TECHNICAL ANALYSIS

In this blog we would learn about the types of triangles pattern and “How to trade them better?” In this blog I would mainly emphasise on important points that should be noted before trading the above triangles. There are 3 types of triangle namely - Ascending triangle  Descending triangle  Symmetrical triangle  ASCENDING TRIANGLE  Triangle which have a horizontal resistance and makes a higher low pattern as in the image below- DESCENDING TRIANGLE  Triangle which have a horizontal support and a lower high pattern as shown in the image below- SYMMETRICAL TRIANGLE   A triangle formed by making higher lows and lower high as shown in the image below- POINTS THAT SHOULD BE NOTED BEFORE TRADING A TRIANGLE PATTERN - For a triangle to be reliable price should cross the triangle multiple times filling the triangle, an empty triangle is not reliable and hence should be traded with cautious or not be traded at all.  Volume should be decreasing at the start and a spurt in volume near the breakout.

As in the previous post we have discussed the Flag Pattern in this we are going to discuss the CUP AND HANDLE pattern in the same simple way.  It’s identification is simple, as the name says a Cup like structure and its handle in the right side of cup as shown in the image below. The pattern can be traded in 2 ways -   At the time of breakout  At the retest of the pattern Best Performance -   There should be a pre 30% increase in the price level before the pattern is formed.  Atleast 5% increase from the breakout level is recommended before any retest.  Volume should be in decreasing mode as the Cup is formed and a spurt near the breakout level is a good sign.  The shorter the handle more reliable is the pattern, long handles are specifically to be avoided as they don’t give good results.   Duration is usually long from 6 to 65 weeks pattern.  One more important tip -   Higher left side of the CUP adds more reliability in the pattern (as shown in the image below).  IF YOU HAVE ANY QUER

  In this post we would cover - What is a Flag Pattern and its identification? How to trade the pattern? When the pattern performs best? Flag is a short slopping rectangle bounded by 2 parallel trend lines as seen in the image below.      Flag is formed after a Steep, Quick Price trend and a short usually from few days to less than 3 week of consolidation or a pause in its previous trend movement.   Volume decreases during the time of consolidation, however this is not a hard and fast rule.     After we find the pattern on above mentioned rule we can trade the pattern in 3 ways -  Place a trade on the  Lower/Upper trendline  of the pattern and wait for the breakout and target price.  Place the trade on  breakout of the trendline  for the target price.  Place the trade on  retest of the pattern  and wait for the target price.    Above mentioned strategies have their Pros and Cons with respect to Risk and Reward so choose wise

  Technical Analysis in simple words is -                     "Method to forecast  future price direction  through study of  historical  market data primarily based on Price and Volume" Unlike Fundamental Anlaysis which is based on  Value of Underlying Assest , technical analysis is purely based on historical data (price and volume) and completely ignores  Value  as its main assumption is  Market discounts everything  i.e current price incorporates the value of all the information available in public domain. Since technical analysis is based on Price and Volume technicians use different types of charts and apply various types of indicators to plot and analyse the data and decide its future movement. Different types of chart includes - 1. Price line chart 2. Candlestick chart  3.Point and Figure Chart  Of the above most commonly used chart is Candlestick Chart.  Various Indicators includes - 1.Relative Strength Index 2.MaCD 3.Stochastic 4.ADX 5.Movi