YTA SCHOOL

YTA SCHOOL

BY YOGESH BHAVSAR

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INTRODUCTION

After my first book on “RELATIVE STRENGTH AND TECHNICAL

ANALYSIS”, I came across lot of traders and readers and students , once
they read the book , they still find difficulty to spot some of the common
chart patterns in the live market .

They had same question, “sir pattern sometimes formed, or we even some
time are unable to spot it , but we still find it difficult to get the desired
accuracy” , and they are still not able to gain that confidence even after
spotting it due to past bad experience .

These couple of common problems have motivated me to write this small

pocket book which you can happily carry with you in your bag everyw here
you go and keep practicing again and again. If you will google about chat
pattern and candle stick patterns, there is no end to it and you will have
to memories all of them which will become difficult to spot them in live
market, I have taken only few of them which book, for those who have still
not read my book can find on amazon link https://amzn.to/41kdMkR .

https://amzn.to/41kdMkR

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THE WORST TREND-LINE

The worst way to draw a trend-line is to keep connecting any

points in name of two points and keep touching the tops as
resistance and bottoms as support, there is no such logic, and
it simply creates confusion for us as to which

trendline to follow on which given time.

The above chart is clear indication that the chart has been forced
to get your own pre-determined trend in your head and someone
is forcing the same on the chart.

A trend-line is a line that indicates the trend or the direction

of a stock.

Plotting a trend line is not a rocket science but an art to understand

the current trend and possibility for a minor trend reversal point
back to its major trend and to find out if there is any chance of
a pause or complete trend change from previous major or minor
trend to the opposite direction.

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Let us look at the same chart below: how one can just try and
identify the
change in trend or make it simple to understand what the trend is
trying to tell us without making it complicated like the above chart.

The above chart is so clear, that on the left hand side, every time
the stock tried to go up, but due its down trend, whenever the
stock came to test the trend line, it faced a resistance and
continued to go back to its major trend.

It is only when the trend line was broken with a strong buying from the
bottoms which helped the stock to close above the trend line and the
buyers gained confidence that the given price to pay for the company
valuation, the demand surpass the supply, the stock stopped falling
and we have a strong uptrend, and which can be seen on the
right hand side of the chart, where the stock price is going up on
consistent basis whenever it came to test the trend line and took
a strong support and kept continuing to its major trend i.e. uptrend.

Trading logics and theory should be kept simple and less

complicated, as too much of analysis leads to paralysis.
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SUPPORT AND RESISTANCE: -

Support and Resistance in simple terms are those areas where

the price tends to take a pause and wait for the demand or supply
to take charge in its old direction or gives a new breakout to start
a new trend.

Traders plot such Support and Resistance on charts and wait for
the price to show signals to which direction the demand and supply
is taking them and as per the trader’s experience they take a
position in the trade.

There is no right or wrong way to plot such areas. It depends on the

trader’s experience and expertise and his/her method to
understand the price action.

Let us understand the horizontal Support and Resistance in simple

terms and with few charts examples:

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SUPPORT:-
Support is the level at which demand is strong enough to stop the
stock from falling any further.

In the above chart of Reliance Industries, we can see that each time
the price reaches the support level (2300rs - 2400rs), it has
difficulty penetrating level i.e. Price is finding it difficult to make new
LOW. The rationale is that as the price drops and approaches
support, buyers (demand) become more inclined to buy and sellers
(supply) become less willing to sell.

This is pure example of support, the price tried to penetrate the

rage 6 times, but every time the supply tried to test those levels,
a strong support of demand of that price range is there to give the
stock a support.

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RESISTANCE:-

Resistance in simple words is nothing but an area on a specific

time frame, which do not let the price go more up. Resistance is
the level at which supply
is strong enough to stop the stock from moving higher.

In the above chart we can see that the sock of Apollo Hospital had a
clear resistance Area of 4900Rs to 5000 Rs. The price tried to test
the level 6 times, which means the buyers tried to push the price
above those area, but the supply always gave a strong respond
to the buyers and the price could not go above the Resistance
area.

The rationale is that as the price rises and approaches resistance,

sellers (supply) become more inclined to sell and buyers (demand)
become less willing to buy.
In both above cases, one must be very Clear what is Support and
What is Resistance.

Never try to Sell in Support area and never try to Buy at Resistance area.

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SUPPORT CONVERTS INTO RESISTANCE:-

The Support area will not stay for always support for the stock,
if the same area has been tested again and again. One fine day,
supply will take over and demand will leave that area and the price
will fall further, the same area will later become a resistance as
there will be pressure of sellers now to sell more stocks.

In the above chart of Bandhan Bank, we can see clearly on the

left hand side that the stock had a good support at the price range
of 270 to 280 RS, the stock got 6 times support, but may be due
to strong QOQ bad numbers or some bad banking news the supply
surpassed the demand, the buyers did not find the same price any
more important or the supply became more stronger then the
demand and the price broke the support as Breakout shown in the
chart above.To know that the breakout was valid the buyers tried
to push the stock back up, but we can notice that the same area
has converted into Resistance and the price could not go up any
more, every time the stock went to retest the area, it faced the
resistance and finally due to higher pressure of supply.
In above case, one must be very Clear what is Support and What is
Resistance, this is the perfect example of Support converts to
Resistance .

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RESISTANCE CONVERTS INTO SUPPORT:-

In the above chart of Ambuja cement , it is very clear that the stock
was facing continuous Resistance at the area of 385 to 390rs
Resistance, the Buyers tried to push the stock price above three
times but the sellers were stronger then the Buyers. At the
breakout area the 4th attempt of the buyers, they came with very
strong force and gave a breakout.

To confirm the breakout was strong, the stock again came to Re-
test the previous Resistance area but was met with strong buyers
and the stock from there moved sharply in the up direction.

This is the perfect example to show how Resistance converts into

Support.

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WHAT ARE TREND-LINES:-

Trend lines are nothing but slope of support and Resistance,
its where the stock takes support or resistance in a specific
directional trend.

In the above chart, the stock is up trend, and we see that the
stock is testing the up-trend for 9 times and kept going up. This is
called the support in upside trend line.

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To plot a trend line we need two points, so there is a start point

and the first reversal point, to help us to plot out first trend line
as shown in the chart below.

For drawing a trend-line, you need 1 low and second point as

second low, as per the above chart we got two points, so we took
two points and connected the line and then we just extend the line
to the right-hand side as shown in the chart below:

You can clearly notice that the price came to take support on a
slanting line as uptrend. Every time the stock came near to the
trend line and bounced back in the up direction.
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This is called a slanting upside uptrend support line, every time

price came to test the trend line, and went up. This shows that the
demand is still strong in the selected stock, the sellers are not
willing to put pressure or in other words, even if the sellers are
trying to gain the power, the demand just took over the supply and
went in new highs.

But stock does not need to follow the same trend line all the time,
the trends are dynamic in nature and you will also need to be more
dynamic in your observations and plotting the trend line to see if
the trend is still strong or not.

Whenever the stock rally to new peaks and change the lows, we
also have to shift the trend joining points, same trend can have
multiple trend lines.

See from the above chart, it’s the same chart, same direction that
is uptrend, the point of connection changed, and the stock started
respecting the new trend line as support. From point 6 the new
trend started, we can say new point 1 and the new 1-2-3-4 keep
respecting or new trend has been identified.

If we can combine horizontal Support Resistance, support

converts to resistance, and breakout, it can be plotted in the same
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chart, this becomes more advanced setup, where the advance

traders can spot with ease and one can take multiple decisions
and can convert just simple looking chart into strong interactive
chart.

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In the above chart, it is so clear and the chart is very interactive,

or we can put in other words that chart is trying to say something
to you, it’s trying to talk to you, the only thing, one has to just
follow the rules as explained above, not go crazy by connected all
kind of lows and highs, the aim to trade the market is to just
“MAKE IT SIMPLE”, the logics that you are working on should
be as simple as it can be, the brain should automatically start plotting
the trend lines, support resistance, everything like machine.

The aim should be:

“DO NOT FORCE THE TRADE, LET THE TRADE COME TO YOU”

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This will happen only when you are focused and are away from
noise, unwanted tips groups, channels, media etc.

You should be able to draw such trend-lines without any third party
infusing your decision to make such kind of marking. If someone
is trying to give you inputs, your brain will become bias to the
news and you will plot just to justify that logic.

Whenever you are trying to plot, be true to yourself, be alone and

avoid any distraction, the number issue that I have come across
lot of traders and students across, is that they try to find answers
to every move and every chart in the market.

If you are not able to spot such clear lines and interactive charts,
that means the stock is not in the trend, and you must avoid such
charts completely (no second thought), we are not here to prove
anything to anyone, we are here to make money, so with more
clear mind and more clear chart, higher are the chances of
earnings.

What are we trying to achieve to in the above chart? Nothing right !

Avoid this chart.

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EXERCISE 1:

LET’S SEE IF YOU ARE ABLE TO SUPPORT

YOURSELF!! :-
PLOT WITH YOUR LEARNING WITH PEN AND
SEE IF YOU ARE ABLE TO FIND THE TREND,
TRENDLINE,SUPPORT,RESISTANCE,
INTERACTIVE CHART !

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SOLUTION TO EXERCISE 1:

KEEP IT SIMPLE :)

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EXERCISE 2:

LET’S HAVE ONE MORE TRY, WITH AN

INTERACTIVE CHART:

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SOLUTION TO EXERCISE 2:

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EXERCISE 3:

LET’S TRY ONE TRADE IN DOWN SIDE:-

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SOLUTION TO EXERCISE 3:

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HOPE YOU CAN OBSERVE WHAT I AM TRYING TO TELL YOU!

IF YOU CAN SEE THIS WITH YOUR NAKED EYES, YOUR LIFE
TO TRADE WILL BECOME SO SIMPLE AND SO CLEAR THAT
YOU WOULD NOT NEED ANYONE TO TELL YOU WHAT’S GOING
ON IN THE MARKET, WHY WOULD YOU PANIC ! IF STOCK IS
NOT PERFORMING FOR COUPLE OF DAYS OR WEEKS, WHEN
THE STOCK IS RESPECTING YOUR TREND-LINES AND
INTERACTIVE CHART.

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STRONG BREAKOUT CANDLE:

Now that you have learned What are support, resistance, support
converting to resistance and resistance converting to support, and
how to take advantage of the those in the markets, let us identify
some strong patterns that keep recurring in the market from ages
and the success ratio of those patterns are very high and if this
happen along with the help of the above interactive charts, your
confidence and accuracy to trade will become even more
stronger and you can take those trade with higher conviction and
confidence.

For that let’s first understand what type of candle stick, I personally
use for trading in pattern breakout.

When you google about the types of candle sticks, you will get a
long list of them, and to memorize them , and to spot them in the
live market becomes next to impossible, as market has only one
logic , “BETWEEN THE FIGHT OF BUYERS AND SELLERS, WHO
SOEVER PROVES TO BE STRONGEST, THE PRICE TENDS TO
GO IN THAT DIRECTION”, in short, IN MARKET- there is
nothing but a continuous battle between supply and demand, that
is measured with money power, whichever side the money power
is, the stock price tends to follow the direction or change the
direction, but it’s a pure game of demand and supply. So, to make
it simple, we need a strong candle for breakout of the pattern
what we are going to discuss ahead.

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Strong candle is nothing but, a closed candle, should be a full
bullish candle with very small shadow or no shadow, if the candle is
with the shadow, then the shadow should not be more than 20%
from the top.

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example:- if the candle closing at daily time frame, entire move

from low to high is from 90rs to 100rs, that is 10rs full day move,
the closing should close above 8rs move as 20% is 2rs. So, closing
should be 98rs or above 98rs, then such candle is called a strong
candle, if we do not find such candle breakout then we should
avoid, as we can see that there is some selling pressure from the
top, as the top price was rejected by the sellers.

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CONSOLIDATION BREAKOUT:-
The simplest breakout pattern is known as consolidation breakout,
as we can see in the above chart that stock was traveling between
two price range, and after staying in consolidation for many days
(but respected the interactive chart uptrend trend line), the stock
gave a strong breakout.

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SYMMETRICAL TRIANGLE CHART PATTERN:-

If we notice that, the uptrend is intact, and the stock faced couple
of days of profit booking, which helped us to join the tops, normal
traders would exit thinking that the stock is in pressure, but soon
the stock gets support at trend line, the resistance was broken with
a strong breakout candle and we can say that the symmetrical
Triangle setup is complete. One can think of going bullish above the
high of breakout candle and low as the stop stoploss.

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FLAG PATTERN BREAKOUT :-

The above chart looks very much like a Pole and Flag. It simply
means that the stock is in sharp uptrend and takes a pause, but
it does not mean the trend is out, after couple of days or weeks
later, the stock gives a strong breakout as shown in the above
chart. Buy above the high of breakout candle and low as stoploss.

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CUP & HANDLE PATTERN:-

In the chart below, The stock is in uptrend and it never went out
of the uptrend line, the stock took the support at the previous
areas as marked as area, ittook rounding journey and small
consolidation at the resistance area, giving it a perfect illusion
shape of Cup and holder pattern.

The strong breakout can be taken as Buy on the high and Stop-
loss low of the breakout candle.

This pattern is widely used in cross the world and has high
success ratio in all the time frames

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CHANNEL BREAKOUT :-

In the chart below, we can see that the trend was clearly up, the stock
was consistently coming down, but if one knew about the
interactive chart, the trend was still up, the stock took strong support
and we go a strong successful breakout, one can buy above the
high of the breakout candle and put a stoploss below the low of
the breakout candle.

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HEAD AND SHOULDER PATTERN :-

The head and shoulders chart pattern is a reversal pattern and

most often seen in uptrends. It is formed by a peak (left shoulder),
followed by a higher peak (head), and then another lower peak (right
shoulder). A “neckline” is drawn by connecting the lowest points of
the two troughs.

The head is the second peak and is the highest point in the pattern.
The two shoulders also form peaks but do not exceed the height
of the head.

Sell below the neckline. We can

also calculate a target by measuring
the high point of the head to the
neckline. This distance is
approximately how far the price will
move after it breaks the neckline.

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Inverse Head and Shoulders

The name speaks for itself. It is basically a head and shoulders
formation, except this time it’s upside down. A valley is formed
(shoulder), followed by an even lower valley (head), and then
another higher valley (shoulder).

These formations occur after extended downward movements.

Buy above the neckline. Our target is

calculated just like the head and
shoulders pattern. Measure the
distance between the head and the
n e c k l i n e , and that is approximately
the distance that the price will move
after it breaks the neckline.

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MAJOR TREND REVERSAL :-

A strong trend which are broken by the trend line, has a high chance
of trend reversal in the opposite direction.

These are the strong trend reversals and points and patterns to
be remembered while trading, if you can spot such trades setups
and trade with strong reading of company fundamentals and sector
analysis you will do really good in your trading career.

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POINTSTOREMEMBER:-
One must remember nothing is 100%, but you must have a basic
knowledge about few of such setups in the market.

Have clear charts, clean thinking process, your trading decision should not be
dependent on anyone else’s tips or ideas, which will help you to see the
charts as it is, and your mind will start manipulating the setups in your
head.

There are lot of setups in the market, which you can google it, but even if
you are able to master only those which are shared above with full honesty,
you will be far better traders then others in the market.

There are lot of other patterns in the market, I have shared only those
which I use, as I feel these have higher wining ratio, you are free to use
them, as I am not saying they are less important, but I fell the above ones
works perfectly for me and I am very happy to be with them.
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POINTOFCONTACT:-

I would love to hear your success story, do email me at

“[email protected]" Or you can also connect with me on my telegram

@YTAschool

And can also follow me on twitter https://twitter.com/YTA_School

This PDF is dedicated to my family who is always there to support me in every

situation.

DEDICATED :-
To Family and Friends who have been part of my journey .