TECHNICAL STRATEGIES

Technical analysis is the examination of past price movements to forecast future price
movements.

Technical analysis is applicable to stocks, indices, commodities, futures or any tradable

where the price is influenced by the forces of supply and demand. Price refers to any
combination

of the open, high, low or close for a given security over a specific timeframe. The time frame can

be based on intraday (tick, 5-minute, 15-minute or hourly), daily, weekly or monthly price data

and last a few hours or many years. In addition, some technical analysts include volume or open

interest figures with their study of price action. It uses candlestick charts instead of financial data

and Indicators instead of arriving at an intrinsic value of any stock.

What are Charts?

A price chart is a sequence of prices plotted over a specific timeframe. In statistical terms, charts

are referred to as time series plots. Because charts provide an easy-to-read graphical
representation

of a security's price movement over a specific period of time. The timeframe used for forming a

chart depends on the compression of the data: intraday, daily, weekly, monthly, quarterly or
annual

data. The less compressed the data is, the more detail is displayed.

Types of Charts

Line Chart:

The line chart is one of the simplest charts. It is formed by plotting one price point, usually the

close, of a security over a period of time. Connecting the dots, or price points, over a period of
time, creates the line.

Bar Chart:

The high, low and close are required to form the price plot for each period of a bar chart. The
high

and low are represented by the top and bottom of the vertical bar and the close is the short

horizontal line crossing the vertical bar. If you are not interested in the opening price, bar charts

are an ideal method for analyzing the close relative to the high and low. In addition, bar charts
that

include the open will tend to get cluttered quicker. If you are interested in the opening price,

candlestick charts probably offer a better alternative.

Candlestick Chart:

For a candlestick chart, the open, high, low and close are all required. A daily candlestick is
based

on the open price, the intraday high and low, and the close. Green candlesticks form when the

close is higher than the open and Red candlesticks form when the close is lower than the open.

The Green and Red portion formed from the open and close is called the body. The lines above

and below are called shadows and represent the high and low.

Trend Lines

Technical analysis is built on the assumption that prices trend. Trendlines are an important tool
in

technical analysis for both trend identification and confirmation. A trendline is a straight line that

connects two or more price points and then extends into the future to act as a line of support or
resistance.

Up Trend line

An up trendline has a positive slope and is formed by connecting two of more low points. The

second low must be higher than the first for the line to have a positive slope. Up trendlines act as

support and indicate that net-demand (demand less supply) is increasing even as the price rises.

A rising price combined with increasing demand is very bullish and shows a strong

determination on the part of the buyers

Down Trend line

A down trendline has a negative slope and is formed by connecting two or more high

points. The second high must be lower than the first for the line to have a negative slope.

Down trendlines act as resistance and indicate that net-supply (supply less demand) is

increasing even as the price declines. A declining price combined with increasing supply

is very bearish and shows the strong resolve of the sellers.

Side Trend

A sideways trend is the horizontal price movement that occurs when the forces of supply

and demand are nearly equal. This typically occurs during a period of consolidation

before the price continues a prior trend or reverses into a new trend. A sideways

price trend is also commonly known as a "horizontal trend.

Candlesticks are formed using the open, high, low and close. Without opening prices, candlestick

charts are impossible to draw. If the close is above the open, then a Green candlestick is drawn.

If the close is below the open, then a Red candlestick is drawn. The green or red portion of the

candlestick is called the body. The long thin lines above and below the body represent the

high/low range and are called shadows (also referred to as wicks and tails).

Doji Candle

Doji are important candlesticks that provide information on their own. 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 a cross, inverted cross or plus sign.

Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding price

action and future confirmation.

hammer and hanging man, are identical with small bodies and long lower shadows. The

long shadow should be at least twice the length of the real body. The hammer and inverted

hammer forms after a decline and are bullish reversal patterns. The hammer and hanging

man look exactly alike, but have different implications based on the preceding price

action.

The hammer is a bullish reversal pattern that forms after a decline. In addition to a

potential trend reversal, hammers can mark bottoms or support levels. After a decline,

hammers signal a bullish revival.

The hanging man is a bearish reversal pattern that can also mark a top or resistance level.

Forming after an advance, a hanging man signals that selling pressure is starting to

increase.

Bullish Engulfing & Bearish Engulfing

When a small red candle is completely engulfed or overlapped by big green candle then

it is called Bullish Engulfing.

When a small green candle is completely engulfed or overlapped by big Red candle then

Bullish Engulfing Pattern

Price Action Strategies

1. Cup with Handle

The Cup with Handle is a bullish continuation pattern that marks a consolidation period
followed by a breakout. It was developed by William O'Neil and introduced in his 1988

book, How to Make Money in Stocks. As its name implies, there are two parts to the

pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or

rounding bottom. As the cup is completed, a trading range develops on the right hand

side and the handle is formed. A subsequent breakout from the handle's trading range

signals a continuation of the prior advance.

Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend

should be a few months old and not too mature. The more mature the trend, the less chance

that the pattern marks a continuation or the less upside potential.

Cup: The cup should be "U" shaped and resemble a bowl or rounding bottom. A "V"

shaped bottom would be considered too sharp of a reversal to qualify. The softer "U"

shape ensures that the cup is a consolidation pattern with valid support at the bottom of

the "U". The perfect pattern would have equal highs on both sides of the cup, but this is

not always the case.

Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous

advance. However, with volatile markets and over-reactions, the retracement could range

from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which is

conforms with Dow Theory.

Handle: After the high forms on the right side of the cup, there is a pullback that forms

the handle. Sometimes this handle resembles a flag or pennant that slopes downward,

other times just a short pullback. The handle represents the final consolidation/pullback

before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not

more. The smaller the retracement is, the more bullish the formation and significant the
breakout.

Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts.

The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.

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Volume: There should be a substantial increase in volume on the breakout above the

handle's resistance.

Target: The projected advance after breakout can be estimated by measuring the distance

from the right peak of the cup to the bottom of the cup.

. Rounding Bottom

The rounding bottom is a long-term reversal pattern that is best suited for weekly charts. It is also

referred to as a saucer bottom, and represents a long consolidation period that turns from a
bearish

bias to a bullish bias.

Prior Trend: In order to be a reversal pattern, there must be a prior trend to reverse.

Ideally, the low of a rounding bottom will mark a new low or reaction low. In practice,

there are occasions when the low is recorded many months earlier and the security trades

flat before forming the pattern. When the rounding bottom does finally form, its low may

not be the lowest low of the last few months.

Decline: The first portion of the rounding bottom is the decline that leads to the low of

the pattern. This decline can take on different forms: some are quite jagged with a number

of reaction highs and lows, while others trade lower in a more linear fashion.
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Low: The low of the rounding bottom can resemble a "V' bottom, but should not be too

sharp and should take a few weeks to form. Because prices are in a longterm decline, the

possibility of a selling climax exists that could create a lower spike.

Advance: The advance off of the lows forms the right half of the pattern and should take

about the same amount of time as the prior decline. If the advance is too sharp, then the

validity of a rounding bottom may be in question.

Breakout: Bullish confirmation comes when the pattern breaks above the reaction high

that marked the beginning of the decline at the start of the pattern. As with most resistance

breakouts, this level can become support. However, rounding bottoms represent longterm
reversal and this new support level may not be that significant.

Volume: In an ideal pattern, volume levels will track the shape of the rounding bottom:

high at the beginning of the decline, low at the end of the decline and rising during the

advance. Volume levels are not too important on the decline, but there should be an

increase in volume on the advance and preferably on the breakout.

Head and Shoulder patternA head and shoulders pattern forms after an uptrend, and its
completion marks a trend reversal.

The pattern contains three successive peaks with the middle peak (head) being the highest and
the

two outside peaks (shoulders) being low and roughly equal. The reaction lows of each peak can

be connected to form support, or a neckline.

reversal pattern. Without a prior uptrend to reverse, there cannot be a head and shoulders

reversal pattern, or any reversal pattern for that matter.

Left Shoulder: While in an uptrend, the left shoulder forms a peak that marks the high

point of the current trend. After making this peak, a decline ensues to complete the

formation of the shoulder (1). The low of the decline usually remains above the trendline,

keeping the uptrend intact.

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Head: From the low of the left shoulder, an advance begins that exceeds the previous

high and marks the top of the head. After peaking, the low of the subsequent decline

marks the second point of the neckline. The low of the decline usually breaks the uptrend

line, putting the uptrend in jeopardy.

Right Shoulder: The advance from the low of the head forms the right shoulder. This

peak is lower than the head (a lower high) and usually in line with the high of the left

shoulder. While symmetry is preferred, sometimes the shoulders can be out of whack.

The decline from the peak of the right shoulder should break the neckline.

Neckline: The neckline forms by connecting low points 1 and 2. Low point 1 marks the

end of the left shoulder and the beginning of the head. Low point 2 marks the end of the

head and the beginning of the right shoulder. Depending on the relationship between the

two low points, the neckline can slope up, slope down or be horizontal. The slope of the

neckline will affect the pattern's degree of bearishness: a downward slope is more bearish

than an upward slope. Sometimes more than one low point can be used to form the
neckline.

. Up trend lineAn up trendline has a positive slope and is formed by connecting two of more low
points. The

second low must be higher than the first for the line to have a positive slope. Up trendlines act as

support and indicate that net-demand (demand less supply) is increasing even as the price rises.
A

rising price combined with increasing demand is very bullish and shows a strong determination
on

the part of the buyers. As long as prices remain above the trendline, the uptrend is considered
solid

and intact. A break below the up trendline indicates that net-demand has weakened and a change

in trend.

Down Trend lineA down trendline has a negative slope and is formed by connecting two or more
high points. The

second high must be lower than the first for the line to have a negative slope. Down trendlines
act

as resistance and indicate that net-supply (supply less demand) is increasing even as the price

declines. A declining price combined with increasing supply is very bearish and shows the strong

resolve of the sellers. As long as prices remain below the down trendline, the downtrend is

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considered solid and intact. A break above the down trendline indicates that netsupply is

decreasing and a change of trend could be imminent.

In terms of percentage growth

From august 6, 2020 to August 6, 2021

SAIL
The share price of SAIL increased 275.50 % from August 6, 2020 to August 8, 2021 SAIL has
highest growth in these five stocks in last one year.
TATA STEEL
The share price of Tata Steel Ranked second with a 256.81% growth in last one year
JSW STEEL
The share price of JSW Steel increased 216.22 %
HINDALCO
The share price HINDALCO of increased 148.37 %
NMDC
The share price of JSW Steel increased 103.36 %
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