A

PROJECT REPORT
ON
TECHINICAL ANALYSIS
BACHELOR OF MANAGEMENT STUDIES
SEMESTER V
(2016 - 2017)
Submitted
In partial fulfillment of the requirements for the award of degree of
TYBMS (Bachelor of Management Studies.)
University of Mumbai.
Submitted by

ROHAN.S.MUDALIAR
Under the guidance of
ASST. PROF MRS. NAIRA . MOTWANI

S.I.C.E.S DEGREE COLLEGE OF ARTS, SCIENCE AND

COMMERCE.
JAMBHUL PHATA, K.B.Rd.,
AMBARNATH (WEST), THANE 421505.
2016-2017

CERTIFICATE
This is to certify that MR. ROHAN . S . MUDALIAR of TYBMS, Semester - V(20162017) has successfully completed the project on TECHNICAL ANALYSIS under the
guidance of PROF. MRS. NAIRA . MOTWANI

_______________________________ ____________________________
PROF. MS. SUPARNA DUTTA MAM

(Self-Financing Course Coordinator)

_____________________________
PROF. MRS . NAIRA . MOTWANI
(Project Guide)

PROF. DR. SATISH BHALERA SIR

(Principal)

_____________________________
EXTERNAL EXAMINER

DECLARATION

I ROHAN .S . MUDALIAR, student of TYBMS Semester - V hereby declare

that I have completed the project on TECHNICAL ANALYSIS.
I further declare that the information imparted is true and fair to the best of my
knowledge.

SIGNATURE
ROHAN . S . MUDALIAR
ROLL NO. TMS-16013

ACKNOWLEDGEMENT

Preparing the project on (TECHNICAL ANALYSIS ) has given me extensive practical

knowledge related to the course.
I would like to first thank our principal PROF. DR. SATISH BHALERAO SIR, for his
valuable support in preparing this project.
I express my deep sense of gratitude to the course coordinator, ASST. PROF. MS.
SUPARNA DUTTA MAM for the valuable guidance and support during my project work
I am thankful to my ASST. PROF MRS . NAIRA . MOTWANI for providing me the
guidance throughout the course of this project. I am also thankful to him/her for patiently
critically evaluating the content of this project.
I would like to take this opportunity to express my gratitude to all the staff of the library and
the computer lab for their support.

Sr no.

Content

1.

Page no.
1

Executive Summary
2.

2-3
Introduction

3.

4-6
History of Cashless Society

4.

5.

Cashless Society Instruments:

Credit Card

7-13

ATM/Debit Card
Smart Card
Smartphones as Mobile Wallets

14-18
19-23
24-26

Stored-value Cards
Electronic Cash

27-28
29-30

Point of Sale Terminal

31-34

Implants

35

Impact of Current Monetary System and its

Drawback

36

6.

37-40
Growth of Cashless Society in India

7.

41
Possible Impacts of Cashless Society

8.

42
Negative Impacts of Cashless Society

9.

43
Going Cashless Around the World

10.

44
Objective of the Study

11.

44
Scope of the Study

12.

45
Research Methodology

13.

46-58
Data Analysis and Interpretation

14.

59
Limitation of the Study

15.

60
Conclusion

16.

61
Bibliography

17.

62
Annexure

Technical analysis is a financial term used to denote a security analysis for

forecasting the direction of prices through the study of past market data, primarily
price and volume. Behavioral economics and quantitative analysis incorporate
technical analysis.
The principles of technical analysis are derived from hundreds of years of financial
market data. Dow Theory is based on the collected writings of Dow Jones co-founder
and editor Charles Dow, and inspired the use and development of modern technical
analysis at the end of the 19th century. Other pioneers of analysis techniques
include Ralph Nelson Elliott, William Delbert Gann and Richard Wyckoff who
developed their respective techniques in the early 20th century. More technical tools
and theories have been developed and enhanced in recent decades, with an
increasing emphasis on computer-assisted techniques using specially designed
computer software.
While fundamental analysts examine earnings, dividends, new products, research
and the like, technical analysts examine what investors fear or think about those
developments and whether or not investors have the wherewithal to back up their
opinions; these two concepts are called psych (psychology) and supply/demand.
Technicians employ many techniques, one of which is the use of charts. Using
charts, technical analysts seek to identify price patterns and market trends in
financial markets and attempt to exploit those patterns. Technicians use various
methods and tools, the study of price charts is but one.
Technicians using charts search for archetypal price chart patterns, such as the wellknown head and shoulders or double top/bottom reversal patterns, study technical
indicators, moving averages, and look for forms such as lines of support, resistance,
channels, and more obscure formations such as flags, pennants, cup and
handle patterns.
Technical analysts also widely use market indicators of many sorts, some of which
are mathematical transformations of price, often including up and down volume,
advance/decline data and other inputs. These indicators are used to help assess
whether an asset is trending, and if it is, the probability of its direction and of
continuation. Technicians also look for relationships between price/volume indices
and market indicators. Examples include the relative strength index, and MACD.
There are many techniques in technical analysis. Adherents of different techniques
(for example, candlestick charting, Dow Theory, and Elliott wave theory. may ignore
the other approaches, yet many traders combine elements from more than one
technique. Some technical analysts use subjective judgment to decide which
pattern(s) a particular instrument reflects at a given time and what the interpretation
of that pattern should be. Others employ a strictly mechanical or systematic
approach to pattern identification and interpretation.
Technical analysis is frequently contrasted with fundamental analysis, the study
of economic factors that influence the way investors price financial markets.
Technical analysis holds that prices already reflect all such trends before investors
are aware of them. Uncovering those trends is what technical indicators are
designed to do, imperfect as they may be. Fundamental indicators are subject to the

same limitations, naturally. Some traders use technical or fundamental analysis

exclusively, while others use both types to make trading decisions which conceivably
is the most rational approach.
Users of technical analysis are often called market technicians.Some prefer the term
market technical analyst or chartist.

Principles
1. Technicians say that a market's price reflects all relevant information, so their
analysis looks at the history of a security's trading pattern rather than external drivers
such as economic, fundamental and news events. Price action also tends to repeat
itself because investors collectively tend toward patterned behavior hence
technicians' focus on identifiable trends and conditions.
2. Technical analysts believe that prices trend directionally, i.e., up, down, or
sideways (flat) or some combination. The basic definition of a price trend was
originally put forward by Dow Theory.
3. Technical analysts believe that investors collectively repeat the behavior of the
investors that preceded them. To a technician, the emotions in the market may be
irrational, but they exist. Because investor behavior repeats itself so often,
technicians believe that recognizable (and predictable) price patterns will develop on
a chart.
Technical analysis is not limited to charting, but it always considers price trends. For
example, many technicians monitor surveys of investor sentiment. They gauge the
attitude of market participants, specifically whether they are bearish or bullish.
Technicians then determine whether a trend will continue or if a reversal could
develop; they are most likely to anticipate a change when the surveys report extreme
investor sentiment. Surveys that show overwhelming bullishness, for example, are
evidence that an uptrend may reverse; the premise being that if most investors are
bullish they have already bought the market (anticipating higher prices). And
because most investors are bullish and invested, one assumes that few buyers
remain. This leaves more potential sellers than buyers, despite the bullish sentiment.
This suggests that prices will trend down, and is an example of contrarian trading.
Although technical analysis can be applicable to all financiall assests, it might be
possible that some methods are more suitable in cetain markets, meaning that no
method is universally effective over all the markets.
CONCEPTS
Resistance a price level that may prompt a net increase of selling activity.
Support a price level that may prompt a net increase of buying activity.

Breakout the concept whereby prices forcefully penetrate an area of

prior support or resistance, usually, but not always, accompanied by an increase in
volume.
Trend the phenomenon by which price movement tends to persist in one direction
for an extended period of time.
Chart pattern distinctive pattern created by the movement of security prices on a
chart.
Dead cat bounce the phenomenon whereby a spectacular decline in the price of a
stock is immediately followed by a moderate and temporary rise before resuming its
downward movement.
Elliott wave principle and the golden ratio to calculate successive price movements
and retracements.
Fibonacci ratios used as a guide to determine support and resistance.
Types of charts
Line chart Connects the closing price values with line segments.
Open-high-low-close chart OHLC charts, also known as bar charts, plot the span
between the high and low prices of a trading period as a vertical line segment at the
trading time, and the open and close prices with horizontal tick marks on the range
line, usually a tick to the left for the open price and a tick to the right for the closing
price.
Candlestick chart Of Japanese origin and similar to OHLC, candlesticks widen
and fill the interval between the open and close prices to emphasize the open/close
relationship. In the West, often black or red candle bodies represent a close lower
than the open, while white, green or blue candles represent a close higher than the
open price.
Overlays
Overlays are generally superimposed over the main price chart.
Resistance a price level that may act as a ceiling above price.
Support a price level that may act as a floor below price.
Trend line a sloping line described by at least two peaks or two troughs.
Channel a pair of parallel trend lines.
Moving average the last n-bars of price divided by "n" -- where "n" is the number
of bars specified by the length of the average. A moving average can be thought of
as a kind of dynamic trend-line.
Bollinger bands a range of price volatility.
Parabolic SAR Wilder's trailing stop based on prices tending to stay within
a parabolic curve during a strong trend.
Pivot point derived by calculating the numerical average of a particular currency's
or stock's high, low and closing price.

Price-based indicators
These indicators are generally shown below or above the main price chart.
Average Directional Index a widely used indicator of trend strength
MACD moving average convergence/divergence
Momentum the rate of price change
Relative Strength Index (RSI) oscillator showing price strength
Stochastic oscillator close position within recent trading range

Volume-based indicators
Accumulation/distribution index based on the close within the day's range
Money Flow the amount of stock traded on days the price went up
On-balance volume the momentum of buying and selling stocks

MARKET ANALYSIS DOW THEORY

Charles Dow developed the Dow Theory from his analysis of market price action in
late 19th century.
Six basic tenets of Dow Theory
1. The market has three movements
(1) The "main movement", primary movement or major trend may last from
less than a year to several years. It can be bullish or bearish. (2) The "medium
swing", secondary reaction or intermediate reaction may last from ten days to
three months and generally retraces from 33% to 66% of the primary price
change since the previous medium swing or start of the main movement. (3)
The "short swing" or minor movement varies with opinion from hours to a
month or more. The three movements may be simultaneous, for instance, a
daily minor movement in a bearish secondary reaction in a bullish primary
movement.
2. Market trends have three phases
Dow Theory asserts that major market trends are composed of three phases:
an accumulation phase, a public participation phase, and a distribution phase.
The accumulation phase (phase 1) is a period when investors are actively
buying (selling) stock against the general opinion of the market. During this
phase, the stock price does not change much because these investors are in
the minority -absorbing stock that the market at large is supplying . Eventually,

the market catches on to these astute investors and a rapid price change
occurs (phase 2). This occurs when trend followers and other technically
oriented investors participate. This phase continues until rampant speculation
occurs. At this point, the astute investors begin to distribute their holdings to
the market (phase 3).
3. The stock market discounts all news
Stock prices quickly incorporate new information as soon as it becomes
available. Once news is released, stock prices will change to reflect this new
information.
4. Stock market averages must confirm each other
To Dow,, if manufacturers' profits are rising, it follows that they are producing
more. If they produce more, then they have to ship more goods to consumers.
Hence, if an investor is looking for signs of health in manufacturers, he or she
should look at the performance of the companies that ship the output of them
to market, the railroads. The two averages should be moving in the same
direction. When the performance of the averages diverge, it is a warning that
change is in the air.
5. Trends are confirmed by volume
Dow believed that volume confirmed price trends. When prices move on low
volume, there could be many different explanations why. An overly aggressive
seller could be present for example. But when price movements are
accompanied by high volume, Dow believed this represented the "true"
market view. If many participants are active in a particular security, and the
price moves significantly in one direction, Dow maintained that this was the
direction in which the market anticipated continued movement. To him, it was
a signal that a trend is developing.
6. Trends exist until definitive signals prove that they have ended
Dow believed that trends existed despite "market noise". Markets might
temporarily move in the direction opposite to the trend, but they will soon
resume the prior move. The trend should be given the benefit of the doubt
during these reversals. Determining whether a reversal is the start of a new
trend or a temporary movement in the current trend is not easy.Technical
analysis tools attempt to clarify this but they can be interpreted differently by
different investors.
The Three Stages of Primary Bull Markets and Primary Bear Markets
Primary Bull Market - Stage 1 Accumulation

The first stage of a bull market is largely indistinguishable from the last reaction rally
of a bear market. Pessimism, which is excessive at the end of the bear market, still
reigns at the beginning of a bull market. It is a period when the public is out of
stocks, the news from corporate world is bad and valuations are usually at historical
lows. However, it is at this stage that the so-called "smart money" begins to
accumulate stocks. This is the stage of the market. when those with patience see
value in owning stocks for the long haul. Stocks are cheap, but nobody seems to
want them. This is the stage where Warren Buffet stated in the summer of 1974 that
now was the time to buy stocks and become rich. Everyone else thought he was
crazy.
In the first stage of a bull market, stocks begin to find a bottom and quietly firm up.
When the market starts to rise, there is widespread disbelief that a bull market has
begun. After the first leg peaks and starts to head back down, the bears come out
proclaiming that the bear market is not over. It is at this stage that careful analysis is
warranted to determine if the decline is a secondary movement (a correction of the
first leg up). If it is a secondary move, then the low forms above the previous low.
When the previous peak is surpassed, the beginning of the second leg and a primary
bull will be confirmed.
Primary Bull Market - Stage 2 - Big Move
The second stage of a primary bull market is usually the longest, and sees the
largest advance in prices. It is a period marked by improving business conditions and
increased valuations in stocks. Earnings begin to rise again and confidence starts to
mend. This is considered the easiest stage to make money as participation is broad
and the trend followers begin to participate.
Primary Bull Market - Stage 3 - Excess
The third stage of a primary bull market is marked by excessive speculation and the
appearance of inflationary pressures. (Dow formed these theorems about 100 years
ago, but this scenario is certainly familiar.) During the third and final stage, the public
is fully involved in the market, valuations are excessive and confidence is
extraordinarily high. This is the mirror image to the first stage of the bull market. A
Wall Street axiom: When the taxi cab drivers begin to offer tips, the top cannot be far
off.

Primary Bear Market - Stage 1 - Distribution

Just as accumulation is the hallmark of the first stage of a primary bull market,
distribution marks the beginning of a bearmarket. As the "smart money" begins to
realize that business conditions are not quite as good as once thought, they start to
sell stocks. The public is still involved in the market at this stage and become willing
buyers. There is little in the headlines to indicate a bear market is at hand and
general business conditions remain good. However, stocks begin to lose a bit of their
luster and the decline begins to take hold.While the market declines, there is little
belief that a bear market has started and most forecasters remain bullish. After a
moderate decline, there is a reaction rally (secondary move) that retraces a portion

of the decline.Reaction rallies during bear markets were quite swift and sharp; a
large percentage of the losses would be recouped in a matter of days or perhaps
weeks. This quick and sudden movement would invigorate the bulls to proclaim the
bull market alive and well. However, the reaction high of the secondary move would
form and be lower than the previous high. After making a lower high, a break below
the previous low would confirm that this was the second stage of a bear market.
Primary Bear Market - Stage 2 - Big Move
As with the primary bull market, stage two of a primary bear market provides the
largest move. This is when the trend has been identified as down and business
conditions begin to deteriorate. Earnings estimates are reduced, shortfalls occur,
profit margins shrink and revenues fall. As business conditions worsen, the sell-off
continues.
Primary Bear Market - Stage 3 - Despair
At the top of a primary bull market, hope springs eternal and excess is the order of
the day. By the final stage of a bearmarket, all hope is lost and stocks are frowned
upon. Valuations are low, but the selling continues as participants seek to sell no
matter what. The news from corporate world is bad, the economic outlook bleak and
not a buyer is to be found. The market will continue to decline until all the bad news
is fully priced into stocks. Once stocks fully reflect the worst possible outcome, the
cycle begins again.

Elliott Wave Theory

The Elliot Wave Theory represents a development of the well-known Dow theory. It
applies to any freely traded assets, liabilities, or goods (shares, obligations, oil, gold,
etc.). The Wave Theory was proposed by accountant and business expert Ralph
Nelson Elliott in his study titled "The Wave Principle" published in 1938.
The Elliott Wave Theory is based on a certain cyclic laws in human behavior
psychology. According to Elliott, the market price behavior can be clearly estimated
and shown in the chart as waves (wave is here an explicit price move). The Elliott
Wave Theory says that the market can be in two large phases: Bull Market and Bear
Market.
Elliott proposes, as well, that all price moves on the market are divided into:
five waves in the direction of the main trend (waves 1 to 5 )+three corrective waves
(waves A, B, C )
Fibonacci Numbers provide the mathematical foundation for the Elliott Wave Theory.
Fibonacci numbers play an important role in the construction of the complete market
cycle described with the Elliott's waves. Each of the cycles Elliott defined are
comprised of a total wave count that falls within the Fibonacci number sequence.

Wave

Classical Relations between Waves

0.382, 0.5, or 0.618 of Wave 1 length

1.618, 0.618, or 2.618 of Wave 1 length

0.382 or 0.5 of Wave 1 length

0.382, 0.5, or 0,618 of Wave 1 length

1, 0.618 or 0.5 of of Wave 5 length

0.382 or 0.5 of Wave A length

1.618, 0.618, or 0.5 of Wave A length

Wave 1-Happens when the market psychology is practically bearish. News are still
negative. As a rule, it is very strong if it represents a leap (change from bear trend to
the bull trend, penetration into the might resistance level, etc.). In a state of
tranquillity, it usually demonstrates insignificant price moves in the background of
general wavering.
Wave 2-Happens when the market rapidly rolls back from the recent, hard-won
profitable positions. It can roll back to almost 100% of Wave 1, but not below its
starting level. It usually makes 60% of Wave 1 and develops in the background of
prevailing amount of investors preferring to fix their profits.
Wave 3-Is what the Elliott's followers live for. Rapid increase of investors' optimism is
observed. It is the mightest and the longest wave of rise (it can never be the
shortest) where prices are accelerated and the volumes are increased. A typical
Wave 3 exceeds Wave 1 by, at least, 1.618 times, or even more.
Wave 4-Often difficult to identify. It usually rolls back by no more than 38% of Wave
3. Its depth and length are normally not very significant. Optimistic moods are still
prevailing in the market. Wave 4 may not overlap Wave 2 until the five-wave cycle is
a part of the end triangle.

Wave 5-Is often identified using momentum divergences. The prices increases at
middle-sized trade volumes. The wave is formed in the background of mass
agiotage. At the end of the wave, the trade volumes often rise sharply.
Wave A-Many traders still consider the rise to make a sharp come-back. But there
appear some traders sure of the contrary. Characteristics of this wave are often very
much the same as those of Wave 1.
Wave B-Often resembles Wave 4 very much and is very difficult to identify. Shows
insignificant movements upwards on the rests of optimism.
Wave C-A strong decreasing wave in the background of general persuasion that a
new, descreasing trend has started. In the meantime, some investors start buying
cautiously. This wave is characterized by high momentum (five waves) and
lengthiness up to 1.618-fold Wave 3.
Rule 1: Wave 2 cannot retrace more than 100% of Wave 1.
Rule 2: Wave 3 can never be the shortest of the three impulse waves.
Rule 3: Wave 4 can never overlap Wave 1.

Fibonacci retracement
It is a very popular tool among technical traders and is based on the
key numbers identified by mathematician Leonardo Fibonacci in the thirteenth
century. However, Fibonacci's sequence of numbers is not as important as the
mathematical relationships, expressed as ratios, between the numbers in the
series. In technical analysis, Fibonacci retracement is created by taking two extreme
points (usually a major peak and trough) on a stock chart and dividing the vertical
distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. Once
these levels are identified, horizontal lines are drawn and used to identify
possible support and resistance levels. Before we can understand why these ratios
were chosen, we need to have a better understanding of the Fibonacci number
series.
The Fibonacci sequence of numbers is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55,
89, 144, etc. Each term in this sequence is simply the sum of the two preceding
terms and sequence continues infinitely. One of the remarkable characteristics of
this numerical sequence is that each number is approximately 1.618 times greater
than the preceding number. This common relationship between every number in the
series is the foundation of the common ratios used in retracement studies.
The key Fibonacci ratio of 61.8% - also referred to as "the golden ratio" or "the
golden mean" - is found by dividing one number in the series by the number that
follows it. For example: 8/13 = 0.6153, and 55/89 = 0.6179.

The 38.2% ratio is found by dividing one number in the series by the number that is
found two places to the right. For example: 55/144 = 0.3819.
The 23.6% ratio is found by dividing one number in the series by the number that is
three places to the right. For example: 8/34 = 0.2352.
In addition to the ratios described above, many traders also like using the 50% and
78.6% levels. The 50% retracement level is not really a Fibonacci ratio, but it is used
because of the overwhelming tendency for an asset to continue in a certain direction
once it completes a 50% retracement.
For reasons that are unclear, these ratios seem to play an important role in the stock
market, just as they do in nature, and can be used to determine critical points that
cause an asset's price to reverse. The direction of the prior trend is likely to continue
once the price of the asset has retraced to one of the ratios listed above. The
following chart illustrates how Fibonacci retracement can be used. Notice how the
price changes direction as it approaches the support/resistance levels.

Fibonacci Extensions
Fibonacci Extensions Means- Levels used in Fibonacci retracement to forecast
areas of support or resistance. Extensions consist of all levels drawn beyond the
standard 100% level and are used by many traders to determine areas where they
will wish to take profits. The most popular extension levels are 138.2%, 150%,
161.8%, 238.2%, 261.8%, 361.8% and 423.6%.

A price chart is a sequence of prices plotted over a specific time.

TYPES OF CHARTS1. LINE CHART 2. BAR CHART 3.CANDLESTICK CHART
LINE CHARTS
represents only the closing prices over a set period of time. The line is formed by
connecting the closing prices over the time frame. Line charts do not provide visual
information of the trading range for the individual points such as the high, low and
opening prices. However, the closing price is often considered to be the most
important price in stock data.

BAR CHART
The chart is made up of a series of vertical lines that represent High and Low points.
The opening price on a bar chart is illustrated by the dash that is located on the left
side of the vertical bar. Conversely, the close is represented by the dash on the right.

Candlestick
Compared to traditional bar charts, many traders consider Japanese candlestick
charts more visually appealing and easier to interpret. Each candlestick provides an
easy-to-decipher picture of price action. Immediately a trader can see compare the
relationship between the open and close as well as the high and low. The
relationship between the open and close is considered vital information and forms

the essence of candlesticks.Green/white candlesticks, where the close is greater

than the open, indicate buying pressure. Red/black candlesticks, where the close is
less than the open, indicate selling pressure.Candlestick charts are an effective way
of visualizing price movements.

Candlestick Patterns
The power of Candlestick Charts is with multiple candlesticks forming reversal and
continuation patterns
Doji
The Doji is a powerful Candlestick formation, signifying indecision between bulls and
bears. A Doji is quite often found at the bottom and top of trends and thus is
considered as a sign of possible reversal of price direction, but the Doji can be
viewed as a continuation pattern as well. A Doji is formed when the opening price
and the closing price are equal.

A long-legged Doji, often called a "Rickshaw Man" is the same as a Doji, except
the upper and lower shadows are much longer than the regular Doji formation.
After the open, bulls push prices higher only for prices to be rejected and pushed
lower by the bears. However, bears are unable to keep prices lower, and bulls then
push prices back to the opening price.
Spinning Top
Spinning Tops are Candlesticks that have small bodies with upper and lower
shadows/wicks that are longer than the body. This candle is often regarded as
neutral and used to signal indecision about the future direction of the underlying
asset.
If a spinning top formation is found after a prolonged uptrend, it suggests that the
bulls are losing interest in the stock and that a reversal may be in the cards. On the
other hand, if this formation is found in an defined downtrend, it suggests that the
sellers are losing conviction and that a bottom may be forming.

Dragonfly Doji
The Dragonfly Doji is a significant bullish reversal candlestick pattern that mainly
occurs at the bottom of downtrends. The most important part of the Dragonfly Doji is
the long lower shadow.
The long lower shadow implies that the market tested to find where demand was
located and found it. Bears were able to press prices downward, but an area of
support was found at the low of the day and buying pressure was able to push prices
back up to the opening price. Thus, the bearish advance downward was entirely
rejected by the bulls.

Gravestone Doji
The Gravestone Doji is a significant bearish reversal candlestick pattern that mainly
occurs at the top of uptrends. The long upper shadow is generally interpreted by
technicians as meaning that the market is testing to find where supply and potential
resistance is located.
The construction of the Gravestone Doji pattern occurs when bulls are able to press
prices upward.
However, an area of resistance is found at the high of the day and selling pressure is
able to push prices back down to the opening price. Therefore, the bullish advance
upward was entirely rejected by the bears.

Hammer
The Hammer candlestick formation is a significant bullish reversal candlestick
pattern that mainly occurs at the bottom of downtrends.
The long lower shadow of the Hammer implies that the market tested to find where
support and demand was located. When the market found the area of support, the
lows of the day, bulls began to push prices higher, near the opening price. Thus, the
bearish advance downward was rejected by the bulls.

Hanging Man
The Hanging Man candlestick formation, as one could predict from the name, is a
bearish sign. This pattern occurs mainly at the top of uptrends and is a warning of a
potential reversal downward. It is important to emphasize that the Hanging Man
pattern is a warning of potential price change, not a signal, in and of itself, to go
short. After a long uptrend, the formation of a Hanging Man is bearish because
prices hesitated by dropping significantly during the day. Granted, buyers came back
into the stock, future, or currency and pushed price back near the open, but the fact
that prices were able to fall significantly shows that bears are testing the resolve of
the bulls. What happens on the next day after the Hanging Man pattern is what gives
traders an idea as to whether or not prices will go higher or lower.

Shooting Star
The Shooting Star candlestick formation is a significant bearish reversal candlestick
pattern that mainly occurs at the top of uptrends.
The Shooting Star formation is considered less bearish, but nevertheless bearish
when the open and low are roughly the same. The bears were able to counteract the
bulls, but were not able to bring the price back to the price at the open.
The long upper shadow of the Shooting Star implies that the market tested to find
where resistance and supply was located. When the market found the area of
resistance, the highs of the day, bears began to push prices lower, ending the day
near the opening price. Thus, the bullish advance upward was rejected by the bears.
Inverted Hammer
The Inverted Hammer candlestick formation occurs mainly at the bottom of
downtrends and is a warning of a potential reversal upward. It is important to note
that the Inverted pattern is a warning of potential price change, not a signal, in and of
itself, to buy.
After a long downtrend, the formation of an Inverted Hammer is bullish because
prices hesitated their move downward by increasing significantly during the day.
Nevertheless, sellers came back into the stock, future, or currency and pushed
prices back near the open, but the fact that prices were able to increase significantly
shows that bulls are testing the power of the bears. What happens on the next day
after the Inverted Hammer pattern is what gives traders an idea as to whether or not
prices will go higher or lower.

Harami
The Harami (meaning "pregnant" in Japanese) Candlestick Pattern is a reversal
pattern. The pattern consists of two Candlesticks:
Larger Bullish or Bearish Candle (Day 1)
Smaller Bullish or Bearish Candle (Day 2)
Bearish Harami: A bearish Harami occurs when there is a large bullish green candle
on Day 1 followed by a smaller bearish or bullish candle on Day 2. The most
important aspect of the bearish Harami is that prices gapped down on Day 2 and
were unable to move higher back to the close of Day 1. This is a sign that
uncertainty is entering the market.
Bullish Harami: A bullish Harami occurs when there is a large bearish red candle on
Day 1 followed by a smaller bearish or bullish candle on Day 2. Again, the most
important aspect of the bullish Harami is that prices gapped up on Day 2 and price
was held up and unable to move lower back to the bearish close of Day 1.

Bullish Engulfing Pattern

The Bullish Engulfing Candlestick Pattern is a bullish reversal pattern, usually
occuring at the bottom of a downtrend. The pattern consists of two Candlesticks:

Smaller Bearish Candle (Day 1)

Larger Bullish Candle (Day 2)

The bearish candle real body of Day 1 is usually contained within the real
body of the bullish candle of Day 2.

On Day 2, the market gaps down; however, the bears do not get very far
before bulls take over and push prices higher, filling in the gap down from the
morning's open and pushing prices past the previous day's open.

The power of the Bullish Engulfing Pattern comes from the incredible change
of sentiment from a bearish gap down in the morning, to a large bullish real
body candle that closes at the highs of the day. Bears have overstayed their
welcome and bulls have taken control of the market.

Bearish Engulfing Pattern

The Bearish Engulfing Candlestick Pattern is a bearish reversal pattern, usually
occuring at the top of an uptrend. Generally, the bullish candle real body of Day 1 is
contained within the real body of the bearish candle of Day 2.

The market gaps up (bullish sign) on Day 2; but, the bulls do not push very far
higher before bears take over and push prices further down, not only filling in
the gap down from the morning's open but also pushing prices below the
previous day's open.

With the Bullish Engulfing Pattern, there is an incredible change of

sentiment from the bullish gap up at the open, to the large bearish real body
candle that closed at the lows of the day. Bears have successfully overtaken
bulls for the day and possibly for the next few periods.

Dark Cloud Cover

Dark Cloud Cover is a bearish candlestick reversal pattern, similar to the Bearish
Engulfing Pattern (see: Bearish Engulfing Pattern).

A Dark Cloud Cover Pattern occurs when a bearish candle on Day 2 closes below
the middle of Day 1's candle.In addition, price gaps up on Day 2 only to fill the gap
and close significantly into the gains made by Day 1's bullish candlestick.
The rejection of the gap up is a bearish sign in and of itself, but the retracement into
the gains of the previous day's gains adds even more bearish sentiment. Bulls are
unable to hold prices higher, demand is unable to keep up with the building supply.
Piercing Line Pattern
The Piercing Pattern is a bullish candlestick reversal pattern.A Piercing Pattern
occurs when a bullish candle on Day 2 closes above the middle of Day 1's bearish
candle. Moreover, price gaps down on Day 2 only for the gap to be filled and closes
significantly into the losses made previously in Day 1's bearish candlestick. The
rejection of the gap up by the bulls is a major bullish sign, and the fact that bulls were
able to press further up into the losses of the previous day adds even more bullish
sentiment. Bulls were successful in holding prices higher, absorbing excess supply
and increasing the level of demand.

Evening Star
The Evening Star Pattern is a bearish reversal pattern, usually occuring at the top of
an uptrend. The pattern consists of three candlesticks:
The first part of an Evening Star reversal pattern is a large bullish green candle. On
the first day, bulls are definitely in charge, usually new highs were made.

The second day begins with a bullish gap up. It is clear from the opening of Day 2
that bulls are in control. However, bulls do not push prices much higher. The
candlestick on Day 2 is quite small and can be bullish, bearish, or neutral (i.e.Doji).
Generally speaking, a bearish candle on Day 2 is a stronger sign of an impending
reversal. But it is Day 3 that is the most significant candlestick.
Day 3 begins with a gap down, (a bearish signal) and bears are able to press prices
even further downward, often eliminating the gains seen on Day 1.
Morning Star
The Morning Star Pattern is a bearish reversal pattern, usually occuring at the
bottom of a downtrend. The pattern consists of three candlesticks:
The first part of a Morning Star reversal pattern is a large bearish red candle. On the
first day, bears are definitely in charge, usually making new lows.The second day
begins with a bearish gap down. It is clear from the opening of Day 2 that bears are
in control. However, bears do not push prices much lower. The candlestick on Day 2
is quite small and can be bullish, bearish, or neutral (i.e. Doji).
Generally speaking, a bullish candle on Day 2 is a stronger sign of an impending
reversal. But it is Day 3 that holds the most significance.Day 3 begins with a
bullish gap up, and bulls are able to press prices even further upward, often
eliminating the losses seen on Day 1.

Tweezer Tops and Bottoms

The Tweezer Top formation is a bearish reversal pattern seen at the top of uptrends
and the Tweezer Bottom formation is a bullish reversal pattern seen at the bottom of
downtrends.sometimes Tweezer Tops or Bottoms have three candlesticks.

A bearish Tweezer Top occurs during an uptrend when bulls take prices higher,
often closing the day off near the highs (a bullish sign). However, on the second day,
traders feel (i.e. their sentiment) reverses completely. The market opens- makes
almost equal high of Day 1- and goes straight down, often eliminating the entire
gains of Day 1.
The reverse, a bullish Tweezer Bottom occurs during a downtrend when bears
continue to take prices lower, usually closing the day near the lows (a bearish sign).
Nevertheless, Day 2 is completely opposite because prices open -makes almost
equal low of Day 1-and go nowhere but upwards. This bullish advance on Day 2
sometimes eliminates all losses from the previous day.
Candlestick Pattern Dictionary

Abandoned Baby:
A rare reversal pattern characterized by a gap
followed by a Doji, which is then followed by another gap in the opposite direction.
The shadows on the Doji must completely gap below or above the shadows of the
first and third day.

Dark Cloud Cover:

A bearish reversal pattern that continues the
uptrend with a long white body. The next day opens at a new high then closes
below the midpoint of the body of the first day.

Doji:
Doji form when a security's open and close are virtually equal.
The length of the upper and lower shadows can vary, and the resulting candlestick
looks like, either, a cross, inverted cross, or plus sign. Doji convey a sense of
indecision or tug-of-war between buyers and sellers. Prices move above and
below the opening level during the session, but close at or near the opening level.

Downside Tasuki Gap:

A continuation pattern with a long, black
body followed by another black body that has gapped below the first one. The third
day is white and opens within the body of the second day, then closes in the gap
between the first two days, but does not close the gap.

Dragonfly Doji:
A Doji where the open and close price are at the
high of the day. Like other Doji days, this one normally appears at market turning
points.

Engulfing Pattern:
A reversal pattern that can be bearish or bullish,
depending upon whether it appears at the end of an uptrend (bearish engulfing
pattern) or a downtrend (bullish engulfing pattern). The first day is characterized by
a small body, followed by a day whose body completely engulfs the previous day's
body.

Evening Doji Star:

A three day bearish reversal pattern similar to
the Evening Star. The uptrend continues with a large white body. The next day
opens higher, trades in a small range, then closes at its open (Doji). The next day
closes below the midpoint of the body of the first day.

Evening Star:
A bearish reversal pattern that continues an uptrend
with a long white body day followed by a gapped up small body day, then a down
close with the close below the midpoint of the first day.

Falling Three Methods:

A bearish continuation pattern. A long black
body is followed by three small body days, each fully contained within the range of
the high and low of the first day. The fifth day closes at a new low.

Gravestone Doji:
very near, the low of the day.

Hammer:
Hammer candlesticks form when a security moves
significantly lower after the open, but rallies to close well above the intraday low.
The resulting candlestick looks like a square lollipop with a long stick. If this
candlestick forms during a decline, then it is called a Hammer.

Hanging Man:
Hanging Man candlesticks form when a security
moves significantly lower after the open, but rallies to close well above the intraday
low. The resulting candlestick looks like a square lollipop with a long stick. If this
candlestick forms during an advance, then it is called a Hanging Man.

A doji line that develops when the Doji is at, or

Harami:
A two day pattern that has a small body day completely
contained within the range of the previous body, and is the opposite color.

Harami Cross:
A two day pattern similar to the Harami. The
difference is that the last day is a Doji.

Inverted Hammer:
A one day bullish reversal pattern. In a
downtrend, the open is lower, then it trades higher, but closes near its open,
therefore looking like an inverted lollipop.

Long Day:
A long day represents a large price move from open to
close, where the length of the candle body is long.

Long-Legged Doji:
This candlestick has long upper and lower
shadows with the Doji in the middle of the day's trading range, clearly reflecting the
indecision of traders.

Long Shadows:
Candlesticks with a long upper shadow and short
lower shadow indicate that buyers dominated during the first part of the session,
bidding prices higher. Conversely, candlesticks with long lower shadows and short
upper shadows indicate that sellers dominated during the first part of the session,
driving prices lower.

Marubozu:
A candlestick with no shadow extending from the body at
either the open, the close or at both. The name means close-cropped or close-cut
in Japanese, though other interpretations refer to it as Bald or Shaven Head.

Morning Doji Star:

A three day bullish reversal pattern that is very
similar to the Morning Star. The first day is in a downtrend with a long black body.
The next day opens lower with a Doji that has a small trading range. The last day
closes above the midpoint of the first day.

Morning Star:
A three day bullish reversal pattern consisting of
three candlesticks - a long-bodied black candle extending the current downtrend, a
short middle candle that gapped down on the open, and a long-bodied white
candle that gapped up on the open and closed above the midpoint of the body of
the first day.

Piercing Line:
A bullish two day reversal pattern. The first day, in a
downtrend, is a long black day. The next day opens at a new low, then closes
above the midpoint of the body of the first day.

Rising Three Methods:

A bullish continuation pattern in which a
long white body is followed by three small body days, each fully contained within
the range of the high and low of the first day. The fifth day closes at a new high.

Shooting Star:
A single day pattern that can appear in an uptrend. It
opens higher, trades much higher, then closes near its open. It looks just like the
Inverted Hammer except that it is bearish.

Short Day:
A short day represents a small price move from open to
close, where the length of the candle body is short.

Spinning Top:
Candlestick lines that have small bodies with upper
and lower shadows that exceed the length of the body. Spinning tops signal
indecision.

Stars:
A candlestick that gaps away from the previous candlestick is
said to be in star position. Depending on the previous candlestick, the star position
candlestick gaps up or down and appears isolated from previous price action.

Stick Sandwich:
A bullish reversal pattern with two black bodies
surrounding a white body. The closing prices of the two black bodies must be

equal. A support price is apparent and the opportunity for prices to reverse is quite
good.

Three Black Crows:

A bearish reversal pattern consisting of three
consecutive long black bodies where each day closes at or near its low and opens
within the body of the previous day.

Three White Soldiers:

A bullish reversal pattern consisting of three
consecutive long white bodies. Each should open within the previous body and the
close should be near the high of the day.

Upside Gap Two Crows:

A three day bearish pattern that only
happens in an uptrend. The first day is a long white body followed by a gapped
open with the small black body remaining gapped above the first day. The third
day is also a black day whose body is larger than the second day and engulfs it.
The close of the last day is still above the first long white day.

Upside Tasuki Gap:

A continuation pattern with a long white body
followed by another white body that has gapped above the first one. The third day
is black and opens within the body of the second day, then closes in the gap
between the first two days, but does not close the gap.

Support and Resistance

Support and Resistance is one of the most important and fundamental part of
technical analysis. The price level which, historically, a stock has had difficulty falling
below. It is thought of as the level at which a lot of buyers tend to enter the stock.
Often referred to as the "support level".
If the price of a stock falls towards a support level it is a test for the stock: the
support will either be reconfirmed or wiped out. It will be reconfirmed if a lot of buyers
move into the stock (thinking it cheap and opportunity to buy), causing it to rise and
move away from the support level. It will be wiped out if buyers will not enter the
stock and the stock falls below the support.

Resistance
The price at which a stock or market can trade, but not exceed, for a certain period
of time.
Often referred to as "resistance level".
The stock or market stops rising because sellers start to outnumber buyer or the
supply exceeds the demand.Also the profit booking intensifies.
When support and resistance has been firmly established:
Buy Signal-Buy when price touches the support line
Sell Signal-Sell when price touches the resistance line.
Breaking Support & Resistance
Another fundamental concept of support and resistance is listed next and is shown in
the chart below of Alcoa (AA) stock:

If price breaks below support, then that support level becomes the new
resistance level.

If price breaks above support, then that resistance level becomes the new
support level.

Trendlines
Trendlines are a very basic yet powerful tool used in technical analysis (analyzing
stock charts). They are used to illuminate the general direction of a stocks price
movement.
Trendlines are straight lines that are drawn on a stock chart along at least two price
highs or price lows and a third point confirms the validity of the line (it's taken
seriously). The price highs or lows are the points.The trendline becomes more
significant (stronger) as more prices touch the line.
There are three types of trends:
1. Downward Trend (Bearish)
2. Upward Trend (Bullish)

3. Side to Side (Channeling)

Trendlines are primarily used to manage trades and to help you see when or if the
trend is changing. It can be assumed that prices will continue in the direction of the
trend until the trend is broken.
Downward Trendlines
A downward trendline is used when prices have been falling. You construct a
downward trendline by drawing a straight line "down and to the right" across price
highs. All price action is below the trendline.
Make sure to get as many price highs to touch the line as you can, but not all points
have to be exactly on the line.As long as prices stay below the trendline, the
downward trend is considered intact.
Bearish trading strategies and downward trendlines are a great compliment to each
other.
Upward Trendlines
An upward trendline is used when prices have been rising. An upward trendline is
constructed by drawing a straight line "up and to the right" across price lows. Make
sure to get as many price lows to touch the line as you can, but not all points have to
be exactly on the line.
As long as prices stay above the trendline the uptrend is considered intact.
Bullish trading strategies and upward trendlines are a great compliment to each
other.
Side to Side Trend
A side to side trend is often called a channel. It's when stock prices have been
moving up and down between two parallel price barriers.
To construct the trendlines for a channel you draw a horizontal line across price
highs AND across price lows. The area between these two lines is called the
channel.Prices are bound by the two parallel price barriers which are illuminated by
the lines. The upper line is commonly referred to as the resistance level and the
lower line is referred to as the support level.
While this may be the case, there are generally three situations that can occur if the
stock closes outside of the trendline:
Using a trendline can help you maximize profits and minimize losses. You can also
use them for trade entry and exit signals.
Trading with Trendlines

Trendline breaks are trend reversal trades. They occur when prices break or drift
outside of the current trend and start a new trend.
you would buy when prices break outside of the downward trendline.
It's the opposite for an upward trendline. As an upward trendline is broken you would
sell.
If a stock closes outside of a trendline, always asses the volume and "how" it broke
outside of the trend. Because of the higher volume (aggressive movement), this
would be considered an "upside breakout". The high volume and gap in prices
strengthens the possibility that this is a valid trend change.
Trendline bounces are trend continuation trades. You would participate in this type of
trade if you expect prices to continue in the direction of the trend.
A trendline bounce occurs when prices move (dip) toward the line, touch it, then
bounces off and reverses back into their original direction:
If we have an upward trend. Ideally you would buy when prices touch the trendline
(blue arrows). After the stock bounces off the line and continues back upward, your
stock price will begin to gain value.
Once your stock price gains enough value, you can sell it for a profit and wait for the
next opportunity to "buy on the dip".
This method of trading is also suitable for stocks that are trending in a channel.

GAPS
A gap in a chart is essentially an empty space between one trading period and the
previous trading period. They usually form because of an important and material
event that affects the security, such as an earnings surprise or a merger agreement.
This happens when there is a large-enough difference in the opening price of a
trading period where that price and the subsequent price moves do not fall within the
range of the previous trading period. For example, if the price of a companys stock
is trading near Rs.40 and the next trading period opens at Rs.45, there would be a
large gap up on the chart between these two periods.

Gap price movements can be found on bar charts and candlestick charts but will not
be found on basic line charts. The reason for this is that every point on line charts
are connected.
It is often said when referring to gaps that they will always fill, meaning that the price
will move back and cover at least the empty trading range. However, before you
enter a trade that profits the covering, note that this doesnt always happen and can
often take some time to fill.
There are four main types of gaps: common, breakaway, runaway (measuring),
and exhaustion. Each are the same in structure, differing only in their location in the
trend and subsequent meaning for chartists.
Common Gap
As its name implies, the common gap occurs often in the price movements of a
security. For this reason, it's not as important as the other gap movements but is still
worth noting. These types of gaps often occur when a security is trading in a range
and will often be small in terms of the gap's price movement. They can be a result of
commonly occurring events, such as low-volume trading days or after an
announcement of a stock split.
These gaps often fill quickly, moving back to the pre-gap price range.
Breakaway Gap
A breakaway gap occurs at the beginning of a market move - usually after the
security has traded in a consolidation pattern, which happens when the price is nontrending within a bounded range. It is referred to as a breakaway gap as the gap
moves the security out of a non-trending pattern into a trending pattern.
A strong breakaway gap out of a period of consolidation gives an indication of a large
increase in sentiment in the direction of the gap , leading to an extended move.
The strength of this gap can be confirmed by high volume which indicates that
security will continue in the direction of the gap, also reducing the chances of it being
filled.
The gap will often provide support or resistance for the resulting move. For an
upward breakaway gap, the lowest point of the second candlestick provides support.
A downward breakaway gap provides resistance for a move back up at the highest
price in the second candlestick. The breakaway gap is a good sign that the new
trend has started.
Runaway Gap (Measuring Gap)
A runaway gap is found around the middle of a trend, usually after the price has
already made a strong move. It is a healthy sign that the current trend will continue
as it indicates continued, and even increasing, interest in the security
After a security has made a strong move, many of the traders that have been on the
sideline waiting for a better entry or exit point decide that it may not be coming and if
they wait any longer they will miss the trade. It is this increased buying or selling that
creates the runaway gap and continuation of the trend.

Volume in a runaway gap is not as important as it is for a breakaway gap but

generally should be marked with average volume. If the volume is too extreme, it
could signal that the runaway gap is actually an exhaustion gap (see next
paragraph), which signals the end of a trend. The runaway gap forms support or
resistance in the exact same manner as the breakaway gap. Likewise, the
measuring gap does not often fill.
Exhaustion Gap
This is the last gap that forms at the end of a trend and is a negative sign that the
trend is about to reverse. This usually occurs at the last thrusts of a trend (typically
marked with panic or hype).
The exhaustion gap usually coincides with an irrational market philosophy, such as
the security being touted as "a can't-miss opportunity" or conversely as something to
"avoid at all costs".
the gap should be marked with a large amount of volume. The strength of this signal
is also increased when it occurs after the security has already made a substantial
move.
Because the exhaustion gap signals a trend reversal, the gap is expected to fill. After
the exhaustion gap, the price will often move sideways before eventually moving
against the prior trend.
Island Reversal
One of the most well-known gap patterns is the island reversal, which is formed by a
gap followed by flat trading and then confirmed by another gap in the opposite
direction. This pattern is a strong signal of a top or bottom in a trend, indicating a
coming shift in the trend. see an example of an island-bottom reversal that occurs at
the end of a downtrend. It's formed when an exhaustion gap appears in a downtrend
followed by a period of flat trading. The pattern is confirmed when an upward
breakaway gap forms in the price pattern.

Head and Shoulders

Head and Shoulders Components
1. Left Shoulder: Bulls push prices upwards making new highs; however these
new highs are short lived and prices retreat.
2. Head: Prices don't retreat for long because bulls make another run, this time
succeeding and surpassing the previous high; a bullish sign. Prices retreat
again, only to find support yet again.
3. Right Shoulder: The bulls push higher again, but this time fail to make a
higher high. This is very bearish, because bears did not allow the bulls to
make a new higher or even an equal high. The bears push prices back to
support (Confirmation line or Neckline); this is a pivotal moment - Will bulls
make another push higher or have the bears succeeded in stopping the move
higher.
Head and Shoulders Sell Signal
If prices break the confirmation support line, it is clear that the bears are in charge;
thus, when price closes below the confirmation line(Neckline), a strong sell
signal is given.
Note that a downward sloping confirmation line(Neckline) is generally seen as a
more powerful Head & Shoulders pattern, mainly because a downward sloping
confirmation line means that prices are making lower lows.
The opposite of the Head & Shoulders pattern is the Reverse Head & Shoulders
pattern which is another strong pattern, this time a bottoming pattern.ic
Double Top
The Double Top technical analysis charting pattern is a common and highly effective
price reversal pattern.
1. First High: Bulls push prices upwards making new highs; however, these new
highs are short lived and prices retreat.
2. Second High: Prices don't retreat for long because bulls make another run,
making a similar high. Nevertheless, this is bearish, because bulls were
unable to push prices higher; bears held their ground at the previous high
level. The bears push prices back to support (Confirmation line); this is a
pivotal moment - either bulls will make another push higher or bears will take
control and push prices even lower, more than likely taking over for good.
Double Top Sell Signal
Sell when price closes below the confirmation line.

Double Bottom
To create a double bottom pattern, price begins in a downtrend, stops, and then
reverses trend. However, the reversal to the upside is short-term. Price breaks again
to the downside only to stop again and reverse direction upwards. With the second
bottom of the double bottom pattern, it is usually more bullish if the second low is
higher than the first low.
Double Bottom Buy Signal
The signal to buy is given when the confirmation line is penetrated to the upside.
The confirmation line is drawn across the top of the double bottom pattern.
Note that traders expect a significant increase in volume to accompany the
confirmation line break; if there is very little volume when price pierces the
confirmation line, then the move downward/upward is suspect. Small volume usually
means weak support of price movement .
Often, after price penetrates the confirmation line, price will retrace for a short time,
sometimes back to the confirmation line. This retracement offers a second chance to
get into the market long.
Similar to Double Top and Double Bottom Patterns, Triple Top & Triple Bottom
patterns are also seen on charts.
Flag
The Flag pattern usually occurs after a significant up or down market move. After a
strong move, prices usually need to rest. This resting period usually occurs in the
shape of a rectangle, thus the word "flag". The Flag is considered a continuation
pattern because after resting, prices will usually continue in the direction they did
before.
Flag Buy Signal
When price has moved higher and prices have consolidated, creating a channel of
support and resistance, a buy signal is given when prices penetrate and close
above the upward resistance line.
Flag Sell Signal
Assuming prices previously moved downward, then after a period of price
consolidation, a sell signal is given when price penetrates and closes below the
support line.

The Pennant
The pennant forms what looks like a symmetrical triangle, where the support and
resistance trendlines converge towards each other. The pennant pattern does not
need to follow the same rules found in triangles, where they should test each support
or resistance line several times. Also, the direction of the pennant is not as important
as it is in the flag; however, the pennant is generally flat.

A cup-and-handle pattern resembles the shape of a tea cup on a chart. This is a

bullish continuation pattern .
The cup-and-handle pattern is preceded by an upward move, which stalls and sells
off. After the sell-off, the security will basically trade flat for an extended period of
time, with no clear trend. The next part of the pattern is the upward move back
towards the peak of the preceding upward move. The last part of the pattern, known
as the handle, is a relatively smaller downward move before the security moves
higher and continues the previous trend.

Again, the most important area of focus is the breakout: the stronger the volume on
the upward breakout, the clearer the sign that the upward trend will continue. Like
the head-and-shoulders pattern, the price may move back to the trendline to test the
support.
A Rounding bottom, also referred to as a saucer bottom, is a longterm reversal pattern that signals a shift from a downtrend to an uptrend. This pattern
is traditionally thought to last anywhere from several months to several years. Due to
the long-term look of these patterns and their components, the signal and construct
of these patterns are more difficult to identify than other reversal patterns.
A rounding-bottom pattern looks similar to a cup and handle, but without the handle.
The basic formation of a rounding bottom comes from a downward price movement
to a low, followed by a rise from the low back to the start of the downward price
movement - forming what looks like a rounded bottom.
Triangles
The basic construct of this chart pattern is the convergence of two trendlines - flat,
ascending or descending - with the price of the security moving between the two
trendlines.
There are three types of triangles, which vary in construct and significance:
the symmetrical triangle, the descending triangle and the ascending triangle.

While the either side breakouts can be expected in case of Symmetrical Triangles,
upward breakout is expected in ascending triangles and downside breakouts
expected in descending triangles.
However one should trade only after the breakout occurs, and not because of
expectations before actual breakout.
Wedges
The wedge pattern differs in that it is generally a longer-term pattern, usually lasting
three to six months. It also has converging trendlines that slant in an either upward
or downward direction, which differs from the more uniform trendlines of triangles.
There are two main types of wedges falling and rising which differ on the overall
slant of the pattern.
A falling wedge slopes downward, while a rising wedge slants upward. Trades can
be taken LONG (in case of falling wedge) or SHORT (in case of rising wedge ) after
the breakout occurs.
Market tells you a lot from the way breakouts work.-- aka Market Palmistry !!!
If breakouts do not have immediate follow through it indicates weak
conviction. Many breakouts fade by end of the day.
Similarly if you see breakouts to new high getting sold , it indicates
distribution by larger players.
If you see only late stage stocks breaking out it indicates tired market unlikely
to make big move. This is the case currently - new leadership is lacking?
If you see large stocks breaking out and making moves it indicates funds are
seeking safety. Large caps have been leading recently?
If you see beaten down stocks dominating breakout list it indicates lack of
conviction and short term commitment by funds.
If you see stocks after stock that made big move in last 2 year getting in to
trouble and having hard breakdowns, it indicates distribution.
In an environment like this unless you are a day trader your primary concern should
be risk management.
Your total risk exposure to the market should be at level where if things turn sour you
should be able to get out with minimum damage.
A real bull market lasts months and offers several opportunities. So if it shows up( a
breakout traders edge) you will not have trouble finding setups and make big money
if you have thought through your setups

Simple Moving Average

The Simple Moving Average is arguably the most popular technical analysis tool
used by traders. The Simple Moving Average (SMA) is used mainly to identify trend
direction, but is commonly used to generate buy and sell signals. The SMA is an
average, or in statistical speak - the mean. An example of a Simple Moving Average :
The prices for the last 5 days were 25, 28, 26, 24, 25.
The average would be (25+28+26+26+27)/5 = 25.6.
Therefore, the SMA line below the last days price of 27 would be 25.6
Exponential Moving Average (EMA)
The Exponential Moving Average (EMA) weighs current prices more heavily than
past prices. This gives the Exponential Moving Average the advantage of
being quicker to respond to price fluctuations than a Simple Moving
Average; however, that can also be viewed as a disadvantage because the EMA is
more prone to whipsaws (i.e. false signals). The main thing to notice is how much
quicker the EMA responds to price reversals; whereas the SMA lags during periods
of reversal. Since Exponential Moving Averages weigh current prices more heavily
than past prices, the EMA is viewed by many traders as quite superior to the Simple
Moving Average; however, every trader should weigh the pros and the cons of the
EMA and decide in which manner they will be using moving averages.
Weighted Moving Average(WMA)
The Weighted Moving Average places more importance on recent price moves;
therefore, the Weighted Moving Averagereacts more quickly to price
changes than the regular Simple Moving Average (see: Simple Moving Average). A
basic example (3-period) of how the Weighted Moving Average is calculated is
presented below:
Prices for the past 3 days have been Rs.5, Rs 4, and Rs 8.
Since there are 3 periods, the most recent day (Rs 8) gets a weight of 3, the second
recent day (Rs 4) receives a weight of 2, and the last day of the 3-periods (Rs 5)
receives a weight of just one.
The calculation is as follows: [(3 x Rs 8) + (2 x Rs 4) + (1 x Rs 5)] / 6 = Rs 6.17
The Weighted Moving Average value of 6.17 compares to the Simple Moving
Average calculation of 5.67. Note how the large price increase of 8 that occured on
the most recent day was better reflected in the Weighted Moving Average
calculation.
Triangular Moving Average
The Triangular Moving Average is a Simple Moving Average that has been
averaged again (i.e. averaging the average); this creates an extra smooth Moving
Average line.

Generally, simple moving averages are smooth, but the re-averaging makes the
Triangular Moving Average even smoother and more wavelike.

Description: The triangular moving average (TMA) is a weighted average of

the last n prices (P), whose result is equivalent to a double smoothed simple
moving average (i.e. calculated twice).
Calculation:
SMA = (P1 + P2 + P3 + P4 + ... + Pn) / n
TMA = (SMA1 + SMA2 + SMA3 + SMA4 + ... SMAn) / n

Moving Average Acting as Support - Buy Signal

When price is in an uptrend and subsequently, the moving average is in an uptrend,
and the moving average has been tested by price and price has bounced off the
moving average a few times (i.e. the moving average is serving as a support
line), then buy on the next pullbacks back to the Simple Moving Average.
Moving Average Acting as Resistance Sell Signal
At times when price is in a downtrend and the moving average is in a downtrend as
well, and price tests the SMA above and is rejected a few consecutive times (i.e.
the moving average is serving as a resistance line), then buy on the next rally up
to the Simple Moving Average.
Moving Average Crossovers
Moving average crossovers are a common way traders use Moving Averages. A
crossover occurs when a faster Moving Average (i.e. a shorter period Moving
Average) crosses either above a slower Moving Average (i.e. a longer period Moving
Average) which is considered a bullish crossoveror below which is considered
a bearish crossover. the long-term 200-day Simple Moving Average is in an
uptrend; this is a signal that the market is quite strong. Generally, a buy signal is
established when the shorter-term 50-day SMA crosses above the 200-day SMA and
contrastly, a sell signal is indicated when the 50-day SMA crosses below the 200-day
SMA. the 50-day, 200-day Simple Moving Average crossover is a very long-term
strategy.
For those traders that want more confirmation when they use Moving Average
crossovers, the 3 Moving Average crossover technique could be used, as follows:
1. The first crossover of the quickest SMA (in the example , the 20-day EMA)
across the next quickest EMA (50-day EMA) acts as a warning that prices are
reversing trend; however, usually a buy or sell order is not placed yet.
2. The second crossover of the quickest EMA (20-day) and the slowest SMA
(100-day) finally triggers the buy or sell signal.
There are numerous variants and methodologies for using the Moving Average
crossover method.

A money management technique of buying a half size when the quick MA crosses
over the next quickest MA and then the other half when the quick MA crosses over
the slower MA. Instead of halves, buy or sell one-third of a position when the quick
MA crosses over the next quickest MA, another third when the quick MA crosses
over the slow SMA, and the last third when the second quickest MA crosses over the
slow MA.
MACD
Developed by Gerald Appel in the late seventies, the Moving Average ConvergenceDivergence (MACD) indicator is one of the simplest and most effective momentum
indicators available. The MACD turns two trend-following indicators, moving
averages, into a momentum oscillator by subtracting the longer moving average from
the shorter moving average. As a result, the MACD offers the best of both worlds:
trend following and momentum. The MACD fluctuates above and below the zero line
as the moving averages converge, cross and diverge. Traders can look for signal line
crossovers, centerline crossovers and divergences to generate signals. Because the
MACD is unbounded, it is not particularly useful for identifying overbought and
oversold levels.
There are three main components of the MACD 1. MACD: The 12-period exponential moving average(EMA) minus the 26-period
EMA.
2. MACD Signal Line: A 9-period EMA of the MACD.
3. MACD Histogram: The MACD minus the MACD Signal Line.
The MACD indicator is an effective and versatile tool. There are three main ways to
interpret the MACD technical analysis indicator.
MACD Moving Average Crossovers
The primary method of interpreting the MACD is with moving average crossovers.
When the shorter-term 12-period exponential moving average (EMA) crosses over
the longer-term 26-period EMA a buy signal is generated.
Remember that the MACD line (the blue line) is created from the 12-period and 26period EMA. Consequently:
1. When the shorter-term 12-period EMA crosses above the longer-term 26period EMA, the MACD line crosses above the Zero line, A buy signal is
generated
2. When the 12-period EMA crosses below the 26-period EMA, the MACD line
crosses below the Zero line, A sell signal is generated.

Most Common MACD Buy and Sell Signals

A buy signal is generated when the MACD (blue line) crosses above the MACD
Signal Line (red line).Similarly, when the MACD crosses below the MACD Signal
Line a sell signal is generated.
MACD Histogram
The MACD Histogram is simply the difference between the MACD line (blue line)
and the MACD signal line (red line).
Convergence: The MACD histogram is shrinking in height. This occurs because
there is a change in direction or a slowdown in the stock. When the MACD histogram
is below the zero line and begins to converge towards the zero line.It is BUY signal.
Divergence: The MACD histogram is increasing in height (either in the positive or
negative direction). This occurs because the MACD is accelerating faster in the
direction of the prevailing market trend. When the MACD histogram is above the
zero line and begins to converge towards the zero line.It is SELL signal.
When a stock, future, or currency pair is moving strongly in a direction, the MACD
histogram will increase in height. When the MACD histogram does not increase in
height or begins to shrink, the market is slowing down and is a warning of a possible
reversal.
Bollinger Bands
Created by John Bollinger ; Bollinger Bands is a versatile tool combining moving
averages and standard deviations and is one of the most popular technical analysis
tools available for traders. There are three components to the Bollinger Band
indicator:
1. Moving Average: By default, a 20-period simple moving average is used.
2. Upper Band: The upper band is usually 2 standard deviations (calculated
from 20-periods of closing data) above the moving average.
3. Lower Band: The lower band is usually 2 standard deviations below the
moving average.
Playing the Bollinger Bands
Playing the bands is based on the premise that the vast majority of all closing prices
should be between the Bollinger Bands. That stated, then a stock's price going
outside the Bollinger Bands, which occurs very rarely, should not last and should
"revert back to the mean", which generally means the 20-period simple moving
average.
a trader buys or buys to cover when the price has fallen below the lower Bollinger
Band.

The sell is initiated when the stock, future, or currency price pierces outside the
upper Bollinger Band.
Bollinger Band Breakouts
Basically the opposite of "Playing the Bands" and betting on reversion to the mean is
playing Bollinger Band breakouts. Breakouts occur after a period of consolidation,
when price closes outside of the Bollinger Bands. Other indicators such as support
and resistance lines can prove beneficial when deciding whether or not to buy or sell
in the direction of the breakout.

Stochastics
Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a
momentum indicator that shows the location of the close relative to the high-low
range over a set number of periods. According to Lane, the Stochastic Oscillator
"doesn't follow price, it doesn't follow volume or anything like that. It follows the
speed or the momentum of price. As a rule, the momentum changes direction before
price." As such, bullish and bearish divergences in the Stochastic Oscillator can be
used to foreshadow reversals. This was the first, and most important, signal that
Lane identified. Lane also used this oscillator to identify bull and bear set-ups to
anticipate a future reversal. Because the Stochastic Oscillator is range bound, is also
useful for identifying overbought and oversold levels
Stochastic Fast
Stochastic Fast plots the location of the current price in relation to the range of a
certain number of prior bars (dependent upon user-input, usually 14-periods). In
general, stochastics are used to measure overbought and oversold conditions.
Above 80 is generally considered overbought and below 20 is considered oversold.
The inputs to Stochastic Fast are as follows:

Fast %K: [(Close - Low) / (High - Low)] x 100

Fast %D: Simple moving average of Fast K (usually 3-period moving

average)

Stochastic Slow
Stochastic Slow is similar in calculation and interpretation to Stochastic Fast. The
difference is listed below:

Slow %K: Equal to Fast %D (i.e. 3-period moving average of Fast %K)

Slow %D: A moving average (again, usually 3-period) of Slow %K

The Stochastic Slow is generally viewed as superior due to the smoothing effects
of the moving averages which equates to less false buy and sell signals.
When the Stochastic is below the 20 oversold line and the %K line crosses over the
%D line, buy.When the Stochastic is above the 80 overbought line and the %K line
crosses below the %D line, sell.
Stochastic Price Divergences
Stochastics can be used to confirm price trend. the Stochastic indicator may spend
most of its time in the overbought area. When Stochastics get stuck in the
overbought area, lt is a sign of a strong bullish run. Signals to sellshort would be
ignored.
Stock make a higher high; however, the Stochastic Slow indicator failed to make a
higher high, instead it made a lower high. This divergence coupled with a trendline
break in the price of gold would be a strong warning to futures traders that the recent
rally had probably ended and any long futures positions should be exited or at least
scaled back.
Stock making a lower low. On the other hand, the Stochastic Slow indicator was
signaling a higher low. This bullish divergence would have warned traders to exit
their shortsells, the price of stock had a strong potential of bottoming.Remember
Stochastic oscillator signal give maximum profitable signals in rangebound
market.
Relative Strength Index (RSI)
Developed by J. Welles Wilder, the Relative Strength Index (RSI) is a momentum
oscillator that measures the speed and change of price movements. RSI oscillates
between zero and 100. Traditionally, and according to Wilder, RSI is considered
overbought when above 70 and oversold when below 30. Signals can also be
generated by looking for divergences, failure swings and centerline crossovers. RSI
can also be used to identify the general trend The RSI is a versatile tool, it can be
used to:

Generate buy and sell signals

Show overbought and oversold conditions

Confirm price movement

Warn of potential price reversals through divergences

RSI Buy Signal

Buy when the RSI crosses above the oversold line (30).
RSI Sell Signal
Sell when the RSI crosses below the overbought line (70).
RSI Divergences
Relative Strength Index Confirmations & Divergences
A powerful method for using the Relative Strength Index is to confirm price moves
and forewarn of potential price reversals through RSI Divergences.
An alternative way that the Relative Strength Index (RSI) gives buy and sell signals
is given below:

Buy when price and the Relative Strength Index are both rising and the RSI
crosses above the 50 Line.

Sell when the price and the RSI are both falling and the RSI crosses below
the 50 Line.

A bullish divergence is registered between Low #3 and Low #4. The stock
made lower lows, but the RSI failed to confirm this price move, only making
equal lows. An astute trader would see this RSI divergence and begin taking
profits from their shortsells.alternatively new buy can also be initiated.

A bearish divergence occured when the stock made a higher high and the RSI
made a lower high. This bearish divergence warned that prices could be
reversing trend shortly. A trader should consider reducing their long position,
or even completely selling out of their long position.A short sell can also be
initiated

.
Average Directional Index (ADX)
The Average Directional Index (ADX), Minus Directional Indicator (-DI) and Plus
Directional Indicator (+DI) represent a group of directional movement indicators that
form a trading system developed by Welles Wilder. Wilder designed ADX with
commodities and daily prices in mind, but these indicators can also be applied to
stocks. The Average Directional Index (ADX) measures trend strength without regard

to trend direction. The other two indicators, Plus Directional Indicator (+DI) and
Minus Directional Indicator (-DI), complement ADX by defining trend direction. Used
together, chartists can determine both the direction and strength of the trend.
The Average Directional Index (ADX) is used to measure the strength or weakness
of a trend, not the actual direction. Directional movement is defined by +DI and -DI.
In general, the bulls have the edge when +DI is greater than - DI, while the bears
have the edge when - DI is greater. Crosses of these directional indicators can be
combined with ADX for a complete trading system.
Directional movement is positive (plus) when the current high minus the prior high is
greater than the prior low minus the current low. This so-called Plus Directional
Movement (+DM) then equals the current high minus the prior high, provided it is
positive. A negative value would simply be entered as zero.
Directional movement is negative (minus) when the prior low minus the current low is
greater than the current high minus the prior high. This so-called Minus Directional
Movement (-DM) equals the prior low minus the current low, provided it is positive. A
negative value would simply be entered as zero.
You can also only focus on +DI buy signals when the bigger trend is up and - DI sell
signals when the bigger trend is down.

Accumulation Distribution
Accumulation Distribution uses volume to confirm price trends or warn of weak
movements that could result in a price reversal.

Accumulation: Volume is considered to be accumulated when the day's

close is higher than the previous day's closing price. Thus the term
"accumulation day"

Distribution: Volume is distributed when the day's close is lower than the
previous day's closing price. Many traders use the term "distribution day"

Therefore, when a day is an accumulation day, the day's volume is added to the
previous day's Accumulation Distribution Line. Similarly, when a day is a distribution
day, the day's volume is subtracted from the previous day's Accumulation
Distribution Line.
The main use of the Accumulation Distribution Line is to detect divergences
between the price movement and volume movement.
Volume Interpretation
The basic interpretation of volume goes as follows:

Increasing and decreasing prices are confirmed by increasing volume.

Increasing and decreasing prices are not confirmed and warn of future trouble
when volume is decreasing.

Money Flow Index

The Money Flow Index (MFI) uses price and volume and the concept
of accumulation distribution to create anoverbought and oversold indicator that is
helpful in confirming trends in prices and warning of potential reversals in prices. The
inputs to the Money Flow indicator are given below:
1. Typical Price: (High + Low + Close) / 3
2. Money Flow: Typical Price x Volume
3. Positive Money Flow: The Money Flow on days where the Typical Price is
greater than the previous day's Typical Price.
4. Negative Money Flow: The Money Flow on days where the Typical Price is
less than the previous day's Typical Price.
5. Money Ratio: Positive Money Flow / Negative Money Flow
6. Money Flow Index: 100 - [100 / (1 + Money Ratio)]
Interpreting the Money Flow Index

Below 20 is considered oversold; look for buying opportunities.

Above 80 is in overbought territory; look for sell signals

NDS.

OBJECTIVE OF THE STUDY

To understand how the new ways of payment has penetrate in the market.

To try to analyse how fast we are moving towards the cashless society.

To understand the fact how people are well-informed about todays technology.

To understand what might be the future scenario of the world will be in payment
concept.

To understand the current monetary system.

SCOPE OF THE STUDY

There is a rapid growth in e-payment transaction throughout the world. There are many new
innovative technologies are comprehended for easy and quick transaction without involving
cash, and people are accepting this with open arms as it helps save time and energy.

I surveyed through filling out questionnaires by various people in Badlapur and Ambarnath.
This will help in understanding how fast are we moving towards cashless society, and how
people are contented with the idea of no actual cash in the hand but as virtual numbers in
banks and accounts.

RESEARCH METHODOLOGY
Research Methodology can be defined as the process used to collect information and
data for the purpose of making business decisions.
This study is based on primary as well secondary data. Research methodology has its
importance in identifying the problem, collecting, analysing the required information data
and providing the various solution to the problem. The research methodology may include
publication research, interviews, surveys and other research techniques, and could include
both present and historical information.

Data sources
The research is based upon primary data, which has been done by interacting with
various people, as well as secondary data, which has been collected through various
journals, newspaper and websites.

Sampling
Sampling procedure

The sample was selected randomly in the area of Badlapur and Ambarnath. It
was also collected through online surveys to persons, by formal and informal
talks and through filling up the questionnaire prepared.
Sample size and presentation
The sample size of my project is limited to 50 people only.
Data has been presented with the help of pie charts.

Questionnaire

1. I use Analysts recommendations when I buy stocks.

2. I use Analysts recommendations when I sell stocks.

3. I use financial statements when I buy stocks.

4. I use financial statements when I sell stocks.

5. I use support and resistance lines when I buy stocks.

6. I use support and resistance lines when I sell stocks.

7. I use moving averages when I buy stocks.

8. I use moving averages when I sell stocks.

9. I use the stochastic oscillator when I buy stocks.

10. I use the stochastic oscillator when I sell stocks.

11. I use the RSI oscillator when I buy stocks.

12. I use the RSI oscillator when I sell stocks.

13. I use the MACD oscillator when I buy stocks.

14. I use the MACD oscillator when I sell stock

2. I use Analysts recommendations when I sell stocks.

Male 48%

4. I use financial statements when I sell stocks.

52%Female

10%
26%

18-25

28%
25-35

35-50

36%

7. I use moving averages when I buy stocks.

above 50

22%
34%

Credit Card

Debit Card
44%

10. I use the stochastic oscillator when I sell stocks.

Other

46%

Cash

13. I use the MACD oscillator when I buy stocks.

54%

Cards

4%
30%

Cash

Cards

Both

66%

LIMITATION OF THE STUDY

There may be a chance of inaccuracy in data collection because many of respondent

may have not provided definite answers of my questionnaire.

All the response given by the respondent were on the basis of their knowledge & there
perception so some biasness may be present.

Respondent didnt give proper response, as there was lack of time.

Sample size is limited to 50 persons. The sample size may not adequately represent
the whole market.

Research was only limited to the area of Badlapur and Ambarnath, which is still
progressive area, people may not be that well-informed about the current market
status.

CONCLUSION
It can thus be concluded that with the increasing popularity of transactions through cards,
cash is slowly but surely expected to die a natural death. In a world where payments go
online, cash serves very little purpose apart from creating a burden on the state. Doing away
with cash addresses a very wide spectrum of problems, starting from counterfeiting, money
laundering and bribery ti tax dodging and criminal businesses.
While a cashless economy might take some time to get fully realized, it is something thats
surely coming our way in the near future. Like everything else, cashless society has its own

set of pros and cons. But the positives that we can get out of it outweigh any negative impact
that it might have.
The distribution of power between a central bank and the smaller banks is an important
aspect in becoming a cashless society. The role of the central bank as a money-maker would
cease to exist and its new found role would be to supervise the smaller parties who get
enabled to be a part of the money, point-issuing process. A switch over to the cashless
economy thus decentralizes the power from a central hand at the top of the hierarchy, which
is what is needed.
Overall in a nutshell, a cashless society has an innumerable number of benefits over the
current monetary system. The paper currency stays on because it is the only form of money
that is built in our psyche. The future generations though will live through a time when the
idea of money creates an image of credit and debit cards inside their head. That will be the
time when cash will have to give way to a world where exchange will take place as it does
now, but without the money being visible to us.

BIBLIOGRAPHY AND WEBLIOGRAPHY

The End of Money: Counterfeiters, Preachers, Techies, Dreamers and The Coming
Cashless Society - David Wolman
The Coming Cashless Society - Thomas Ice, Timothy J. Demy

www.electran.org

www.researchgate.net
http://www.360financialliteracy.org
http://thenextgalaxy.com
http://www.brighthub.com
http://www.business-standard.com
http://www.ijcst.org
http://www.slideshare.net