Technical Analysis
Presented By,
“SUMMER of 69”
Arijit Das (03), Srijit Dutta (), Parakram Majumder(), Tithi Shaoo(),
Eshita Sadhukhan (), Atanu Ghosh().
Technical Analysis
It assists investor to buying or selling ant stock. For example, an analysis may set his/her own filter rule
at 15%. In that particular case, if any stock moves up by 15% from subsequent low, then buy the stock. If
any stock moves down by 15% from subsequent high, then sell the stock. So, main objective is to set the
percentage of the filter rule.
Unlike fundamental analysis, technical analysis is not heavily dependent on company’s financial
statement. Problems of financial system:
o Lack of information
o Many physiological and other non- quantifiable factors do not show in financial
statement.
Trends are easily found: Taking a look at a moving average line quickly displays a price that is
trending or stuck in a range
Challenges to the basic assumptions like empirical test of Efficient Market Hypothesis (EMH)
show that price does not move in trends.
Technical Analysis
Price
Peak
Flat Trend
Channel
Declining
Trend Channel
Sell Point
Declining
Rising Trend
Trend Channel
Channel
Rising Trend
Channel
Trough
Trough
Buy point
Time
Technical Analysis
Technical Analysis :-
o Bar Chart : a graph that indicates the high, low, and closing price movements for a stock
during a specified period
o Trend line penetration: the point at which the trading line crosses the trend line
o Dow theory: a technique used to predict reversals in market patterns by examining the
movements of the Dow Jones Industrial Average and the Dow Jones Transportation
Average
o Moving average theory: stock price averages for a fixed time frame, say 100 days,
computed for a particular period of time
o Market breath indicators: measure the trading volume and the range of trading that
takes place in the market
Technical Analysis
o Advance / decline line: a graph that depicts the results computing the difference
between the number of advancing stocks and the number of declining stocks over some
time period
o Sentiment indicators: technical indicators that are used to monitor the “mood” or
psychology of the market
Value of Stocks
Growth of Stocks
Trends:
Up-trends
Down- trends
Rang –bound
Trend behavior:
A famous quote about trends advises that "The trend is your friend”.
How can you organize the endless stream of stock chart data into a logical format?
Pattern analysis gains its power from the tendency of charts to repeat the same bar formations
over and over again.
Complex Corrections:
Flat
Irregular
Triangle