Project Report

Titled
“A study on Technical Analysis”
In the partial fulfilment of the Degree of
PGDM
By
Mr. Waragade Saurabh Navnath

[PGDM, Division & Roll No: 29]

Semester V & Specialization: Banking &Finance

Batch: 2020-22

Under the Guidance of

Faculty Guide
Prof. Sonali Athawale.
(Project Guide)

2020-22
 CERTIFICATE

This is to certify that Mr. Saurabh Navnath Waragade a student of Class:

PGDM B&FS Semester: VI bearing Roll No. 29 has successfully completed
the project titled, “A study on Technical Analysis”, in the partial fulfilment
of the Degree of PGDM.

Place:

Date:

Name of the Project Guide: Prof. Sonali Athawale.

Signature of the Project Guide:

Signature Institutes Seal:

(Dr. D.Y. Patil)

Director
 STUDENT DECLARATION

I hereby declare that the project titled “A study on Technical analysis” is

my own work conducted under the supervision of Prof. Sonali
Athawale.

I further declare that no part in this project work has been plagiarized
without proper citations and has not formed the basis for the award
of anydegree, diploma, associateship, fellowship previously.

Name of Student: Saurabh Navnath Waragade

Signature of the Student
 ACKNOWLEDGEMENT

I avail this opportunity to express my sincere, humble and deepest sense of

gratitude towards my guide Prof. Sonali Athawale. for his valuable guidance and
tremendous efforts which he has taken to guide me to the path of success. His
constructive feedback and endless encouragement always inspired to work hard
on the topic. His Determination and ambition to achieve goal in life is really
fascinating and inspired me.
I wish to thank my friends for their suggestion and co-operation in completion of
this project.
No one can successfully complete work without blessings and wishes, so we
thank and dedicate it to our loving parents for their love and inspiration.

Mr. Saurabh Navnath Waragade.

 TABLE OF CONTENTS

Sr.No. Topic Page No.

1. EXECUTIVE SUMMARY 1
2. INTRODUCTION TO THE TOPIC 3
3. PROJECT DETAILS 7
4. CHART PATTERN WORKED 36
5. DATA ANALYSIS AND INTERPRETATION 40
6. FINDING 48
7. CONCLUSION 50
8. BIBLIOGRAPHY 52
9. ANNEXURE 54
10. PROJECT PROGRESS REPORT 58
11. PROJECT SYNOPSIS 60
 CHAPTER 1 :
EXECUTIVE SUMMARY

1
 1. EXECUTIVE SUMMARY

Equity Analysis is the systematic study of the performance of companies in stock

market with help of fundamental analysis and technical analysis. Equity analysis consists of
fundamental analysis & technical analysis. While decision in investment of shares should be
base on actual movement of shares price measured more in money & percentage term &
nothing else. Equity is a share in the ownership of a company. Equity represents a claim on the
company's assets and earnings. As you acquire more equity, your ownership stake in the
company becomes greater. Whether you say shares, equity, it all means the same thing. A stock
is represented by a stock certificate. This is a piece of paper that is proof of your ownership.
Today its in dematerialized form i.e. in electronic form shares have been kept safe.
This is done to make the shares easier to trade. In the past, when a person wanted to sell
his or her shares, that person physically took the certificates down to the brokerage. Now,
trading with a click of the mouse or a phone call makes life easier for everybody.
Technical analysis really just studies supply and demand in a market in an attempt to
determine what direction, or trend, will continue in the future. In other words, technical analysis
attempts to understand the emotions in the market by studying the market itself, as opposed to
its components. If you understand the benefits and limitations of technical analysis, it can give
you a new set of tools or skills that will enable you to be a better trader or investor. Technical
analysis is a method of evaluating securities by analysing the statistics generated by market
activity, such as past prices and volume. Technical analysts do not attempt to measure a
security's intrinsic value, but instead use charts and other tools to identify patterns that can
suggest future activity.
The Technical Approach to investment is essentially a reflection of the idea that prices
moves in a trend that are determined by the changing attitude of investor’s toward a variety of
economic, monetary, political and psychological forces. The art of technical analysis, for it is
an art, is to identify a trend reversal at a relatively early stage and ride on that trend until the
weight of the evidence shows or proves the trend has reversed.
The present market scenario has shown us the Boom in Share Market. Even some of
the research firms showed that Share Market is the fastest growing in India. From last two years
share market is in boom. Now it is possible for the investors to trade from their own place. As
compare to last two years there is a growth in the number of share brokers and market analysts.
Media is playing an important role in these regards. Now the common man is also thinking of
some investment in share market. Too many investors invest their money for the short span,
the intention is speculative.

2
 CHAPTER 2:
INTRODUCTION TO THE
TOPIC

3
 2. INTRODUCTION TO THE TOPIC

Technical analysis is the study of how past and present price action in a given financial
market may help determine its future direction. At the same time, however, technical analysis
should not be considered a crystal ball. Rather, the skills of a technical analyst are used
primarily to help determine the highest-probability reactions to past and current price
movement, as well as likely future price movement. Therefore, technical analysis is less about
actually predicting the future and more about finding high-probability potential opportunities
to trade in the financial markets.
Technical analysis is a broad collection of methods and strategies which attempt to
forecast future prices on the basis of past prices or other observable market statistics, such as
volume or open interest. Different analysts/ traders may choose to use different types of charts
at different times, whether it is a line chart, a bar chart, a candlestick chart, a point and- figure
chart, or any of a number of other chart types.
Technical analysis involve putting stock information like prices, volumes and open
interest on a chart and applying various patterns and indicators to it in order to assess the future
price movements. The time frame in which technical analysis is applied may range from
intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly
or monthly price data to many years.
Technical analysis really just studies supply and demand in a market in an attempt to
determine what direction, or trend, will continue in the future. In other words, technical analysis
attempts to understand the emotions in the market by studying the market itself, as opposed to
its components. If you understand the benefits and limitations of technical analysis, it can give
you a new set of tools or skills that will enable you to be a better trader or investor.

Definition:-

 According to technical analysis, the price of stock depends on demand and supply in
the market place.
 Technical analysis is the study of investor behaviour and its effect on the subsequent
price action of financial instruments. The main data that we need to perform our studies
are the price histories of the instruments, together with time and volume information.
These enable us to form our views, based on objective fact.
 Technical analysis is the study of investor behaviour & its effect on the subsequent
price action of financial instrument. It is the process of trying to interpret that supply &
demand.
 It is the method of evaluating securities by analysing the statistics generated by market
activity, such as past prices & volume.
4
ASSUMPTIONS OF TECHNICAL ANALYSIS

The Market Discounts Everything

A major criticism of technical analysis is that it only considers price movement,

ignoring the fundamental factors of the company. However, technical analysis assumes that, at
any given a time, a stocks price reflects everything that has or could affect the company
including Fundamental Factors. Technical analysts believe that the company’s fundamentals,
along with broader economic factors and market\ psychology, are all priced into the stock,
removing the need to actually consider these factors separately.
This only leaves the analysis of price movement, which technical theory views as a
product of supply and demand for a particular stock in the market.

Price Moves In Trends

In technical analysis, price movements are believed to follow trends. This means that
after a trend has been established, the future price movement is more likely to be in the same
direction as the trend that to be against it. Most technical trading strategies are based on this
assumption.

History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly
in terms of price movement. The repetitive nature of price movement is attributed to market
psychology; in other words, market participants tend to provide a consistent reaction to similar
market stimuli over time. Technical analysis uses chats patterns to analyze market movements
and understand trends. Although many of\these charts have been use for more than 100 years
they are still believed to be relevant because they illustrate patterns in price movements that
often repeat themselves.

Importance of Technical Analysis

Not Just for stocks

Technical analysis has universal applicability. It can be applied to any fi nancial
instrument - stocks, futures and commodities, fi xed-income securities, forex, etc

Focus on price
Fundamental developments are followed by price movements. By focusing only on
price action, technicians focus on the future. The price pattern is considered as a leading
indicator and generally leads the economy by 6 to 9 months. To track the market, it makes
sense to look directly at the price movements. More often than not, change is a subtle beast.
Even though the market is prone to sudden unexpected reactions, hints usually develop before
significant movements. You should refer to periods of accumulation as evidence of an
impending advance and periods of distribution as evidence of an impending decline.

5
Supply, demand, and price action
Technicians make use of high, low and closing prices to analyze the price action of a
stock. A good analysis can be made only when all the above information is present Separately,
these will not be able to tell much. However, taken together, the open, high, low and close
reflect forces of supply and demand.

Support and resistance

Charting is a technique used in analysis of support and resistance level. These are
trading range in which the prices move for an extended period of time, saying that forces of
demand and supply are deadlocked. When prices move out of the trading range, it signals that
either supply or demand has started to get the upper hand. If prices move above the upper band
of the trading range, then demand is winning. If prices move below the lower band, then supply
is winning.

Pictorial price history:-

A price chart offers most valuable information that facilitates reading historical amount of
security’s price movement over period of time charts are much easier to read than table of
numbers.It is easy to identify following-
 Past & present volatility
 Historical volume or trading volume
 Relative strength of stock Vs index

Assist with entry point:-

It helps in tracking a proper entry point. Fundamental used to decide what to buy &
technical analysis is used to when to buy. Timing in this context plays a very important role in
performance. It can help spot demand ( support) & supply ( resistance)levels as well as
breakout.

6
 CHAPTER 3:
PROJECT DETAILS

7
 3. PROJECT DETAILS
TOOLS AND TECHNIQUES OF TECHNICAL ANALYSIS

There are numerous tools and techniques for doing technical analysis. Basically this
analysis is done from the following four important points of view:-

1)Prices:
Whenever there is change in prices of securities, it is reflected in the changes in investor
attitude and demand and supply of securities.

2) Time
The degree of movement in price is a function of time. The longer it takes for a reversal
in trend, greater will be the price change that follows.

3) Volume:
The intensity of price changes is reflected in the volume of transactions that accompany
the change. If an increase in price is accompanied by a small change in transactions, it implies
that the change is not strong enough. Volume is simply the number of shares or contracts that
trade over a given period of time, usually a day. The higher the volume, the more active the
security. To determine the movement of the volume (up or down).

4)Width:
The quality of price change is measured by determining whether a change in trend
spreads across most sectors and industries or is concentrated in few securities only. Study of
the width of the market indicates the extent to which price changes have taken place in the
market in accordance with a certain overall trends.

5) The Market Discounts Everything:

A major criticism of technical analysis is that it only considers price movement,
ignoring the fundamental factors of the company. However, technical analysis assumes that, at
any given time, a stock's price reflects everything that has or could affect the company -
including fundamental factors. Technical analysts believe that the company's fundamentals,
along with broader economic factors and market psychology, are all priced into the stock,
removing the need to actually consider these factors separately. This only leaves the analysis
of price movement, which technical theory views as a product of the supply and demand for a
particular stock in the market

6) History Tends To Repeat Itself :

Another important idea in technical analysis is that history tends to repeat itself, mainly
in terms of price movement. The repetitive nature of price movements is attributed to market
psychology; in other words, market participants tend to provide a consistent reaction to similar
market stimuli over time. Technical analysis uses chart patterns to analyse market movements
and understand trends.

 Analyst bias
Technical analysis is not hard core science. It is subjective in nature and your personal
biases can be reflected in the analysis. It is important to be aware of these biases when analysing
a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On

8
the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have
a bearish tilt.

 Open to interpretation
Technical analysis is a combination of science and art and is always open to interpretation.
Even though there are standards, many times two technicians will look at the same chart and
paint two different scenarios or see different patterns. Both will be able to come up with logical
support and resistance levels as well as key breaks to justify their position. Is the cup half-
empty or half-full? It is in the eye of the beholder.

 Too late
You can criticize the technical analysis for being too late. By the time the trend is identified,
a substantial move has already taken place. After such a large move, the reward to risk ratio is
not great. Lateness is a particular criticism of Dow Theory.

 Always another level

Technical analysts always wait for another new level. Even after a new trend has been
identified, there is always another “important” level close at hand. Technicians have been
accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish,
there is always some indicator or some level that will qualify their opinion.

 Trader’s remorse
An array of pattern and indicators arises while studying technical analysis. Not all the
signals work. For instance: A sell signal is given when the neckline of a head and shoulders
pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors
such as volume and momentum. In that same vein, what works for one particular stock may
not work for another. A 50-day moving average may work great to identify support and
resistance for Infosys, but a 70-day moving average may work better for Reliance. Even though
many principles of technical analysis are universal, each security will have its own
idiosyncrasies.

 TA is also useful in controlling risk

It is Technical Analysis only that can provide you the discipline to get out when you’re on
the wrong side of a trade. The easiest thing in the world to do is to get on the wrong side of a
trade and to get stubborn. That is also potentially the worst thing you can do. You think that if
you ride it out you’ll be okay. However, there will also be occasions when you won’t be okay.
The stock will move against you in ways and to an extent that you previously found virtually
unimaginable

9
Trend
Trend represent a constitunt change in prices ( i-e a change in investor expectations).
Trends differs from support or resistance levels in that represent change, where as support or
resistance levels represent barriers to change. Dow theory provides us with a clear definition
of trend.

Dow described how prices did not rise or fall in a straight line but moved in a series of
zigzags which resembled waves and it was the relative positioning of the peaks and troughs in
these waves that defined the trend.

Uptrend:-

A rising trend is defined by successively higher low-prices. A rising trend can be

thought of as rising support level the bulls in control & are pushing prices higher. Uptrend is
classified as series of higher highs & higher lows.

Notice how each successive peak and trough is located above the previous ones. For
example, the peak at trend is higher than the peak at uptrend. The uptrend will be deemed
broken if the next low on the chart falls below trend.

An uptrend describes the price movement of a financial asset when the overall direction
is upward. In an uptrend, each successive peak and trough is higher than the ones found earlier
in the trend. The uptrend is therefore composed of higher swing lows and higher swing highs.
As long as the price is making these higher swing lows and higher swing highs, the uptrend is
considered intact.

Some market participants only choose to trade during uptrends. These "long" trend
traders utilize various strategies to take advantage of the tendency for the price to make higher
highs and higher lows.

10
Downtrend :-

A falling trend is defined by successively lower high-prices. A falling trend can be

thought of as falling resistance level- the bears are in control & are pushing price lower. A
downtrend line has a negative slope & is formed by connecting two or more high points. The
second high must be lower than first for line to have a negative slope.

Notice how each successive peak and trough is lower than the previous one. For
example, the low trend is lower than the low at Point. The downtrend will be deemed broken
once the price closes above the high at high direction trend. Downtrend is the opposite of
uptrend.

While the price may move intermittently higher or lower, downtrends are characterized
by lower peaks and lower troughs over time. Technical analysts pay attention to downtrends
because they represent something more than a random losing streak. Securities in a downtrend
seem to be more likely to continue trending lower until some market condition changes,
implying that a downtrend marks a fundamentally deteriorating condition.

The first characteristic of a downtrend marks a point in the price action where supply
exceeds demand. The number of available sellers and the quantity of the security they want to
sell is more than the number of ready buyers and the quantity they want to buy. Somehow
market participants have, as a majority, no longer accepted the idea that this security should be
priced as high as it is.

The second characteristic indicates the increasing number of market participants that,
though previously undecided, have become convinced during the recent peak of price that they
must no longer own (or own as much of) the security. The number of sellers increases
simultaneously with the number of buyers decreasing.

The third characteristic is usually accompanied by news or new information that

confirms the suspicions of those who determined to exit, or no longer consider buying, the
security. Even more buyers back away and even more sellers become eager to take profits or
limit losses.

11
Support And Resistance Zones:-

A stock’s price is determined by supply and demand. Bulls buy when the stock’s is
prices are too low and bears sell when the price reaches its maximum. Bulls increase the prices
by increasing the demand and bears decrease it by increasing the supply. The market reaches a
balance when bulls and bears agree on a price.

When prices are increasing upward, there exists a point at which the bears become more
aggressive the bulls begin to pull back - the market balances along the resistance line. When
prices are going downwards, the market balances along the support line. As prices starts to
decline toward the support line, buyers become more inclined to buy and sellers start holding
on to their stocks.

Support represents a low level a stock price reaches over time, while resistance
represents a high level a stock price reaches over time. Support materializes when a stock price
drops to a level that prompts traders to buy.

12
 Technical analysts use support and resistance levels to identify price points on a chart
where the probabilities favor a pause or reversal of a prevailing trend. Support occurs where a
downtrend is expected to pause due to a concentration of demand.
Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of
supply. Market psychology plays a major role as traders and investors remember the past and
react to changing conditions to anticipate future market movement. Support and resistance
areas can be identified on charts using trendlines and moving averages.

Breakout:-

Breakout is a signal for the investors who wish to buy or sell their stocks

Just as prices penetrate support & resistance levels when expectation change, price can
penetrate rising & falling trendline. It shows penetration of Merk’s falling trendline as investors
no longer expected lower price.

Break out is also called as ‘confirmation’. This is indicated by drawing a line, which is
a period of consolidation, when the share prices move sideways within a range of about 5% of
the share price. Eventually a break out will occur and it is often suggested that the longer the
period of consolidation, the greater will be the extent of ultimate rise or fall.

Volume increased when trendline was penetrate . this is an important confirmation that
previous trend is no longer intact.

13
Some important term for new investor:-

Price Fields
Technical analysis is based almost entirely on the analysis of price and volume. The
fields which define a security's price and volume are explained below.

Open
This is the price of the first trade for the period (e.g., the first trade of the day). When
analyzing daily data, the Open is especially important as it is the consensus price after all
interested parties were able to "sleep on it."

High
This is the highest price that the security traded during the period. It is the point at
which there were more sellers than buyers (i.e., there are always sellers willing to sell at higher
prices, but the High represents the highest price buyers were willing to pay).

Low
This is the lowest price that the security traded during the period. It is the point at which
there were more buyers than sellers (i.e., there are always buyers willing to buy at lower prices,
but the Low represents the lowest price sellers were willing to accept).

Close
This is the last price that the security traded during the period. Due to its availability,
the Close is the most often used price for analysis. The relationship between the Open (the first
price) and the Close (the last price) are considered significant by most technicians. This
relationship is emphasized in candlestick charts.

Volume Volume
This is the number of shares (or contracts) that were traded during the period. The
relationship between prices and volume (e.g., increasing prices accompanied with increasing
volume) is important.

Open Interest
This is the total number of outstanding contracts (i.e., those that have not been
exercised, closed, or expired) of a future or option. Open interest is often used as an indicator.

Bid
This is the price a market maker is willing to pay for a security (i.e., the price you will
receive if you sell).

Ask
This is the price a market maker is willing to accept (i.e., the price you will pay to buy
the security). These simple fields are used to create literally hundreds of technical tools that
study price relationships, trends, patterns, etc.

14
Market Watch: -

Market watch is very needed to predict the market. The stock holder, dealer as well as
analyst should give the regular market watch to the market, trading script. High, Low, Open,
Close are important terms which are shown, on market watch script or on trading terminal.

Order placing-
It is important phase in technical analysis. There is asymmetry between zero &
infinity. What does it mean? Most of us have very finite capital but infinite opportunities
because of thousands of stocks . if we lose an opportunity, we will have thousands more
tomorrow. If we lose our capital, will we get thousands of opportunity? It is likely that we
will not. It is simply demand & supply management.

Buying order –
There is a special script for buying Order, which include the name of investment,
product type, price, trig price, quantity, type of exchange, name of investor etc.

15
Selling order –

There is a special script for buying Order, which include the name of investment ,
product type, price, trig price, quantity, type of exchange, name of investor etc. Mostly buying
script is in Red colour.

16
Pattern of charts:-

There are three main types of charts that are used by investors and traders depending
on the information that they are seeking and their individual skill levels. The chart types are:
the line chart, the bar chart, the candlestick chart.

A chart gives us a complete picture of a stock’s price history over a period of an hour,
day, week, month or many years. It has an x-axis (horizontal) and a y-axis (vertical). Typically,
the x-axis represents time; the y-axis represents price.

Line chart:-

“Line charts” are formed by connecting the closing prices of a specific

stock or market over a given period of time. Line chart is particularly useful for providing a
clear visual illustration of the trend of a stock’s price or a market’s movement. It is an
extremely valuable analytical tool which has been used by traders for past many years.

Line charts, especially for Elliott wave analysis. A line chart is the simplest of all
methods. It is constructed by joining together the closing price of each period, for example
daily closings for the daily line chart, weekly closings for the weekly chart or monthly closings
for the monthly line chart.

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. A line chart's strength comes from its simplicity. It provides an
uncluttered, easy to understand view of a security's price. Line charts are typically displayed
using a security's closing prices.

17
Bar chart:-

A bar chart displays a security's open (if available), high, low, and closing prices. Bar
charts are the most popular type of security chart. The bar chart expands on the line chart by
adding several more key pieces of information to each data point. The chart is made up of a
series of vertical lines that represent each data point. This vertical line represents the high and
low for the trading period, along with the closing price. The close and open are represented on
the vertical line by a horizontal dash. 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.
Bar chart is the most popular method traders use to see price action in a stock over a
given period of time. Such visual representation of price activity helps in spotting trends and
patterns.

Candle chart:-

18
 A candlestick chart can be created using the data of high, low, open and closing prices
for each time period that you want to display. The hollow or filled portion of the candlestick is
called “the body” (also referred to as “the real 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”). The high is marked by the top of the upper shadow and the low by the bottom of the
lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn
with the bottom of the body represents the opening price and the top of the body representing
the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn
with the top of the body representing the opening price and the bottom of the body representing
the closing price.

Bull-
The Bulls A bull market is when everything in the economy is great, people are finding
jobs, gross domestic product (GDP) is growing, and stocks are rising. Picking stocks during a
bull market is easier because everything is going up. Bull markets cannot last forever though,
and sometimes they can lead to dangerous situations if stocks become overvalued. If a person
is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have
a "bullish outlook".

The Bears –
A bear market is when the economy is bad, recession is looming and stock prices are
falling. Bear markets make it tough for investors to pick profitable stocks. One solution to this
is to make money when stocks are falling using a technique called short selling. Another
strategy is to wait on the side lines until you feel that the bear market is nearing its end, only
starting to buy in anticipation of a bull market. If a person is pessimistic, believing that stocks
are going to drop, he or she is called a "bear" and said to have a bearish outlook.

19
Reversal pattern

Candlesticks primarily focus on trend reversals. Reversal patterns are indicators that the
previous trend is about to:

 Reverse,
 flatten out and continue,
 or flatten out and reverse

As you can see, reversal patterns can signal several different outcomes. This is why we
need to have a firm grip on reversal patterns before we proceed any further. Successful traders
have the ability to know what the trend is doing and is going to do. They do this by mastering
the ability to recognize reversal patterns and then implementing the knowledge gained to
improve their trading positions.

The main use of reversal patterns is to signal when to exit a trade. They should not be
used to signal when to enter a trade. The reason is because a reversal pattern can signal that the
trend is reversing, flattening and resuming or flattening and reversing. We must wait until
we get more information after the reversal pattern to make our move.

The reversal patterns that we will discuss are divided into two sections. Single candle
reversal indicators and multi-candle reversal indicators are:

Single Candlestick

Doji, Gravestone Doji and Dragonfly Doji

 BULLISH or BEARISH single candle

Reversal Pattern.

 The open is equal to (or almost equal to)

the close, resulting in no real body. Indecision
in the market - neither the bulls nor bears are
in control.

 The Doji can be found at the top or

bottom. The Gravestone Doji is usually found
at a top reversal. The Dragonfly Doji is
usually found at a bottom reversal.

A Doji indicates a 'tug-of-war' between the bulls and bears in which neither party was
dominant. Price may have been driven up and/or down from the open, but was driven back to
close equal to (or almost equal to) the opening price. This indecision in the market often
precedes a change in trend to either a sideways or a reverse direction trend.

20
 The Gravestone Doji is more bearish, and therefore more effective at a market top. The
Dragonfly Doji is more bullish, and therefore more effective at a market bottom.

Inverted Hammer and Shooting Star

 Shooting Star candle is BEARISH single

candle Reversal Pattern.
 Inverted hammer is BULLISH single
candle Reversal Pattern.
 Market gaps up to Shooting Star candle.
 Market gaps down to inverted hammer
candle.
 Colour can be RED or GREEN.
 Upper Shadow is at least 2 times the size
of the real body.

Shooting Star
The bulls continue the uptrend by gapping the price up at the open and driving it to new
highs. The bears come back in force though and drive price back down. A red Shooting Star is
more bearish than a green Shooting Star, due to the bears ability to force the close of the candle
below the opening price.

Inverted hammer
The bulls continue the uptrend by gapping the price up at the open and driving it to new
highs. The bears come back in force though and drive price back down. A red Shooting Star is
more bearish than a green Shooting Star, due to the bears ability to force the close of the candle
below the opening price.

21
Hammer and Hanging man

 BULLISH single candle Hammer Pattern and BEARISH single candle Hanging Man
Pattern.
 Market ideally gaps down to Hammer candle and Market gaps up to Hanging Man
candle.
 Colour can be RED or GREEN.
 Lower Shadow is at least 2 times the size of the real body.

Hammer
The bears continue the downtrend by gapping the price down at the open and driving it
to new lows. The bulls come back in force though and drive price back up. A green Hammer
is more bullish than a red Hammer, due to the bulls ability to force the close of the candle above
the opening price.
Hanging Man
The uptrend initially appeared that it would continue strongly as the price gapped up at
the open, however the bears fought back strongly driving price convincingly lower. Although
the bulls were able to resist the downward pressure, this is only temporary. A red Hanging Man
is more bearish than a green Hanging Man, due to the bulls inability to force the close of the
candle above the opening price. The Hanging Man is not considered as bearish as the Shooting
Star, due to the fact that the bulls were able to fight back to some degree.

22
Double candlestick
Bullish Engulfing and Bearish Engulfing

 BULLISH ENGULFING two candle Reversal Pattern.

 1st candle has a smaller RED real body.
 2nd longer GREEN candle completely engulfs the first candle body.

This is a very bullish reversal pattern in which the bulls inflict a rapid and decisive
victory over the bears. The downtrend continues via a red bodied candle. The opening of the
next candle ideally gaps down (continued sign of bearishness) however the bulls then drive
the price upwards to close the candle above the open of the red bodied candle. The name
'bullish engulfing' is due to the fact that the real body of the green candle completely engulfs
the real body of the red candle.

 BEARISH ENGULFING two candle Reversal Pattern.

 1st candle has a smaller GREEN real body.
 2nd longer RED candle completely engulfs the 1st candle body.

This is a very bearish reversal pattern in which the bears inflict a rapid and decisive victory
over the bulls. The uptrend continues via a green bodied candle. The opening of the next
candle ideally gaps upwards (continued sign of bullishness) however the bears then drive the
price down to close the candle below the open of the green bodied candle. The name 'bearish
engulfing' is due to the fact that the real body of the red candle completely engulfs the real
body of the green candle.

23
Piercing and Dark Cloud candlestick

Piercing candlestick
 BULLISH two candle Reversal Pattern.
 1st candle has a RED real body.
 2nd GREEN candle opens below, and closes in the upper half of the 1st candle body.

The downtrend continues via a red bodied candle. The opening of the next candle ideally
gaps down (continued sign of bearishness) however the bulls then drive the price back up
showing renewed strength and a potential change of trend. The bulls win the battle closing the
candle in the upper half of the red candle's body. Note that this is not as bullish as the bullish
engulfing pattern, in which the bulls were able to drive the price higher to close above the first
candle's real body.

Dark Cloud candlestick

 BEARISH two candle Reversal Pattern.
 1st candle has a GREEN real body.
 2nd RED candle opens above, and closes in the lower half of the 1st candle body.

The uptrend continues via a green bodied candle. The opening of the next candle ideally
gaps up (continued sign of bullishness) however the bears then drive the price back down
showing renewed strength and a potential change of trend. The bears win the battle closing the
candle in the lower half of the green candle's body. Note that this is not as bearish as the bearish
engulfing pattern, in which the bears were able to drive the price lower to close below the first
candle's real body.

24
Three Candlestick
Moring Star and Evening Star Candlestick

Moring star
 BULLISH three candle Reversal Pattern.
 1st candle has a long RED real body.
 Market gaps down to 2nd small body candle (either colour).
 3rd candle has a GREEN real body, ideally gapping up from the star (2nd candle).

The bears continue the downtrend by forming a long red bodied candle. The gap opening
down to the second candle initially appears bearish, but the small body of the star shows a
possible loss of momentum. The bulls then re-enter the market in force, ideally gapping up
from the star, and driving price to close well within (or above) the first candle. The higher the
close, the more decisive the victory of the bulls over the bears.

Evening Star
 BEARISH three candle Reversal Pattern.
 1st candle has a long GREEN real body.
 Market gaps up to 2nd small body candle (either colour)
 3rd candle has a RED real body, ideally gapping down from the star (2nd candle).

The bulls continue the uptrend by forming a long green bodied candle. The gap opening up
to the second candle initially appears bullish, but the small body of the star shows a possible
loss of momentum. The bears then re-enter the market in force, ideally gapping down from the
star, and driving price to close well within (or below) the first candle. The lower the close, the
more decisive the victory of the bears over the bulls.

25
Some Candlestick Pattern
Cup & handle pattern:-

This chart is a bullish continuation pattern in which the upward trend has paused but
will continue in an upward direction once the pattern is confirmed.

This price pattern forms what looks like a cup, which is preceded by an upward trend.
The handle follows the cup formation and is formed by a generally downward/sideways
movement in the security's price. Once the price movement pushes above the resistance lines
formed in the handle, the upward trend can continue.

There is a wide ranging time frame for this type of pattern, with the span ranging from
several months to more than a year.

26
Bilateral Patterns

Triangles are some of the most well-known chart patterns used in technical analysis.
The three types of triangles, which vary in construct and implication, are the symmetrical
triangle, ascending and descending triangle. These chart patterns are considered to last
anywhere from a couple of weeks to several months. The symmetrical triangle is a pattern in
which two trend lines converge toward each other.

This pattern is neutral in that a breakout to the upside or downside is a confirmation of

a trend in that direction. In an ascending triangle, the upper trend line is flat, while the bottom
trend line is upward sloping. This is generally thought of as a bullish pattern in which chartists
look for an upside breakout. In a descending triangle, the lower trend line is flat and the upper
trend line is descending. This is generally seen as a bearish pattern where chartists look for a
downside breakout.

27
Double Top And Double Bottom Pattern

Double top and bottom patterns are chart patterns that occur when the underlying
investment moves in a similar pattern to the letter "W" (double bottom) or "M" (double top).
28
Double top and bottom analysis is used in technical analysis to explain movements in a security
or other investment, and can be used as part of a trading strategy to exploit recurring patterns.

Double top and bottom patterns typically evolve over a longer period of time, and do
not always present an ideal visual of a pattern because the shifts in prices don't necessarily
resemble a clear "M" or "W". When reviewing the chart pattern, it is important for investors to
note that the peaks and troughs do not have to reach the same points in order for the "M" or
"W" pattern to appear.

Double top and bottom patterns are formed from consecutive rounding tops and
bottoms. These patterns are often used in conjunction with other indicators since rounding
patterns in general can easily lead to fakeouts or mistaking reversal trends.

Head And Shoulder And Inverse Head And Shoulder Pattern

A head and shoulders pattern is a chart formation that appears as a baseline with three
peaks, where the outside two are close in height and the middle is highest. In technical analysis,
a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-
bearish trend reversal.

29
 The head and shoulders pattern is believed to be one of the most reliable trend reversal
patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an
upward trend is nearing its end.

The head and shoulders pattern forms when a stock's price rises to a peak and
subsequently declines back to the base of the prior up-move. Then, the price rises above the
former peak to form the "nose" and then again declines back to the original base. Finally, the
stock price rises again, but to the level of the first, initial peak of the formation before declining
back down to the base or neckline of chart patterns one more time.

Indicators And Oscillators

Indicators :-

Technical indicators are heuristic or pattern-based signals produced by the price,

volume, and/or open interest of a security or contract used by traders who follow technical
analysis. By analyzing historical data, technical analysts use indicators to predict future price
movements.
Technical indicators are heuristic or pattern-based signals produced by the price,
volume, and/or open interest of a security or contract used by traders who follow technical
analysis.

By analyzing historical data, technical analysts use indicators to predict future price
movements. Examples of common technical indicators include the Relative Strength Index
(RSI), Money Flow Index (MFI), stochastics, moving average convergence divergence
(MACD), and Bollinger Bands.

An oscillator is a technical analysis tool that constructs high and low bands between
two extreme values, and then builds a trend indicator that fluctuates within these bounds.
Traders use the trend indicator to discover short-term overbought or oversold conditions.

An oscillator is a technical analysis tool that constructs high and low bands between
two extreme values, and then builds a trend indicator that fluctuates within these bounds.
Traders use the trend indicator to discover short-term overbought or oversold conditions. When
the value of the oscillator approaches the upper extreme value, technical analysts interpret that
information to mean that the asset is overbought, and as it approaches the lower extreme,
technicians consider the asset to be oversold.

30
Relative Strength Index

The RSI is part of a class of indicators called momentum oscillators. There are a number
of indicators that fall in this category, the most common being Relative Strength Index,
Stochastic, Rate of Change, Williams %R. Although these indicators are all calculated
differently, there are a number of common elements to their use which shall be discussed in
the context of the RSI.

Momentum is simply the rate of change – the speed or slope at which a stock or
commodity ascends or declines. Measuring speed is a useful gage of impending change. An
oscillator is an indicator that moves back and forth across a reference line or between prescribed
upper and lower limits. When an oscillator reaches a new high, it shows that an uptrend is
gaining speed and is likely to continue. When an oscillator traces a lower peak, it means that
the trend has stopped accelerating and a reversal can be expected from there, much like a car
slowing down to make a U-Turn.

In the same way, RSI is a momentum oscillator generally used in sideways or ranging
markets where the price moves between support and resistance levels. It is one of the most
useful technical tool employed by many traders to measure the velocity of directional price
movement.

Overbought and Oversold

31
 The RSI is a price-following oscillator that ranges between 0 and 100. Generally,
technical analysts use 30% oversold and 70% overbought lines to generate the buy and sell
signals.

• Go long when the indicator moves from below to above the oversold line.
• Go short when the indicator moves from above to below the overbought line.

Note here that the direction of crossing is important; the indicator needs to first go past
the overbought/oversold lines and then cross back through them.

We can find in the below graph the RSI , the graph show the indicators which shows
uptrend single in start show buy single after confirming trend.

32
Moving Average Indicators

Moving average is a simple, technical analysis tool. Moving averages are usually
calculated to identify the trend direction of a stock or to determine its support and resistance
levels. It is a trend-following—or lagging—indicator because it is based on past prices.

The longer the time period for the moving average, the greater the lag. So, a 200-day
moving average will have a much greater degree of lag than a 20-day MA because it contains
prices for the past 200 days. The 50-day and 200-day moving average figures for stocks are
widely followed by investors and traders and are considered to be important trading signals.

Moving averages are a totally customizable indicator, which means that an investor can
freely choose whatever time frame they want when calculating an average. The most common
time periods used in moving averages are 15, 20, 30, 50, 100, and 200 days. The shorter the
time span used to create the average, the more sensitive it will be to price changes. The longer
the time span, the less sensitive the average will be.

Investors may choose different time periods of varying lengths to calculate moving
averages based on their trading objectives. Shorter moving averages are typically used for
short-term trading, while longer-term moving averages are more suited for long-term investors.

There is no correct time frame to use when setting up your moving averages. The best
way to figure out which one works best for you is to experiment with a number of different
time periods until you find one that fits your strategy.

A rising moving average indicates that the security is in an uptrend, while a declining
moving average indicates that it is in a downtrend. Similarly, upward momentum is confirmed
with a bullish crossover, which occurs when a short-term moving average crosses above a
longer-term moving average. Conversely, downward momentum is confirmed with a bearish
crossover, which occurs when a short-term moving average crosses below a longer-term
moving average.

33
MACD (Moving average convergence divergence)

Moving average convergence divergence (MACD) is a trend-following momentum

indicator that shows the relationship between two moving averages of a security’s price. The
MACD is calculated by subtracting the 26-period exponential moving average (EMA) from
the 12-period EMA.

The result of that calculation is the MACD line. A nine-day EMA of the MACD called
the "signal line," is then plotted on top of the MACD line, which can function as a trigger for
buy and sell signals. Traders may buy the security when the MACD crosses above its signal
line and sell—or short—the security when the MACD crosses below the signal line. Moving
average convergence divergence (MACD) indicators can be interpreted in several ways, but
the more common methods are crossovers, divergences, and rapid rises/falls.

KEY Points
 Moving average convergence divergence (MACD) is calculated by subtracting the 26-
period exponential moving average (EMA) from the 12-period EMA.
 MACD triggers technical signals when it crosses above (to buy) or below (to sell) its
signal line.
 The speed of crossovers is also taken as a signal of a market is overbought or oversold.
 MACD helps investors understand whether the bullish or bearish movement in the price
is strengthening or weakening.

MACD Formula
\text{MACD}=\text{12-Period EMA }-\text{ 26-Period EMA}MACD=12-Period EMA − 26-
Period EMA

34
Volume Indicator

Trading volume is a measure of how much a given financial asset has traded in a period
of time. For stocks, volume is measured in the number of shares traded. For futures and options,
volume is based on how many contracts have changed hands. Traders look to volume to
determine liquidity and combine changes in volume with technical indicators to make trading
decisions.

Looking at volume patterns over time can help get a sense of the strength of conviction
behind advances and declines in specific stocks and entire markets. The same is true for options
traders, as trading volume is an indicator of an option’s current interest. In fact, volume plays
an important role in technical analysis and features prominently among some key technical
indicators.

Volume indicators are mathematical formulas that are visually represented in the most
commonly used charting platforms. Each indicator uses a slightly different formula, and traders
should find the indicator that works best for their particular market approach.

Indicators are not required, but they can aid in the trading decision process. There are
many volume indicators to choose from, and the following provides a sampling of how several
of them can be used.

35
 CHAPTER 4:
CHART PATTERN
WORKED

36
 4. CHART PATTERN WORKED
Head and Shoulder Pattern
Nifty50 5 Min Chart

Double Top Pattern

Bank Nifty 5Min Chart

37
Hindalco Inds 1D Chart

Kotak Mahindra Bank 1D Chart

38
TCS 1D Chart

39
 CHAPTER 5:
DATA ANALYSIS AND
INTERPRETATION

40
 5. DATA ANALYSIS AND INTERPRETATION
Age

Qualification

Occupation

41
Income

Do you know what is Technical Analysis?

Which software do you use for Technical Analysis?

42
Which Broker do you prefer?

Do you use Technical Analysis For trading?

For Technical Analysis which Timeframe you use?

43
Do you know what is price action?

In Technical Analysis which strategy do you use?

Where do you invest your money?

44
If your are invest your money in stock market then where do You invest your money?

While trading or investing in stocks/Derivatives/commodities which one you will prefer?

Do you think using technical analysis we can find market trend?

45
Which chart you use in technical analysis?

If your are using candlestick chart for technical analysis then which candlestick do You
know?

In Technical Analysis which Pattern do you use?

46
Which Indicator do you use?

47
CHAPTER 6:
FINDING

48
 6. FINDING
Data collected by questionaries using google form In that collected 50 responses. The
age group of maximum 68% respondent is 18 – 25 years. 50% respondents are employees and
30% are students and remailing are self employed and other and 46% of students are post
graduated and 44% are graduated and remaining in others some are employed. And the income
of respondents is between 1,00,000 to 5,00,000 percentage is higher combined 52 %.

As per respondents response maximum are using TradingView website / software for
technical analysis and after that investing.com website is most used for technical analysis these
two website are very user friendly and easy to use for everyone in these two website you can
find any chart for free example :- shares, crypto, forex, etc,.

As we know that zerodha and upstox are companies in top active clients because of
discount broker and both apps and website are very easy to use and best for investment.

In trading investors / traders using maximum timeframe of 15 Min and 1 Hr chart for
trading and for investing 1 Day chart with this traders can find patterns and with the help of
chart patterns they can generate the profit taking trade with the help of timeframe using patterns
traders / investors take reversal and breakout trades.

Lot of investors invest in equity as compare to derivatives and for technical analysis
maximum investors use candlestick chart using candlestick pattern maximum time head and
shoulder and triangle patterns are mostly seen and traded and with price action traders use some
indicators for confirmation maximum retail investors use volume and moving average for
taking trade.

In chapter 5 I took 2 Index (Nifty & BankNifty) and 3 companies from Nifty Index
(Hindalco, Kotak Mahindra Bank, TCS).

In that Nifty50 chart recently head and shoulder pattern formed and target as per head
and trend based fib extension is 2 nd confirmation to take trade and set target as per level of 0.5
and 1.

In BankNifty recently Double Top Formed and target hit perfectly. Support became
resistance and break of neckline that the perfect time to enter in trade and target achieved.

In Hindalco 1D Chart mid Oct and Mid Feb resistance / double top formed and that
resistance braked and head and shoulder pattern formed and at that resistance line price
consolidated and after that confirmation trade activated and target set and achieved.

In Kotak Mahindra Bank we can see that Triangle Pattern Formed with the good support
near 1700 and trade is not yet activated once if trade activate with the good volume then there
are higher chances to achieve the target.

In TCS we can see that Triangle Pattern Formed and after some days trade activated
and target achieved and after target in chart double top pattern seen.

49
 CHAPTER 7:
CONCLUSION

50
 7. CONCLUSION
Technical analysis is the study of behaviour of buyer & seller. It is very useful tool to
capture gain with the help of technical analysis. It is very important analysis is the study of
investor behaviour and its effect on the subsequent price action of shares, Forex, Crypt and
Etc,. The main data that we need to perform our studies are the price histories of the
instruments, together with time and volume information.

Technical analysts examine the price action of Charts instead of fundamental factors
that to effect to market prices. It is important to understand to enter in the trade & understand
the trade management once you understand this psychology then it is more easy to predict
future price & earn profit.

Using candle and candlestick patterns trader/investor can predict the market trend
direction and with the help of that we can set target and stop loss. While trading there are some
rules that trader/investor should follow if he wants to stay longer in market.

The main rules In Trading are :

1. Don't be greedy
2. Avoid 'hot tips'
3. Avoid actions based on sentiments
4. Don't panic if the market drops
5. Stay invested, possibly continue to invest more
6. Sell when value is realized

These rules are frequently used in technical analysis. The rules are clear and consistent
but they are difficult to use in practise. Much experience is needed to use them. The investor
always kept in the mind we have limited capital but the unlimited opportunity. Once you lose
the capital you cannot opportunity. But if you lose opportunity then hundreds of other
opportunity waiting for us.

51
 CHAPTER 8:
BIBLIOGRAPHY

52
 8. BIBLIOGRAPHY
https://www.investing.com/
https://www.moneycontrol.com/
https://www.investopedia.com/
https://www.tradingview.com/
https://www.screener.in/
https://ticker.finology.in/
https://www.nseindia.com/
https://www.bseindia.com/
https://www.sebi.gov.in/
https://en.wikipedia.org/

53
CHAPTER 9:
ANNEXURE

54
 9. ANNEXURE
1) Age
18-25
26 35
35 above

2)Qualification
HSC
Graduation
Post Graduation
Other

3)Occupation
Student
Service
Self employed
Other

4)Income
0 - 1,00,000
1,00,000 - 3,00,000
3,00,000 - 5,00,000
5,00,000 above

5)Do you know what is Technical Analysis?

Yes
No

6)Which software do you use for Technical Analysis?

Tradingview
Investing.com
Broker software
Other

7)Which Broker do you prefer?

Zerodha
Upstox
5paisa
Angel Broking
Other

8)Do you use Technical Analysis For trading?

Yes
No

55
9)For Technical Analysis which Timeframe you use?
15 Min
30 Min
1 Hr
4 Hr
1 Day

10)Do you know what is price action?

Yes
No

11)In Technical Analysis which strategy do you use?

Reversal
Breakouts
Other

12)Where do you invest your money?

FD
Stocks
Mutual fund
Gold/silver

13)If your are invest your money in stock market then where do You invest your
money?
Equity
Derivatives
Commodity

14)While trading or investing in stocks/Derivatives/commodities which one you will

prefer?
Technical Analysis
Fundamental Analysis
Both A & B
Advice/Tips

15)Do you think using technical analysis we can find market trend?
Yes
No

16)Which chart you use in technical analysis?

Line Chat
Bar Chart
Candlestick Chart

56
17)If your are using candlestick chart for technical analysis then which candlestick do
You know?
Marubuzu
Morning / Evening Star
Hammer / Inverted Hammer
Bullish/Bearish Harami
Bullish / Bearish Engulfing
Other

18)In Technical Analysis which Pattern do you use?

Head and shoulders/Inverted
Flag and pull
Triangle
Double Top / Bottom

19)Which Indicator do you use?

Moving Average
RSI
Volume
MACD

57
 CHAPTER 10:
PROJECT PROGRESS
REPORT

58
 10. PROJECT PROGRESS REPORT
Name of the student: Saurabh Navnath Waragade. Class & Roll No: 29
Course & Batch: PGDM 2020-22 specialization: Banking and finance
Project guide: Prof. Sonali Athwale
Project title: A Study On Technical Analysis

Sr. Date Topic Discussed Next Student Project

No. Meeting Signature Guide
Date Signature
1 26 Feb 2022 Address from project 18 march
co-ordinator regarding 2022
project

2 18 March Discussion on project 4 April

2022 topic 2022

3 4 April 2022 Soft copy of project 28 April

synopsis submitted for 2022
approval

4 28 April Discussion on project 1 May 2022

2022 submission

5 1 May 2022 Submission of first

Draft

59
 CHAPTER 11:
PROJECT SYNOPSIS

60
 11. PROJECT SYNOPSIS
Student Name : Saurabh N. Waragade. Class & Roll No.: 29
Specialization : Banking and Finance

1. PROJECT TITLE:
A Study on Technical Analysis

2. OBJECTIVES AND LIMITATIONS OF THE PROJECT:

 To understand Price behavior of stocks
 To understand how stock patterns work
 To learn about how to invest using technical analysis (Price action)
 To know about indicators and oscillators work and help while investing using
technical analysis

LIMITATIONS:
 Time constraints

3. SOURCES OF DATA:

 Sources of Primary Data: Technical chart Observations, Questionnaires.

 Sources of Secondary Data: Internet, useful websites

(Approved/Not Approved) Date:

____________

61