BASI

CS
OFTECHI
CAL
ANALYSI
S
TABLEOFCONTENTS
I
NTRODUCTI
ON 3

BASI
CSOFCHARTANALYSI
S 4

Whatar
echar
ts 4

Howt
ochoos
ether
ightt
ime-
frame 5

Candl
est
ickChar
t 6

SUPPORTANDRESI
STANCE 7

Howt
oident
if
ysuppor
tandr
esi
stanc
e 8

Suppor
tEqual
sRes
ist
anc
e 9

TRENDS 11

Char
tPat
ter
ns 12

•As
cendi
ngTr
iangl
ePat
ter
ns 13

•Des
cendi
ngTr
iangl
ePat
ter
ns 13

•Doubl
eTops 14

•Doubl
eBot
toms 15
I
NTRODUCTI
ON
Tec
hni
cal
Anal
ysi
sist
hef
orec
ast
ingoff
utur
efinanc
ial
pri
cemov
ement
sbas
edonanex
ami
nat
ionofpas
tpr
icemov
ement
s.Li
keweat
herf
orec
ast
ing,
t
echni
cal
anal
ysi
sdoesnotr
esul
tinabs
olut
epr
edi
cti
onsaboutt
hef
utur
e.I
nst
ead,
tec
hni
cal
anal
ysi
scanhel
pinv
est
orsant
ici
pat
ewhati
s“l
i
kel
y”t
ohappent
o
pr
icesov
ert
ime.
Tec
hni
cal
anal
ysi
sus
esawi
dev
ari
etyofc
har
tst
hats
howpr
iceov
ert
ime.

Ther
ear
emanyt
echni
cal
anal
ysi
stool
sthatt
rader
scanus
etoanal
yzet
hec
har
tsanddet
ermi
nef
utur
epr
icebehav
ior
.Theyhav
evar
yingdegr
eeof
c
ompl
exi
ty–s
omear
eper
fec
tlys
uit
edt
obegi
nner
swhi
l
eot
herr
equi
res
omeadv
anc
edk
nowl
edget
obeunder
stoodpr
oper
ly.
Int
hisc
ompr
ehens
ivegui
de,
wehav
epi
ckedt
hemos
twi
del
yrec
ogni
zedt
enet
soft
echni
cal
anal
ysi
swhi
chwebel
i
eveev
eryt
raders
houl
dknow.

Thoughwr
it
tent
ogui
deandas
sis
tbegi
nner
sint
hei
rfir
sts
tepsi
nthet
radi
ngwor
ld,
thi
seBooki
sal
sos
uit
abl
eformor
eex
per
ienc
edt
rader
s,k
eepi
ngt
hem
ont
opofal
lthebas
icsonemus
tbef
ami
l
iarwi
thwhent
radi
ngc
rypt
ocur
renc
ies
.

BASI
CSOFTECHI
CALANALYSI
S
3
BASI
CSOFCHARTANALYSI
S
WHATARECHARTS

Apr
icec
har
tisas
equenc
eofpr
icespl
ott
edov
eras
pec
ific
t
imef
rame.
Ins
tat
ist
ical
ter
ms,
char
tsar
eref
err
edt
oas
t
imes
eri
espl
ots
.

Tec
hni
ci
ans
,tec
hni
cal
anal
yst
s,andc
har
ti
stsus
echar
tst
o
anal
yzeawi
dear
rayofs
ecur
it
iesandf
orec
astf
utur
epr
ice
mov
ement
s.Thewor
d“s
ecur
it
ies
”ref
erst
oanyt
radabl
e
financ
ial
ins
trumentorquant
ifiabl
eindexs
uchass
toc
ks,
bonds
,commodi
ti
es,
fut
uresormar
keti
ndi
ces
.Any
s
ecur
it
ywi
thpr
icedat
aov
eraper
iodoft
imec
anbeus
ed
t
ofor
m ac
har
tforanal
ysi
s.

Bec
aus
echar
tspr
ovi
deaneas
y-t
o-r
eadgr
aphi
cal
r
epr
esent
ati
onofas
ecur
it
y'
spr
icemov
ementov
era
s
pec
ificper
iodoft
ime,
theyc
anal
sobeofgr
eatbenefitt
o
f
undament
alanal
yst
s

BASI
CSOFTECHI
CALANALYSI
S
4
BASI
CSOFCHARTANALYSI
S
HOW TO CHOOSETHERI
GHTTI
ME-
FRAME

Thet
imef
rameus
edf
orf
ormi
ngac
har
tdependsont
hec
ompr
ess
ionoft
hedat
a: • Tr
ader
sus
ual
l
y
i
ntr
aday
,dai
l
y,week
ly,
mont
hly
,quar
ter
lyorannual
dat
a.Thes
hor
teri
sthedur
ati
onof c
onc
ent
rat
eonc
har
tsmadeupof
par
ti
cul
ars
egmentoft
hepr
ice,
themor
edat
aisgener
all
ydi
spl
ayed.
Forex
ampl
e,bel
ow dai
l
yandi
ntr
adaydat
atof
orec
ast
y
ouc
ans
ee2ex
ampl
esofc
andl
est
ickc
har
trepr
esent
ingpr
icemov
ement
soft
hes
ame s
hor
t-t
erm pr
icemov
ement
s.The
as
set
. s
hor
tert
het
imef
rameandt
hel
ess
c
ompr
ess
edt
hedat
ais
,themor
e
Fort
hefir
stpi
ctur
ewes
elec
tedt
imef
rame,
meani
ngeac
hcandl
eint
hel
ook
bac
kper
iod det
ail
thati
sav
ail
abl
e.Whi
l
elongon
i
sshowi
ngpr
icefluc
tuat
ionshappeni
ngwi
thi
ntheent
ir
edaywhi
l
ethes
econdpi
ctur
e det
ail
,shor
t-t
ermc
har
tsc
anbe
s
howshour
lyt
imef
ramewhi
chal
l
owst
oconc
ent
rat
eons
hor
tert
erm mov
ement
sont
he v
olat
il
eandc
ont
ainal
otof
pr
ice. unc
ert
aint
y.Lar
ges
uddenpr
ice
mov
ement
s,wi
dehi
gh-
lowr
anges
,
andpr
icegapsc
anaffec
tvol
ati
l
ity
,
whi
chc
andi
stor
ttheov
eral
lpi
ctur
e.

• I
nves
tor
sus
ual
l
yfoc
uson
week
lyandmont
hlyc
har
tst
ospot
l
ong-
ter
mtr
endsandf
orec
ast
l
ong-
ter
m pr
icemov
ement
s.Bec
aus
e
l
ong-
ter
mchar
ts(
typi
cal
l
y1-
4year
s)
c
overal
ongert
imef
ramewi
th
c
ompr
ess
eddat
a,pr
icemov
ement
s
donotappearasex
tremeandt
her
e
i
sof
tenl
essnoi
se.

BASI
CSOFTECHI
CALANALYSI
S
5
• Ot
her
smi
ghtus
eac
ombi
nat
ionofl
ong-
ter
m ands
hor
t-t
ermc
har
ts.
Long-
ter
mchar
tsar
egoodf
oranal
yzi
ngt
hel
argepi
ctur
etogetabr
oadper
spec
tiv
eoft
he
hi
stor
ical
pri
ceac
tion.
Onc
ethegener
alpi
ctur
eisanal
yzed,
adai
l
ychar
tcanbeus
edt
ozoom i
nont
hel
astf
ewmont
hs.

BASI
CSOFTECHI
CALANALYSI
S
6
CANDLESTI
CKCHART
Or
igi
nat
ingi
nJapanov
er300y
ear
sago,
candl
est
ick
c
har
tshav
ebec
omequi
tepopul
ari
nrec
enty
ear
s.
Forac
andl
est
ickc
har
t,t
heopen,
high,
lowand
c
los
ear
eal
lrequi
red.
Adai
l
ycandl
est
icki
sbas
ed
ont
heopenpr
ice,
thei
ntr
adayhi
ghandl
ow,
and
t
hec
los
e.Aweek
lyc
andl
est
icki
sbas
edon
Monday
'sopen,
theweek
lyhi
gh-
lowr
angeand
Fr
iday
'sc
los
e.

Manyt
rader
sandi
nves
tor
sbel
i
evet
hatc
andl
est
ick
c
har
tsar
eeas
ytor
ead,
espec
ial
l
yther
elat
ions
hip
bet
weent
heopenandt
hec
los
e.Gr
een
c
andl
est
ick
sfor
m whent
hec
los
eishi
ghert
hant
he
openandRedc
andl
est
ick
sfor
m whent
hec
los
eis
l
owert
hant
heopen.
Ther
edandgr
eenpor
ti
on
f
ormedf
rom t
heopenandc
los
eisc
all
edt
hebody
.
Thel
i
nesabov
eandbel
owar
ecal
l
eds
hadowsand
s
howt
hedai
l
yfluc
tuat
ionsoft
hepr
ice
r
epr
esent
edbyl
oweranduppers
hadows
r
espec
tiv
ely
.

BASI
CSOFTECHI
CALANALYSI
S
7
SUPPORTANDRESI
STANCE
Under
standi
ngs
uppor
tandr
esi
stanc
eist
he
fir
sts
tept
hatev
eryt
raders
houl
dtak
ein
s
tudy
ingt
echni
cal
anal
ysi
s.Not
ool
isus
edmor
e
f
requent
lyt
hans
uppor
tandr
esi
stanc
ethati
s
whyi
tmaybeofgr
eatbenefitf
orBi
tcoi
nand
ot
herc
rypt
ocur
renc
ytr
ader
sifus
ed
appr
opr
iat
ely
.

Suppor
tandr
esi
stanc
erepr
esentpr
icel
evel
s
t
hroughwhi
cht
hepr
icer
arel
ygoesabov
eor
bel
ow.

•Suppor
tist
hepr
icepoi
ntt
hroughwhi
ch
t
heas
setr
arel
yfal
ls.

•Res
ist
ance,ont
heot
herhand,i
sthel
evel
abovewhi
cht
hemar
ketr
arel
ygoesup.
Wec
lear
lys
eet
hatt
hepr
icewasnott
radi
nghi
ghert
hant
han1.
6800whi
l
e1.
6780wasahur
dlef
ort
hepr
icet
ogo
Suppor
tandr
esi
stanc
ear
ever
yimpor
tanti
n f
urt
herdown,
res
ult
ingi
napr
olongedpr
icec
ons
oli
dat
ionbet
weenment
ionedl
evel
s.
t
ermsofmar
ketps
ychol
ogy
,asr
esi
stanc
e
l
i
ter
all
yrepr
esent
sthepoi
ntabov
ewhi
ch
t
rader
sar
enotwi
l
li
ngt
obuy
,whi
l
esuppor
t
out
li
nest
hepr
icebel
owwhi
cht
rader
sar
e
r
eluc
tantt
osel
l
.Pi
ctur
ebel
owdemons
trat
est
he
mos
tst
ri
ki
ngi
nst
anc
eofs
uppor
tandr
esi
stanc
e
ont
hec
har
t:

BASI
CSOFTECHI
CALANALYSI
S
8
HOW TOI
DENTIFYSUPPORT
ANDRESI
STANCE
•Suppor
tcanbees
tabl
is
hedwi
tht
hepr
evi
ous
r
eac
tionl
ows
.

•Res
ist
anc
ecanbees
tabl
is
hedbyus
ingt
he
pr
evi
ousr
eac
tionhi
ghs
.

Af
tereac
hbounc
eoffs
uppor
tat1.
18500,
the
pr
icet
radedal
lthewayupt
ores
ist
anc
e.
Res
ist
anc
ewasfir
stes
tabl
i
shedatar
ound
1.
2000l
evel
.Asy
ouc
ans
ee,
thepr
ices
eemst
o
hav
eaes
tabl
i
shedat
radi
ngr
angebet
ween
1.
2000and1.
1850andl
ack
edmoment
um t
o
br
eakanyoft
hement
ionedl
evel
sfors
omet
ime.
Thati
swhybr
eak
outofl
ongt
erm ar
eaof
s
uppor
torr
esi
stanc
eisus
ual
l
ythought
obea
c
all
toac
tionr
egar
dles
sofdi
rec
tion.

BASI
CSOFTECHI
CALANALYSI
S
9
SUPPORTEQUALSRESI
STANCЕ

Anot
herpr
inc
ipl
eoft
echni
cal
anal
ysi
sst
ipul
atest
hats
uppor
tcant
urni
nto
r
esi
stanc
eandv
icev
ers
a.Onc
ethepr
icebr
eak
sbel
owas
uppor
tlev
el,
the
br
okens
uppor
tlev
elc
ant
urni
ntor
esi
stanc
e.Thebr
eakofs
uppor
tsi
gnal
s
t
hatt
hef
orc
esofs
uppl
yhav
eov
erc
omet
hef
orc
esofdemand.
Ther
efor
e,
i
fthepr
icer
etur
nst
othi
slev
el,
ther
eisl
i
kel
ytobeani
ncr
eas
eins
uppl
y,
andhenc
eres
ist
anc
e.

Al
so,
ident
if
yi
ngt
radi
ngr
angec
anbehel
pful
indet
ermi
nings
uppor
tand
r
esi
stanc
east
urni
ngpoi
ntsorasc
ont
inuat
ionpat
ter
ns.
Atr
adi
ngr
angei
s
aper
iodoft
imewhenpr
icesmov
ewi
thi
nar
elat
ivel
yti
ghtr
ange.
Thi
s
s
ignal
sthatt
hef
orc
esofs
uppl
yanddemandar
eev
enl
ybal
anc
ed.
When
t
hepr
icebr
eak
soutoft
het
radi
ngr
ange,
abov
eorbel
ow,
its
ignal
sthata
wi
nnerhasemer
ged

BASI
CSOFTECHI
CALANALYSI
S
10
TRENDS
At
rendi
sthet
endenc
yoft
hemar
kett
o mov
eina
par
ti
cul
ardi
rec
tionov
ert
ime.
Iti
sanamal
gamat
ionof
pr
edi
ctabl
epr
icemov
ement
swhi
cht
hemar
kett
akes
whenr
eac
hings
uppor
tandr
esi
stanc
elev
elsv
ary
ing
ov
ert
ime.
Trendsc
anbef
oundonv
ari
oust
ime
f
rames
,andt
hos
efoundont
hehi
ghert
imef
rames
c
anl
astf
orweek
s,mont
hsandy
ear
s.I
nsi
mpl
ewor
ds,
mar
kett
rendi
sthegener
aldi
rec
tioni
nwhi
cht
he
mar
ketgoesoraper
iodwhent
hepat
ter
nofi
ts
mov
ement
sremai
nsunc
hanged.

BULLI
SHTREND BEARI
SHTREND

Bul
l
isht
rend(oranupt
rend)i
sat
erm us
edt
odes
cri
bet
hemar
ketwhi
chi
s Bear
isht
rend(oradownt
rend)i
sanoppos
itet
othebul
l
isht
rendandi
s
appr
eci
ati
ngi
nval
uewi
theac
hcons
ecut
ivet
imeper
iod.
Inmos
toft
hec
ases
,at
rend c
har
act
eri
zedbyagener
aldec
li
nei
nthepr
iceoffinanc
ial
ins
trument
sov
ert
he
i
scal
l
edbul
l
ishwhent
hemar
keti
scl
osi
ngt
hedayabov
etheopeni
ngpr
ice.
Abul
l
ish per
iodoft
ime.
Iti
sus
ual
l
ytr
igger
edbyas
uddens
hif
tfr
om i
nves
toropt
imi
smt
o
t
rendi
sas
soc
iat
edwi
ths
igni
ficantc
onfidenc
eandi
ncr
eas
edi
nves
tingi
nant
ici
pat
ion t
hef
earandpes
simi
sm.
Bearmar
ket
sar
eas
soc
iat
edwi
thper
iodsofel
evat
ed
t
hatpr
iceswoul
dri
sei
nthef
utur
e. ec
onomi
cunc
ert
aint
yandunder
lyi
ngdowns
ider
isk
s.

BASI
CSOFTECHI
CALANALYSI
S
11
CHARTPATTERNS
Pat
ter
nspl
ayv
ital
rol
eint
rader
’sabi
l
ityt
oident
if
y
l
ong-
ter
mtr
endsandt
rades
ucc
ess
ful
l
y.Wi
thov
er50
pat
ter
sknownt
oanal
yst
sver
yfewhav
eac
tual
l
yst
ood
t
het
estoft
imeandpr
ovedus
eful
inpr
edi
cti
ng
pot
ent
ial
out
comes
.

I
nmanyway
s,c
har
tpat
ter
nsar
esi
mpl
ymor
e
c
ompl
exv
ers
ionsoft
rendl
i
nes
.Iti
simpor
tantt
hat
y
our
eadandunder
standpar
tsoft
hisgui
deon
Suppor
tandRes
ist
anc
easwel
lasTr
endLi
nesbef
ore
y
ouc
ont
inue.

Char
tpat
ter
nanal
ysi
scanbeus
edt
omak
e
s
hor
t-t
erm orl
ong-
ter
mfor
ecas
ts.
Thedat
acanbe
i
ntr
aday
,dai
l
y,week
lyormont
hlyandt
hepat
ter
nsc
an
beass
hor
tasonedayorasl
ongasmanyy
ear
s.Gaps
andout
sider
ever
sal
smayf
ormi
nonet
radi
ng
s
ess
ion,
whi
l
ebr
oadeni
ngt
opsanddor
mantbot
toms
mayr
equi
remanymont
hst
ofor
m.

BASI
CSOFTECHI
CALANALYSI
S
12
ASCENDI
NGTRI
ANGLEPATTERNS

As
cendi
ngt
ri
angl
epat
ter
sar
ebul
l
ishf
ormat
ionsus
ual
l
yindi
cat
ingac
ont
inuat
ionoft
heupwar
dtr
end.Thepat
ter
nsi
schar
act
eri
zedby2t
rend-
li
nes
.Thefir
stt
rend-
li
nei
s
al
mos
tflatandc
ommonl
ymov
esal
ongt
het
opoft
het
ri
angl
e.Theupperl
i
neac
tsasar
esi
stanc
epoi
ntwhi
chpr
event
sbr
eak
out
sbys
endi
ngs
ecur
it
y’
spr
icebac
ktot
hel
ower
t
rend-
li
ne.

Wi
theac
hsubs
equentf
ail
uret
obr
eakupper
,al
mos
thor
izont
alr
esi
stanc
epoi
ntbot
hli
nesev
ent
ual
l
yconv
erge.
Conv
ergenc
eofbot
hli
nes
us
ual
l
yres
ult
sinabr
eak
outofupperr
esi
stanc
elev
el.
Thebas
ici
nter
pret
ati
oni
sthatt
hepat
ter
nrev
eal
sthateac
hti
mes
ell
ersat
temptt
o
pus
hpr
icel
ower
,theyar
einc
reas
ingl
yles
ssuc
ces
sful
.Thi
spat
ter
nisgoodf
orc
rypt
ocur
renc
ytr
adi
ngaswasf
requent
lys
eenonBi
tcoi
n
andEt
her
eum c
har
ts.

Anot
herwayofus
ingt
hepat
ter
nisf
oll
owi
ngt
hes
uppor
ti
ngl
owert
rend-
li
ne.
Asy
oumays
eeont
hepi
ctur
eabov
e,eac
hsubs
equent
f
ail
uret
obr
eakbel
owt
hel
owerl
i
ensr
esul
tsi
nas
hor
twav
ehi
gherunt
ilr
eac
hingr
esi
stanc
e.Sel
l
ersgetmor
e andmor
eex
haus
tedwi
th
eac
hfai
l
uret
obr
eakbel
owt
hel
owerl
i
ne.
Ass
uch,
inc
ombi
nat
ionwi
thr
ighti
ndi
cat
orss
uppor
ti
ngl
i
nec
anbeapr
ofit
abl
ebuys
ignal
.

DESCENDI
NGTRI
ANGLEPATTERNS
Ast
henames
ugges
ts,
des
cendi
ngt
ri
angl
eisex
act
lyt
heoppos
itet
othepat
terwe’
veex
plai
nedabov
e.Char
act
eri
zedbyflats
uppor
ti
ngl
i
neont
hebot
tom anddown-
slopi
ng
v
ert
ical
li
ne,
des
cendi
ngt
ri
angl
eisas
trongbear
ishr
ever
sal
pat
ter
nthatc
anpr
ovi
det
rader
sas
trongs
ignal
thatpr
icewi
l
lkeepmov
ingdownonc
ethet
ri
angl
eisc
ompl
ete.

Us
ual
l
yfor
meddur
ingl
ongup-
trendst
hispat
ter
nus
ual
l
yindi
cat
est
hatbuy
ersar
eget
ti
ngweak
ereac
hti
met
hepr
ices
bounc
esofft
hes
uppor
t.Eac
hsubs
equentat
temptatpus
hingpr
iceshi
gheri
sweak
ert
hanbef
ore,
andev
ent
ual
l
ybot
h
l
i
nesc
onv
ergeandbr
eak
outbel
owt
hes
uppor
tli
net
akespl
ace.

BASI
CSOFTECHI
CALANALYSI
S
13
DOUBLETOPS

Adoubl
etopf
ormswhent
hepr
icemak
es
ahi
ghwi
thi
nanupt
rend,
andt
henpul
l
s
bac
k.Ont
henex
tral
l
ythepr
icepeak
s
neart
hepr
iorhi
gh,
andt
henf
all
sbel
ow
t
hepul
l
bac
klow.
It'
scal
l
edadoubl
etop
bec
aus
ethepr
icepeak
edi
nthes
amear
ea
t
wic
e,unabl
etomov
eabov
ethat
r
esi
stanc
ear
ea.

Fort
radi
ngpur
pos
es,
sel
lpos
iti
ons
pos
iti
onsmaybei
nit
iat
edwhent
he
pat
ter
ncompl
etes
.It
'sal
soadv
isabl
eto
av
oidl
ongs
,si
ncet
hepr
icec
oul
ddec
li
ne
f
urt
her
.As
topl
ossons
hor
tpos
iti
onsi
s
pl
acedabov
ethel
ates
tpeak
,wher
erec
ent
s
hor
tter
mres
ist
anc
emayhav
ebeen
f
ormed

BASI
CSOFTECHI
CALANALYSI
S
14
DOUBLEBOTTOMS

Adoubl
ebot
tom f
ormswhent
hepr
ice
mak
esal
owwi
thi
nadownt
rend,
andt
hen
pul
l
sbac
ktot
heups
ide.
Ont
henex
t
dec
li
net
hepr
ices
tal
l
sneart
hepr
iorl
ow,
t
henr
all
i
esabov
ethepul
l
bac
khi
gh.
It'
s
c
all
edadoubl
ebot
tom bec
aus
ethepr
ice
s
tal
l
edi
nthes
amear
eat
wic
e,unabl
eto
dr
opbel
owt
hats
uppor
tar
ea.

Thepat
ter
nisc
ompl
ete,
andt
rader
smay
t
akel
ongpos
iti
ons
,whent
hepr
icer
all
i
es
bac
kabov
ethepul
l
bac
khi
gh.
Forex
ampl
e,
i
fthepr
icedr
opst
o$47,
pul
l
sbac
kto$50,
dr
opst
o$46.
75,
thenar
all
ybac
kabov
e
$50s
ignal
sthatt
hepr
icewi
l
lcont
inuet
o
headhi
gher
.

BASI
CSOFTECHI
CALANALYSI
S
15