In-Depth Analysis of Market Statistics and Chart Patterns for Informed Investment Decisions
Explore the world of market analysis through technical and fundamental approaches, including types of charts, chart patterns, and key assumptions. Discover how to interpret market data to make sound investment decisions.
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Presentation Transcript
Introduction Analysis of statistics generated by market activity such as past price and volume to come up with reasonable outcome in future using charts as a primary tool. Should I take a long position? Should I take a short position? What is going to be the price tomorrow, next week or next year?
Technical Analysis Technical analysis involves a study of market generated data like prices and volumes to determine the future direction of price movement.
Fundamental Analysis Technical Analysis WHAT TO BUY WHEN TO BUY Is a pure science form, involves preset parameters for investment decision support system Involves study of balance sheet and profit/loss account. Signals generated by corporate actions. Is a medley of science and art. No algebraic/empirical formulae Involves study of price charts and oscillators derived thereon Signals generated by market actions on prices.
Assumptions The market discounts everything Prices move in trends History tends to repeat itself
Types of Charts There are mainly four types of charts Line Charts Bar Charts MOVING AVERAGES Point and Figure Charts
Type of Charts Line chart
Type of Charts Bar Chart
Type of Charts Volume Bar Chart
Type of Charts Candlestick Chart
Chart Patterns Head and Shoulders Pattern Inverse Head and Shoulders Pattern Triangle Pattern Flags Pattern Double Top Pattern Double Bottom Formation
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 trendline is a simple charting technique that adds a line to a chart to represent the trend in the market or a stock.
Types of Trend Uptrends
Types of Trend Downtrend
Types of Trend Sideways Trend
Support and Resistance Support level is a price level where the price tends to find support as it is going down
Support and Resistance Resistance Level is a price level where the price tends to find resistance as it is going up
Importance of Support and Resistance Support and resistance analysis is an important part of trends because it can be used to make trading decisions and identify when a trend is reversing
Aware: Support and Resistance levels Support and Resistance levels are highly volatile Traders should not buy and sell directly at these points as there may be breakout also
Breakout The penetration of support and resistance level is called breakout
Traders Remorse Returning to the level of support or resistance after a breakout is called trader s remorse.
