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• Technical analysis is a method of evaluating

securities by analyzing the statistics generated


by market activity.
• It is based on three assumptions:
1) The market discounts everything,
2) Price moves in trends and
3) History tends to repeat itself.
Candlestick Basics
• Candlestick charts are an effective way of visualizing
price movements.
• There are two basic candlesticks:
Bullish Candle: When the
close is higher than the
open (usually green or
white)
Bearish Candle: When the
close is lower than the open
(usually red or black)
 A Candlestick has two main parts:
 Real body
 Shadows
Both Real Bodies & Shadows are important in
understanding the Market condition.
1. Open & Close are very close together, creating a very small body.
2. Represent indecision between BULLS and BEARS.
3. Buyers and Sellers are equal in force
4. All Doji Colorless.
5. Traders become alert after formation and trade as per the pattern.
6. Confirmation is must
7. Not valid in mid market
8. Looks like +
DOJI @ RESISTANCE
You could clearly see how strongly the price
moved up after breaking the Doji’s resistance
3 TYPES OF DOJI
Long Legged Doji
1. Open, High and Close price are at the high of the day or almost
same. (NO COLOR)
2. Long lower shadow
3. High Volume
4. If red candle before DRAGONFLY then Best
5. Try to find lower level
6. Like other Doji days, this one normally appears at market turning
points.
7. Not valid in mid market
1. Open, Low and Close price are at the Lower of the day or
almost same. (NO COLOR)
2. Long upper shadow
3. High Volume
4. If Green candle before GRAVESTONE then Best
5. Try to find Higher level
6. Like other Doji days, this one normally appears at market
turning points.
7. Not valid in mid market
• Sell below Yesterdays Low @ 970
• Stoploss- Yesterdays High above @ 1000
• Target- Double of Body Size (HIGH-LOW)
• For Eg- Sell Below 970
With Sl- 1000
Target- 910
• Risk reward ratio= 1:2
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HAMMER
(Bullish reversal)

1. Small Real Body


2. Long lower shadow Only
3. Tail–Minimum twice the Real body.
4. If occurs at the bottom of
downtrends then BEST
5. Looks like a square lollipop
6. Any color
NOTE: Hammer & Hanging Man Both 7. If High and Close/Open same then
are Same But where it occurs that BEST
matters. 8. Control has shifted from Sellers to
*Hammer Downtrend then UP
*Hanging man Uptrend then DOWN Buyers
How the Hammer reversed the prior
down trend sharply
How the Hammer reversed the prior
down trend sharply
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 Small real body
 Long lower shadow Only
• Tail - minimum twice the real
body
 If occurs at the Upper of
Uptrend then BEST
 No or very less upper shadow
NOTE: Hammer & Hanging Man Both  Any color
are Same But where it occurs that
matters .  If High and Close same then
*Hammer Downtrend then UP BEST
*Hanging man Uptrend then DOWN
 Control has shifted from Buyers
to Sellers
Hanging Man occurs after a Uptrend and
indicates a potential Down move.
Hanging Man BUT not….???
1. Bullish Candlestick
2. Reversal Candlestick in a
Downtrend
3. No lower Shadow
4. Longer Upper Shadow
5. Small body with a shadow at
least two times greater than
the body
6. Any Color but if Green then
BEST
7. Best @ Low/Bottom of a
downtrend
8. High Volume on that day BEST
9. BUY ON HIGH BREAK
SHOOTING START
1. Bearish Candlestick
2. Trend Reversal
3. No lower Shadow
4. Longer Upper Shadow
5. Small body with a shadow at
least two times greater than
the body
6. Any Color but if RED then
BEST
7. Best @ HIGH/TOP of a
Uppertrend
8. High Volume on that day
BEST
9. SELL ON LOW BREAK
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1. Trend Reversal
2. Small Body with both side
Longer Shadow
3. Any Color
4. Psychology is same as Doji.
5. High Volume on that day
BEST
6. Found @ HIGH/TOP, Low
break then next day Sell
7. Found @ Low/Bottom, BUY
ON HIGH BREAK
8. Used for trailing the stop-
loss
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Single CANDLESTIC
PATTERN
• BULLISH OR BEARISH
• NO SHADOW
• High Volume on that day
BEST
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2 Candlestick Pattern: BULLISH CANDLESTICK REVERSAL
PATTERN
1ST CANDLE SMALL BEARISH CANDLE
2ND CANDLE BIG BULLISH CANDLE FULL
BODY ENGULF/COVER THE 1ST CANDLE
BODY

CONDITION:
BEST @ DOWNTREND
CANDLE’S SHADOW SMALL.
Its 2 CANDELSTICK pattern
Does not need a confirmation candle.

Support- The Lowest Low of the two


sessions of the pattern.
BUY RATE= (2nd DAY HIGH+LOW)/2
SL= 2nd DAY LOW BELOW
TARGET= 2nd DAY HIGH-LOW

For Eg: BUY @ _______


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2ND CANDLESTICK PATTERN: BEARISH CANDELSTICK
REVERSAL PATTERN.

• 1ST CANDLE: SMALL BULLISH


CANDLE
• 2ND CANDLE: BIG BEARISH
CANDLE ENGULF/COVER THE 1ST
CANDLE
• CONDITION:
BEST AT UPTREND CANDLE’S
SHADOW SMALL.
• Its 2 session pattern
• Does not need a confirmation
candle.
Bearish engulfing pattern as resistance
In above Example, You could see how the price reacted to the bear
engulf occurring after a DOJI & Small Real Body
Bearish Engulfing Pattern
SELL RATE= (2nd DAY HIGH+LOW)/2
SL= 2nd DAY HIGH ABOVE
TARGET= 2nd DAY HIGH-LOW

For Eg: SELL @ _______


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Two-Bar Combinations
CANDLESTICK PATTERN

 A small green bar inside a


large red body.
1st CANDLE BIG BEARISH
2nd CANDLE VERY SMALL
BULLISH
A DOJI inside a large RED body.
BUY RATE= (1st DAY HIGH + LOW)/2
SL= 1st DAY LOW BELOW
TARGET= 1st DAY HIGH - LOW

For Eg: SELL @ _______


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 2 CANDLESTICK PATTERN
 1st CANDLE BIG BULLISH.
 2nd CANDLE VERY SMALL.
BEARISH.
 LOOKS LIKE A PREGNANT
LADY.
 NOT STRONGE PATTERN.
BEARISH HARAMI CROSS

A DOJI inside a large GREEN body.


SELL RATE= (1st DAY HIGH + LOW)/2
SL= 1st DAY HIGH ABOVE
TARGET= 1st DAY HIGH - LOW

For Eg: SELL @ _______


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3 CANDLESTICK PATTERN: BULLISH CANDLESTICK REVERSAL
PATTERN.
• 1st CANDLE BIG Red CANDLE.
• 2nd CANDLE SMALL CANDLE WITH
GAP DOWN BELOW THE PRIOR
BODY. IT CAN BE BULLISH OR
BEARISH.
• 3rd BULLISH CANDLE ENGULF
MINIMUM 60-75% OF 1st CANDLE.
• CONDITION- BEST @ DOWNTREND
• SMALL CANDLE’S SHADOW.
• BULLS ARE TAKING CONTROL
• Very STRONGE PATTERN.
MORNING DOJI STAR
BUY RATE= 3rd DAY HIGH ABOVE
SL= 3rd DAY or 2nd DAY LOW BELOW
TARGET= 3rd DAY HIGH - LOW

For Eg: SELL @ _______


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3 CANDLESTICK PATTERN: BEARISH CANDLESTICK REVERSAL
PATTERN.
• 1st CANDLE BIG GREEN CANDLE.
• 2nd CANDLE SMALL CANDLE
WITH GAP UP ABOVE THE PRIOR
BODY. IT CAN BE BULLISH OR
BEARISH.
• 3rd BEARISH CANDLE ENGULF
MINIMUM 60-75% OF 1st
CANDLE.
• CONDITION- BEST @ UPTREND
• SMALL CANDLE’S SHADOW.
• BEARS ARE TAKING CONTROL.
• STRONGE PATTERN.
Replace Star with DOJI
EVENING DOJI STAR
BUY RATE= 3rd DAY LOW BELOW
SL= 3rd DAY or 2nd DAY HIGH ABOVE
TARGET= 3rd DAY HIGH - LOW

For Eg: SELL @ _______


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DARK CLOUD COVER
2 CANDLESTICK:BEARISH CANDLESTICK REVERSAL PATTERN
 1st CANDLE BIG BULLISH
CANDLE.
 2nd CANDLE GAP UP OPEN
SHOULD CLOSE BELOW 50-75%
OF 1 ST CANDLE
 2nd CANDLE BEARISH
 SELL BELOW 2nd CANDLE LOW

CONDITION- BEST @ UPTREND &


CANDLE’S SHADOW SMALL.
DARK CLOUD COVER
DARK CLOUD COVER @ Resistance
SELL RATE= 2nd DAY LOW BELOW
SL= 2nd DAY HIGH ABOVE
TARGET= 2nd DAY HIGH - LOW

For Eg: SELL @ _______


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PIERCING LINE PATTERN
 2 CANDLESTICK: BULLISH CANDLESTICK REVERSAL PATTERN.

 1st CANDLE BIG BEARISH CANDLE.


 2nd CANDLE GAP DOWN OPEN
SHOULD CLOSE ABOVE 50-75% OF
1st CANDLE
 2nd CANDLE BULLISH
 BUY ABOVE 2nd CANDLE HIGH

 CONDITION- BEST @
DOWNTREND & CANDLE’S
SHADOW SMALL.
BUY RATE= 2nd DAY HIGH ABOVE
SL= 2nd DAY LOW BELOW
TARGET= 2nd DAY HIGH - LOW

For Eg: SELL @ _______


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SUPPORT & RESISTANCE
One of the most important & fundamental parts of technical
analysis:
 Support- Typically expected that prices should rise after
touching support.
 Resistance- Generally expected that prices should fall after
hitting resistance.
Change of Polarity
• This is our First Eye !!!
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1. BEST @ UPTREND.
2. 1st SHOULDER PULL BACK FROM TRENDLINE SUPPORT.
3. HEAD BREAK TRENDLINE AND THEN COME UP & CREATE 2nd SHOULDER &
NOT CROSS NECKLINE RESISTANCE.
3. NECKLINE– TWO BOTTOMS OF HEAD.
4. IF NECKLINE DOWNWARD SLOPING THEN BEST.
5. IF NECKLINE BREAK WITH VOLUME THEN BEST.
6. SELL AFTER NECKLINE BREAK.
1. BEST @ DOWNTREND.
2. 1st SHOULDER PULL BACK FROM TRENDLINE RESISTANCE.
3. HEAD BREAK TRENDLINE AND THEN COME UP & CREATE 2nd
SHOULDER & NOT CROSS TRENDLINE SUPPORT.
3. NECKLINE– TWO HIGHS OF HEAD.
4. IF NECKLINE UPWARDWARD SLOPING THEN BEST.
5. IF NECKLINE BREAK WITH VOLUME THEN BEST.
6. BUY AFTER NECKLINE BREAK.
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DOUBLE TOP

1. BEST @ UPTREND.
2. AFTER 1st TOP MARKET FALL 10-20% THEN AGAIN MAKE 2nd TOP.
3. 1st TOP & 2nd TOP CAN BE SAME OR DIFFERENCE OF 1-3%.
4. ONCE CANDLE CLOSE BELOW SUPPORT (NECKLINE) WITH
VOLUME THAN ONLY SELL BEST.
5. ON DOUBLE TOP HIGH VOLUME ALSO GOOD SIGN.
Double Top
DOUBLE BOTTOM

1. BEST @ DOWNTREND.
2. AFTER 1st BOTTOM, MARKET RISE 10-20% THEN AGAIN MAKE 2nd
BOTTOM.
3. 1st BOTTOM & 2nd BOTTOM CAN BE SAME OR DIFFERENCE OF 1-3%.
4. ONCE CANDLE CLOSE ABOVE RESISTANCE WITH VOLUME THAN ONLY
BUYING BEST.
5. ON DOUBLE TOP HIGH VOLUME ALSO GOOD SIGN.
Double Bottom
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BEAR FLAG

 THIS IS FORMED IN DOWNTREND.ITS CONFIRM THAT DOWNTREND CONTINUE.


 HIGHER HIGH & HIGHER LOWS IN EQUAL DISTANCE CHANNEL.
 FOR ANY PATTERN INDENTIFICATION NO 1,2,3,4,5 CREATION MOST IMPORTANT
 IF PRICE TRADE IN SMALL RANGE & CREATE FLAG THAN BIG DOWNSIDE MOVE.
 FOUND ON HOURLY & DAY BOTH CHART.
 BREAKOUT WITH VOLUME VERY IMPORTANT.
 BOTH CHANNEL ALWAYS PARRALLEL.
BULL FLAG

 THIS IS FORMED IN UPTREND.ITS CONFIRM THAT UPTREND CONTINUE.


 LOWER HIGH & LOWER LOWS IN EQUAL DISTANCE CHANNEL.
 FOR ANY PATTERN INDENTIFICATION NO. 1,2,3,4,5,6 CREATION MOST
IMPORTANT.
 IF PRICE TRADE IN SMALL RANGE & CREATE FLAG THAN BIG UP MOVE.
 FOUND ON HOURLY & DAY BOTH CHART.
 BREAKOUT WITH VOLUME VERY IMPORTANT.
 BOTH CHANNEL ALWAYS PARRALLEL.
PENNANT (BULLISH)

 THIS IS FORMED IN UPTREND. CONTINUATION PATTERN.


 BIG UP SIDE MOVE TO PRICE TRADE IN SMALL RANGE.
 LOWER HIGH & HIGHER LOWS.
 FOR ANY PATTERN INDENTIFICATION NO.1,2,3,4,5 CREATION IMPORTANT.
 FOUND ON HOURLY & DAY BOTH CHARTS.
 BREAKOUT WITH VOLUME VERY IMPORTANT.
PENNANT (BEARISH)

 THIS IS FORMED IN DOWNTREND. CONTINUATION PATTERN.


 BIG UP SIDE MOVE TO PRICE TRADE IN SMALL RANGE.
 LOWER HIGH & HIGHER LOWS.
 FOR ANY PATTERN INDENTIFICATION NO.1,2,3,4,5 CREATION
IMPORTANT.
 FOUND ON HOURLY & DAY BOTH CHARTS.
 BREAKOUT WITH VOLUME VERY IMPORTANT.
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 FALLING WEDGE IS A REVERSAL PATTERN BUT MOSTLY BULLISH PATTERN.
 LOWER HIGH & LOWER LOWS IN NARROW RANGE.
 MARKET FALLING DOWNSIDE SLOWLY BOTH CHANNEL CAME NEAR.
 FOR ANY PATTERN INDENTIFICATION NO. 1,2,3,4,5 CREATION VERY IMPORTANT.
 BUY START WITH CANDLESTICK PATTERN CREATION.
 TAKING LONG TIME TO CREATE PATTERN.
 FOUND BEST @ DAY & WEEKLY CHART.
 BREAKOUT WITH HIGH VOLUME THAN ONLY BUY/SELL.
 RISING WEDGE IS REVERSAL PATTERN BUT MOSTLY BEARISH PATTERN.
 HIGHER HIGH & HIGHER LOWS WITH NARROW RANGE.
 MARKET RISING UPSIDE SLOWLY BOTH CHANNEL CAME NEAR.
 FOR ANY PATTERN INDENTIFICATION NO. 1,2,3,4 CREATION VERY IMPORTANT.
 SELL START WITH CANDLESTICK PATTERN CREATION.
 FOUND BEST @ DAY & WEEKLY CHART.
 BREAKOUT WITH HIGH VOLUME THAN ONLY BUY/SELL.
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FIBONACCI RETRACEMENT
• Fibonacci Retracement is created by taking two
Extreme points.
• Usually a major peak to trough.
• Looks like buyers/sellers are exhausted.
• If you find any DOJI, HAMMER OR INVERTED
HAMMER THEN GOOD.
• Key Fibonacci Ratios of 23.6%, 38.2%, 50%,
61.8%,78.6% and 100%.
• 61.8% IS GOLDEN RATIO.
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Relative Strength Index
DIVERGENCE
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WOLF WAVE IS PRICE ACTION PATTERN THAT
IS MADE OF 5 WAVES.

WOLF WAVE CAN DEVELOP IN ANY TIME


FRAME FROM 1 MINUTE TO MONTHLY CHART.

WOLF WAVE CREATE IN RISING WEDGE OR


FALLING WEDGE.
Bearish Wolf Wave
Bearish Wolfe Wave
Bullish Wolfe Wave
BULLISH & BEARISH
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CANDLES & TREND LINES
• Sloping trend Line
• Channels
• Horizontal Trend Line
• Change Polarity
• Crack n Snap
• Falling Off the Roof
Profitable trading is all about math:
 Risk/reward ratios.
 Position sizing.
 Proper Research & Back testing.
 Draw downs.
 Returns.
 Win%.
 Losing streak probabilities.
 Risk of ruin.
 Stop losses.
 Profit targets.
It’s all math.
Trading Discipline
 Create a trading plan and follow it strictly.
 Take trades only after a proper candlestick signal.
 Enter a trade only if it has more than one confirmation.
 Never enter a trade without a stop-loss.
 Do not second guess the trade after entering.
 If the price moves against your expectation wait for the stop
to be taken out.
 Before taking a trade decide all the entry, stop loss and target
levels.
 Do not chase the trade.
 Do not enter a trade due to an emotional push.
 Always wait for the candle to close, before you decide based
on it.
 Do not take others’ opinion to enter/exit a trade.
 Control your emotions!
Money Management
1. Minimize the risk: Place stops for every trade
you take. Do not risk more than 2% of your
capital.
2. Diversify: Do not invest all your capital into a
single trade, no matter how strong the trade
looks.
3. Calculated risk: Always calculate the risk and
reward before taking a trade. If the risk is
greater than the potential reward, skip the
trade.
4. Let the profits grow: Once the price reaches the
first target level, loosen up 50% of your position and
hold on to the remaining to enjoy more profits.
5. Trail the stop: When you want to enjoy more
profits give the price some space to move around, but
trail your stop without fail.
6. Use technical stops: Do not decide the stop loss
level based on emotions/biases. Stop loss should,
strictly, be technical.
7. Protect the profits: Sometimes, the price might
reverse even before the target level is reached. In that
case, it’s better to protect the profits.
Thank You
@markethighlow (25k followers) Contact For any type of Support/
Query in Trading.
Kingresearch Analysis HARINDER SAHU
C
8468811500
https://t.me/KINGRESEARCH SEBI REGISTERED RESEARCH
ANALYST
8468811500 www.kingresearch.co.in

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