuation
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
RISING/FALLING WEDGE
HOW TO TRADE THEM
Continuation
EX-1
EX-2
EX-3
EX-4
EX-5
HOW TO TRADE
RISING / FALLING
WEDGE
Continuation
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
3 – Bilateral patterns
are those patterns that can continue as well as reverse a trend.
These patterns are a little tricky because they show confusion
among buyers and sellers. We must use technical analysis and
market structure to trade these patterns.
ASCENDING / DESCENDING/
SYMMERTRICAL
TRIANGLES
HOW TO TRADE THEM
EX-1
EX-2
EX-3
EX-4
EX-5
HOW TO TRADE
ASCENDING
DESCENDING
TRIANGLE
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
CLASS 4th
INDICATORS
An indicator is a mathematical calculation that can be used to
improve our trading decisions.
All indicators are laggings means they represent data based on
what has happened in the past.
IMPORTANT INDICATORS
1 – RSI (Relative Strength Index)
2 – EMA (Exponential Moving Average)
3 - fibonacci retracement
4 - Pivots
5-VWAP (volume weighted average price)
6 - Stochastic
1 – RSI (Relative Strength Index)
Relative strength index(RSI) is a momentum indicator that
measures the size of recent price changes to evaluate the
overbought or oversold conditions of a stock
“We use default setting of RSI”
THREE CONDITIONS OF RSI -
1- OVER BOUGHT
2 - OVER SOLD
3 – DIVERGENCE
OVER BOUGHT (ABOVE – 70)
5 – Stochastic
6 – PIVOT LEVEL
pivot levels
are calculated by taking the open, close, high, and low of previous trading days to know the
potential support and resistance of the current trading day.
we use these levels to know our entry and exit.
PIVOT SETTING
TYPE- FIBONACCI
PIVOT TIME FRAME – DAILY
CLASS 5TH
2 MOST IMPORTANT CANDLESTICKS
1- BIG BAR CANDLE 2 - WICK BAR CANDLE
3- TRENDLINE
4 - CANDLESTICKS
5- CHART PATTERN
6- FIBONACCI RETRACEMENT
7- RSI DIVERGENCE
8- MOVING AVERAGES
3 WAYS TO FIND A TRADE
3 – Pivot Points
(helps to set target)
p to r2 /s2 r1 to r3 S1 to s3
Fear
Greed
Hope
RISK MANAGEMENT
Lets say you have 1 lakh capital
Per day risk - 2% (2000rs)
Per day reward – 3-4% (3000-4000rs)
You take 2 trade per day
So now risk will be
1000 each
TRAILING STOPLOSS
+
RISK MANAGEMENT
FIB RETRACEMENT
KEY POINTS
I WILL TRADE ONLY WHEN I GET WHAT I WANT
200EMA
200EMA
STRATEGY ( big bar )
WE NEED
1- 50 EMA
2- 200 EMA
3- BIG BAR CANDLE
4- TIME FRAME – 15 MINS
15 MINS CHART
EX-1
EX-2
EX-3
EX-4
EX-5
EX-6
EX-7
EX-8
EX-9
EX-10
CLASS 8TH
STRATEGY ( VWAP )
GAP THEROY
Diamond pattern
GAP THEROY
how gaps are formed
We use
Stochastics + vwap
Stochastics – is a momentum indicator that use support and resistance to know over bought and over sold
trading conditions ,these are represented in a range of 0 to 100
Vwap – ( volume weighted average price ) is the average price of the stock weighted by the total trading
volumes .
It is used to calculate the average price of a stock over a period of time
Diamond Patterns