Market Analysis and Candlestick Chart Essentials

Jun 26, 2024

Lecture Notes: Market Analysis

Introduction

  • The importance of price and volume in market and stock movements
  • Initially 50-60% probability, later can reach up to 70-80%
  • The need and significance of intraday trading

Video Introduction

  • Information on technical analysis and charts by Mr. Asim Singhal in the video
  • The importance of fundamental and technical analysis

Technical Analysis Basics

  • Trading by looking only at price and volume
  • How charts work

Understanding Charts

  1. Types of Charts
    • Candlestick Charts
    • Line Charts
    • Heikin Ashi Charts
  2. Candle Stick Patterns
    • Opening, closing price, high and low
    • Importance of body and wicks

Types of Charts Explained

  • Candle Stick Charts: The most important chart
    • What green/red candle indicates
    • Structure of candle body and wicks
  • Line Charts: Shows the overall trend a bit clearly
    • Follow-up of zig-zag movements
  • Heikin Ashi Charts: Shows trend by removing noise
    • The low of red Heikin Ashi indicates the right price

Time Frames

  1. Different Time Frames
    • Importance of time frame for intraday trading
    • Swing and positional trading
    • 5-10 or 15-minute time frame for intraday traders
  2. Swing Traders
    • Choosing 15-30 minutes
    • Using daily time frame by positional traders

Candlestick Patterns

  1. Continuation Patterns
    • Marubozu Candle
      • Bullish and Bearish Marubozu
      • Importance of momentum in the candle
  2. Reversal Patterns
    • Doji Candle
      • Importance of reversal
      • Hammer and Shooting Star pattern
      • Bullish Hammer, Bearish Shooting Star
  3. Double Candlestick Patterns
    • Engulfing Patterns (Bullish and Bearish)
    • Piercing and Dark Cloud Cover Patterns
  4. Multiple Candlestick Patterns
    • Morning and Evening Star
    • Importance of three candle patterns

Practical Examples

  1. Marubozu Candle
    • Big candle, no wick
    • Can move up blindly
  2. Engulfing Patterns
    • Market hindrances and buyers’ attention
  3. Doji Candlestick
    • Preference for reversal

Candlestick Patterns Practical Examples

  1. TCS Stock Analysis
    • Example of Doji and Marubozu
  2. Bearish Engulfing - Karur Bank Stock Analysis
    • Combined pattern with red candle and green

Conclusion

  • Understanding the importance and various charts and time frames
  • Analysis of candlestick patterns
  • Effectiveness of risk management