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Technical Analysis

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Showing 1-10 of 12 results
classical chart reversal pattern
Alok Daiya

Two strong price reversal patterns commonly used by traders

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 0 comment
November 15, 2017
0

In Technical Analysis, there are a number of classical chart patterns which includes triangle pattern, rectangle patterns, Head and Shoulder, cup and handle, etc. Today, we will discuss 2 strong reversal pattern which hold good in different time frames. Though, …

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Identify trend reversal using Doji
Alok Daiya

Identify trend reversal signal using variations of Doji patterns

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 0 comment
November 15, 2017
0

The Doji  is one of the most powerful signals in Candlestick trading which simply indicates that the bulls and the bears are at equilibrium (i.e. a state of indecision). The appearance of it at the end of an extended trend, …

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How to ytrade using MACD
Alok Daiya

Trading simplified using MACD indicator

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 0 comment
November 14, 2017
600

MACD is one of the simplest and most effective momentum indicators which was developed by Gerald Appel in the late seventies. The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from …

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How to trade using RSI
Alok Daiya

How to generate trading signal using RSI?

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 3 comments
November 14, 2017
3

Relative Strength Index was developed by j. Welles Wilder in the year 1977 and is a momentum based oscillators which measure the speed and change of price movement. The full abbreviation of RSI stands Relative Strength Index or indicator. RSI …

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Bullish and bearish Candlestick pattern
Alok Daiya

4 Commonly-used bullish and bearish reversal candlestick patterns

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 0 comment
November 13, 2017
1

There are large number of reversal candlestick pattern in Technical Analysis. Today, we will discuss some of the most commonly and popularly used bullish and bearish reversal candlestick patterns. Here’s a list of commonly used reversal patterns. Bullish Engulfing Bullish …

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role of oscillator in stock market
Alok Daiya

Role of Oscillator in stock market

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 0 comment
November 11, 2017
0

In technical analysis, oscillators are known as momentum indicator. We should keep in our mind that momentum is an indispensable part of a trend. A trend is made up of direction and momentum. A direction might be linear whereas a …

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Role of psychology in stock market
Alok Daiya

How does psychology play a role in Stock market?

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 3 comments
November 11, 2017
5

Psychology drives the market. Stock market on a broader view is driven by two psychological factors known as hope or greed and fear. The most interesting aspect is that people want to buy more and more as the price goes …

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Most traders consider candlestick charts to be more visually appealing and easy to interpret as compared to traditional bar charts. Moreover, the traders get a quick overview of Open, High, Low and Close data simply by looking at the candle. There are large number of candlestick patterns which are looked upon by the traders on a regular basis but the most commonly used candlestick patterns includes Hammer, Hanging man, Inverted Hammer and Shooting star pattern. All of this are very much look alike but they have a different implication at various location in the price chart. Understanding of different Candlestick patterns Now we will study them in little detail and also understand their significance. These are basically two pair of candlestick reversal pattern made up of small real body, one long shadow and very short to non-existent wick. They are classified simply on the basis of preceding price action and location of long shadow. The first pair includes Hammer and Hanging Man which consists of identical candlesticks with small bodies and long lower shadows. The second pair includes Shooting Star and Inverted Hammer, also contains identical candlesticks, except, in this case, they have small bodies and long upper shadows. The bullish or bearish nature of these candlesticks gets confirmed only by previous price action and further confirmation. The Hammer and Inverted Hammer form after a decline and are bullish reversal patterns, while the Shooting Star and Hanging Man form after an advance and are bearish reversal patterns. Hammer and Hanging Man The Hammer and Hanging Man are exactly same with the looks, but have different implications based on the preceding price action. Both the candle have small real bodies (either green or red), long lower shadows and short or non-existent upper shadows. Unlike other candlestick pattern, the previous move is very important with both Hammer and Hanging Man. Hammer is a bullish reversal pattern which is seen after a long decline and it also marks probable bottoms or support level. The hammer symbolises bullish revival since it indicates that the bears are trapped (denoted by long low) and may end up covering their short position resulting in aggressive buying. However, we may need confirmation in the form of expansion of volume, gap up or presence of long green candle which provide validity of the reversal. On the other hand, Hanging man is a bearish reversal pattern which marks probable top or resistance. After a strong up move, the appearance of Hanging man suggests that the selling pressure is about to go up. Even though after making the long low, the price closed higher but the selling pressure raised a question mark on the existing uptrend. However, unlike Hammer pattern, here also we require confirmation which can be in the form of gap down or long red candle on increased volumes. Inverted Hammer and Shooting Star The Inverted Hammer and Shooting Star look similar, but have different implications based on previous price action. Both candlesticks have small real bodies (red or black), long upper shadows and small or nonexistent lower shadows. These candlesticks also mark potential trend reversals, but you need a proper confirmation before taking positions. The Shooting Star is a bearish reversal pattern that forms after a long uptrend. A Shooting Star can mark a potential trend reversal or resistance level. The simple logic behind this pattern is that after making a long high, the stock closed almost near the bottom of candle thus trapping the bulls. This may result in aggressive unwinding of long position and end up long covering thus pushing prices lower. Bearish confirmation in the form of a gap down or long red candlestick on heavy volume signals the probable downtrend. The Inverted Hammer is a exact look alike of a Shooting Star, but forms after a downtrend. Inverted Hammers represent a potential trend reversal or support levels. Even though after making the long high, the price closed lower but the selling pressure raised an eyebrow on the existing downtrend. However, unlike Hammer pattern, here also we require confirmation which can be in the form of gap up or long green candle on increased volumes. Conclusion There are other candlestick patterns which works equally well in the market which we will discuss in the coming blog. However, trading simply on the basis of mere candlestick pattern is not enough but you need to get confirmation from other patterns or indicators to confirm your trade.
Alok Daiya

How to generate reversal signal using Hammer and related candlestick pattern?

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 3 comments
November 9, 2017
3

Most traders consider candlestick charts to be more visually appealing and easy to interpret as compared to traditional bar charts. Moreover, the traders get a quick overview of Open, High, Low and Close data simply by looking at the candle. …

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Support and resistance explained
Alok Daiya

A comprehensive study on Support-Resistance and Principle of Polarity

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 4 comments
November 7, 2017
4

Support and resistance shows key areas where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up). Supply is synonymous with bearish, bears and selling while demand is synonymous …

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gap Theory
Alok Daiya

Theory of gaps explained

  • Posted by Alok Daiya
  • Categories Innovation, Technical Analysis
  • Comments 2 comments
November 5, 2017
4

When there is a price difference between the two consecutive days, high and low, a gap is said to have created in the chart. Gaps are of two types- 1. Positive gaps or Bullish gap 2. Negative gap or Bearish …

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