TECHNICAL ANALYSIS DOW THEORY TRENDS CHART PATTERN ELLIOTT WAVE THEORY MATHEMATICAL INDICATORS DOW THEORY TRENDS CHART PATTERN ELLIOTT WAVE THEORY MATHEMATICALINDICATORS

1. TECHNICAL ANALYSIS

2. MEANING OF TECHNICAL ANALYSIS
 Technical analysis is a security
analysis methodology for forecasting the
direction of prices through the study of
past market data, primarily price and
volume

3.  A fundamental principle of technical analysis is
that a market's price reflects all relevant
information, so their analysis looks at the history
of a security's trading pattern rather than external
drivers such as economic, fundamental and news
events. Therefore, price action tends to repeat
itself due to investors collectively tending toward
patterned behavior – hence technical analysis
focuses on identifiable trends and conditions

4. DOW THEORY
 Chapels Dow formulated a hypothesis that the
stock market does not move on a random basis
but is influenced by three distant cyclical trends
that guide its direction
 According to Dow’s theory, the market has three
movement and this movement are simultaneous in
nature .this movement are primary movement
,secondary movement ,and minor movement

5. PRIMARY TREND
 The primary movement is the long range cycle that
carries the entire market up or down .this is a long
run trend in market
 In Dow theory, the primary trend is the major trend
of the market, which makes it the most important
one to determine. The primary trend will also
impact the secondary and minor trends within the
market

6. SECONDARY TREND
 A secondary trend moves in the opposite direction of the
primary trend, or as a correction to the primary trend. For
example, an upward primary trend will be composed of
secondary downward trends
 This is the movement from a consecutively higher high to a
consecutively lower high. In a primary downward trend the
secondary trend will be an upward move, or a rally.
 This is the movement from a consecutively lower low to a
consecutively higher low

7. MINOR TREND
 The last of the three trend types in Dow theory is the minor trend,
which is defined as a market movement lasting less than three
weeksThe minor trend is generally the corrective moves within a
secondary move, or those moves that go against the direction of
the secondary trend.
 Due to its short-term nature and the longer-term focus of Dow
theory, the minor trend is not of major concern to Dow theory
followers. But this doesn't mean it is completely irrelevant; the
minor trend is watched with the large picture in mind, as these
short-term price movements are a part of both the primary and
secondary trends

9. BASIC PRINCIPLES OF TECHNICAL
ANALYSIS
 The market value of a security is related to demand and
supply factors operating in the market
 Security price behave in manner that their movement is
continuous in a particular direction for some length of
time
 Trend in stock price have been seen to change when there
is a shift in the demand and supply factor
 The shift in demand and supply can be detected through
charts prepared specially to show market action
 And these charts are used by analysts to make forecasts
about the movement of price in future .

10. PRICE CHART
Three type of price chart are currently used by
technical analysts
 LINE CHART
 BAR CHART
 CANDLESTICK CHART

11. LINE CHART

12. BAR CHART

13. CANDLESTICK CHART

14. Trends
 The meaning of trend in finance isn't all that
different from the general definition of the term - a trend
is really nothing more than the general direction.
 A trend represents a consistent change in prices (i.e. a
change in investor’s expectations)
 A trend line is a simple charting technique that adds a
line to a chart to represent the trend in the market or a
stock

15. Types of Trend
 RISING TREND

16.  FALLING TREND

17. CHART PATTERN

18. Support and Resistance
 Support level is a price level where the price tends to find support as it is going down

19. Support and Resistance
 Resistance Level is a price level where the price tends to find resistance as it is going
up

20. Reversal Patterns
 Reversal Patterns
Head and Shoulders, Rounding tops and
bottoms, Triangles, Rectangles, Double and triple
tops and bottoms, diamonds, wedges etc
 Continuation Patterns
Pennants and flags etc

21. Head and Shoulders

22. Triangles

23. Flags and Pennants

24. ELLIOTT WAVE THEORY
 The Elliott Wave Principle is a form of technical analysis that traders use to
analyze financial market cycles and forecast market trends by identifying extremes
in investor psychology, highs and lows in prices, and other collective factors.

25. MATHEMATICALINDICATORS
Averages
SIMPLE MOVING AVERAGE
The simple moving average is an arithmetic mean of price
data. It is calculated by summing up each interval's price
and dividing the sum by the number of intervals covered by
the moving average. For instance, adding the closing prices
of an instrument for the most recent 25 days and then
dividing it by 25 will get you the 25 day moving average.

26. Exponential Moving Average
 Exponential Percentage = 2
----------------------------
Time Periods(n) + 1
Ex: for 3 day EMA,
E % = 2/(3 + 1)
E % = 2/4 = 0.5

27. OSCILLATORS
 Oscillators are mathematical indicators with the help of the closing price
data. They help to identify overbought and oversold conditions and also the
possibility of trend reversals. These indicators are called oscillators because
they move across a reference point
RATE OF CHANGE INDICATOR
Measures rate of change of the current price as compared to the price a certain
number of days or week back
ROC = CURRENT PRICE
------------------------ 1
PRICE n period ago

28.  RELATIVE STRENGTH INDEX (RSI)
This is a powerful indicators that signals buying and selling opportunites ahead
of the market.
RSI =100 –[100/(1+RS)]
WERE
AVERAGE GAIN PER DAY
RS = -----------------------------
AVERAGE LOSS PER DAY