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1. Vol.01 www.forex2tradeindia.weebly.com venKEY SUREsh Praveen TECHNICAL Analysis Logical Thinking towards Price Action forex2tradeindia Your Success Story Begins from HERE http://forex2tradeindia.weebly.com/ Email : - forex2tradeindia@yahoo.com

2. Technical Analysis Index : Analysis Methods Definition of Technical Analysis Dow Theory Gann’s Trading Methods Trend Trend Reversal Trend Lines Supports & Resistance Patters & Recognition Candles and Patterns RSI (Relative Strength Index) MACD (Moving Averages Convergence and Divergence) Stochastics ADX www.forex2tradeindia.weebly.com " TIME N SMILE " ARE THE TWO CRUCIAL THINGS IN OUR LIFE . " SOME TIMES, TIME MAKES US FORGET SMILE AND SOME TIMES SOME ONES SMILE MAKE US FORGET TIME"

3. Definition-Tech. Analysis • Technical Analysis - Study of prices with the help of Chart • Purpose - to understand the future movement of the price. • Where it works: equities, derivatives, commodities and where free trades with volumes • Where it doesn’t work –Lower Volumes and Less Trade • Those are operator based. • Here upper / lower circuits occur with out valid reasons • Buying/Selling opportunities are very less Alternatively : Technical analysis is the study of a stock, or the market as a whole, strictly by using the price and volume history of a stock. Technical analysis uses little or no information about the actual business behind the stock. The common belief is that a stock price represents all known information about a stock. Technical analysis is an alternative to fundamental analysis. Despite all the fancy and exotic tools it employs: • Technical analysis really just studiessupply& demandin a market in an attempt to determine what direction/trend, will continue in the future. • In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components www.forex2tradeindia.weebly.com

4. ANALYSIS METHODS Fundamental Analysis Long-Term Perspective/Averaging/SIPs Factors Supports Resistence Pivots High/Low breaks Patterns Break outs Technical Analysis Averages & Indicators Wave Analysis 80 % of Technicals function …it indicates perfect following is 80% success rate Day-swing Trading Fractal Analysis Divergence Analysis www.forex2tradeindia.weebly.com Reviews / Corp. actions News Analysis Less Time Immediate Decision Keen Observe Spot news / Forecasts Market opens with AMETURES Close with EXPERTS.. closing Important. Inventories Never chase PRICE.. Don’t average when in LOSS Trial SL for Profit locking Finally

5. BASIC ASSUMPTIONS of Tech. analysis: (2 of 2) • History REPEAT it-self: It is another important remise on which this subject realize heavily. Human psychology comes into play here. It is assume that human psychology does not tempt to change under similar circumstances.. He is expected to behave in the same manner as he had done in the past. • Prices move in TRENDS(our Best FRIENDS) The basic idea of technical analysis is to identify the proper trend. In fact early identification of the trend help analyst to trade in favors of the trend. So it is said in technical’s that “trend is your best friend”. • Trend : movement of price action basing on different time frames • Those trend - time frames are • Long term trends • Short term trends • Medium term trend (Intermediatory trend) www.forex2tradeindia.weebly.com

6. Dow Theory-page 1 Dow Theory: Inventor is ONE…Followers are MANY DOW invented …Followers are ANALYSTS Note : Should look in monthly Chart based on Closing Chart 1. Average discount everything :(Index-nifty, dow, etc) ) 2. Market has 3 trends : Tide – The long tar trend of the market can be compared to the tide in an ocean. Usually last more than a year.-(long-term trend/Main trend/Primary trend) Wave- The intermediate trend of the market usually lost 3 weeks to 3 months can be compare to the wave within the tide (Intermediate trend/mid-term trend) Ripples- Short term trend of the market usually last less than 21 days it is also known as short-term trend/minor trend. www.forex2tradeindia.weebly.com

7. Dow Theory-page 2 Dow Theory: 3. Major trends have 3-phases. Accumulations (insider market/well and early informed) • General conditions of the economy looks very depressive, • Economy looks uninteresting to most of the market participants especially crowds. • The crowed become very bearish • Media continue publishing bearish stories and corporate deliver bad earning, • But those who are the fore-sighted (early known) start accumulating the stock.. Consolidation (TECHNICAL INTEREST) – • General conditions of the economy looks stable. • Technical trend followers starts participating because Index generate Dow buy signal at this point of time. Distribution (CROWED BUYING)– • General conditions of the economy looks very attractive than ever before and this time crowd starts participating. • Media and Market gurus continue publishing bullish stories. • Corporate earnings looks robust (very healthy) at that point of time foresighted investors starts booking their profits (distributions –selling of accumulated stocks) Because they bought shares when nobody want to buy… now they selling shares where crowed want to buy. www.forex2tradeindia.weebly.com

8. Dow Theory-page 3 Dow Theory: 4. Both the averages must confirm each other : • Dow stated that the overall health of the economy depends on Automobile Sector & Transportation sector. • If we have found any divergence between the main index and auto index…it signifies the fact that the healthy economy in not good. • So auto index should perform alongwith the main index. Note :In Indian market we can compare it to the BSE-auto Index (DOWNJONES RIAL ROAD) with Nifty/Sensex. (DOWJONES INDEX) 5. Volume must confirm the trend: • In a healthy uptrend volume should increase in favor of the trend. • If price, rising without volume then 1 should not trust it as a healthy behavior of the price action rather it is the first signal of DISTRIBUTIONs. 6. Trends once in motions shall be assumed to be continue unless it gives a reversal signal. www.forex2tradeindia.weebly.com

9. Trends Trends are our BEST FRIENDS Trend - The Direction of price movement is known as “Trend”. Price at a particular of time has got (3) options. It can either go up or go down or remain static. Hence Trend can be categorized as : • Up Trend : A trend is said to be so long on the price action keeps making higher tops and higher bottoms • Down Trend : A trend is said to be so long on the price action keeps making lower tops &lower bottoms • Choppy Trend/Sideways: In a choppy trend one can’t identify the clear-cut tops and bottom rather price moves in straight line passion. So this case does not take any decision when price moves in sideways manner. Decision Making : Just patiently wait for valid break-out with volumes or valid break-down (no need of volumes) www.forex2tradeindia.weebly.com

10. Trend Reversal According to the ‘law of nature’ nothing last for ever. • Like wise an uptrend will not remain up for all time it has to reverse the direction at a point of time which is known as Trend Reversal… • Violation of the last established higher bottom gives us the first signal that the existing uptrend is getting into trouble. • Formation of lower tops and lower bottoms gives us the clear-cut idea that the existing uptrend is consolidating to down-trend. Bearish Reversal:- comes after a bullish trend follower lower tops and lower bottoms. Bullish Reversal : - come after a Bearish Trend with higher tops and higher bottoms www.forex2tradeindia.weebly.com

11. Counter Trend • Price generally can’t rise or falls even/line straight fashion. • It has to reverse the direction to gain fresh energy and momentum with the fresh energy and momentum. • Price again goes to its original direction which is tide or primary trend… • So we can explain counter trend as ‘the trend which goes or oppose the main trend is known as counter trend’. • Counter trend gives birth to tops and bottoms in the market. Counter trends can be categorized as: • Correction –means market in bull run/ occur in bull run • Pull back - means market in bear run / occurs in bear run Trading Strategy @ counter trend: • When main trend is up buy at every corrective dips & • Where main trend is down sell at every pull-back rally www.forex2tradeindia.weebly.com

12. Trend Lines page : 1 Trend Lines Trend Lines - are those lines which are drawn in the chart either by connecting • the Rising Bottoms (up-trend line) • the Falling Tops (down-trend line) • We can draw trend line in Bar Chart and Line Chart • Violations of TREND line alerts us probable trend reversal. • Trend line shows the support of the stock and at support level liquidity and inflow comes until it come to expensive and liquidity will stop. • The main significant uptrend line is ‘it acts as a STRONG support / resistance as the case may be’ www.forex2tradeindia.weebly.com

13. Trend Lines page : 2 Trend Lines Validity of Trend-line: 1. Time-span (longer the trend line would be strength-stronger-strongest) We have to consider how old a trend-line… in fact long the time span stronger it will be. • No. of Attacks : 3. Sloping (angle/degree) – an ideal trend-line should be 45 degrees/angle • A trend line which showing below 45 degree means it is not a valid trend • A trend line which is above or around 60 degree means the price of such stock is running and ready to sour/need retracement. • Trend-line with the range around 45 degrees would be accurate. www.forex2tradeindia.weebly.com