Price Action

Study:
Technical
Analysis
 What is Technical Analysis

PRICE ACTION

CHART PATTERNS

Technical
INDICATORS
Analysis

TRENDS

ENTRY & EXIT

 What is Technical Analysis?

Technical analysis is a method of studying financial

markets by analyzing historical price and volume data.

It focuses on identifying patterns, trends, and

relationships in market data to predict future price
movements.

Key components of technical analysis include price,

volume, time frames, and various price variables.
 Technical Analysis

Price: The value at which an asset is traded in the market. It is the primary data
point used in technical analysis.

Volume: The number of shares or contracts traded within a specific time

period. The volume provides insights into market participation and the strength
of price movements.

Time Frames: Different time intervals are used to analyze price data, such as
daily, hourly, or minute charts. Each time frame provides different levels of
detail and perspective on market movements.

Price Variables: Various factors that influence price, including supply and
demand dynamics, market sentiment, economic indicators, and news events.
 Charts

Charts are graphical representations of

price and volume data.

They visually depict the historical

performance of an asset, allowing traders
to analyze patterns and trends.
 Types of Charts

LINE CHARTS BAR CHARTS

A basic chart that connects Displays opening, closing, high, and low
closing prices over time, prices as vertical bars. The opening
providing a simple price is represented by a horizontal line
representation of price on the left, the closing price by a line
movements. on the right, and the high and low
prices by the top and bottom of the
bar, respectively.

CANDLESTICK CHARTS
Similar to a bar chart but with
added color coding and visual
elements, candlestick charts
provide more detailed information
about price movements.
 What is Candlestick?

Developed in the 18th century by a Japanese

rice trader, this trading technique generates
signals according to the relationship between
open, high, low, and close prices.

Candlestick charts represent price data using

candlestick shapes composed of a body and wicks
(also known as shadows).

The body represents the price range between the

opening and closing prices.
Wicks show the price range between high and low prices.
How to read Candlestick Patterns?
The Candlestick Movements
Combined Candlestick Patterns
Strength Of a Candlestick
 Candlestick Patterns
The candlestick patterns can be divided into:

Bullish Patterns:
Bullish patterns may form after a market downtrend and signal a reversal of price movement. They are an indicator for
traders to consider opening a long position to profit from any upward trajectory.

Bearish Patterns:
Bearish candlestick patterns usually form after an uptrend and signal a point of resistance. Heavy pessimism about the
market price often causes traders to close their long positions and open a short position to take advantage of the
falling price.

Continuation Patterns:
If a candlestick pattern doesn’t indicate a change in market direction, it is what is known as a continuation pattern.
These can help traders to identify a period of rest in the market, when there is market indecision or neutral price
movement.
 Bullish Candlestick Patterns
Hammer
The hammer candlestick pattern is formed of a short body with a long
lower wick and is found at the bottom of a downward trend.

Inverse Hammer
A similarly bullish pattern is the inverted hammer. The only difference is
that the upper wick is long, while the lower wick is short.

Bullish Engulfing
The bullish engulfing pattern is formed of two candlesticks. The first candle
is a short red body that is completely engulfed by a larger green candle.
Bullish Candlestick Patterns
Piercing Line
The piercing line is also a two-stick pattern, made up of a long red candle,
followed by a long green candle. Usually, a significant gap down between
the first candlestick’s closing price, and the green candlestick’s opening.

Morning Star
The morning star candlestick pattern is considered a sign of hope in a bleak
market downtrend. It is a three-stick pattern: one short-bodied candle
between a long red and a long green.

Three White Soldiers

The three white soldiers’ pattern occurs over three periods. It consists of
consecutive long green (or white) candles with small wicks, which open and
close progressively higher than the previous period.
 Bearish Candlestick Patterns
Hanging Man
The hanging man is the bearish equivalent of a hammer; it has the same shape
but forms at the end of an uptrend. It indicates that there was a significant sell-
off during the day, but that buyers were able to push the price up again.

Shooting Star
The shooting star is the same shape as the inverted hammer but is formed
in an uptrend: it has a small lower body and a long upper wick.

Bearish Engulfing
A bearish engulfing pattern occurs at the end of an uptrend. The first candle
has a small green body that is engulfed by a subsequent long red candle.
Bearish Candlestick Patterns

Evening Star
The evening star is a three-candlestick pattern that is the equivalent of
the bullish morning star. It is formed of a short candle sandwiched
between a long green candle and a large red candlestick.

Three Black Crows

The Three Black Crows candlestick pattern comprises of three consecutive
long red candles with short or non-existent wicks. Each candle opens at a
similar price to the previous period.

Dark Cloud Cover

The dark cloud cover candlestick pattern indicates a bearish reversal – a
black cloud over the previous day’s optimism. It comprises two candlesticks:
a red candlestick that opens above the previous green body and closes
below its midpoint.
Bullish & Bearish Engulfing
Hammer & Shooting Star
Drangongly & Gravestone Doji
Morning & Evening Star
Tweezer Top & Bottom
Bulls vs Bear
Continuation Candlestick Patterns

Doji
When a market’s open and close are almost at the same price point, the
candlestick resembles a cross or plus sign – traders should look out for a short
to non-existent body, with wicks of varying length.
Alone a Doji is a neutral signal, but it can be found in reversal patterns such as
the bullish morning star and bearish evening star.

Spinning Top
The spinning top candlestick pattern has a short body centered between wicks
of equal length. The pattern indicates indecision in the market, resulting in no
meaningful change in price: the bulls sent the price higher, while the bears
pushed it low again.
Continuation Candlestick Patterns

Falling Three Methods

Three-method formation patterns are used to predict the continuation of a
current trend, be it bearish or bullish.
The bearish pattern is called the falling three methods. It is formed of a long
red body, followed by three small green bodies, and another red body – the
green candles are all contained within the range of the bearish bodies.

Rising Three Methods

The opposite is true for the bullish pattern, called the ‘rising three methods’
candlestick pattern.
It comprises of three short reds sandwiched within the range of two long
greens. The pattern shows traders that, despite some selling pressure, buyers
are retaining control of the market.
 Trading Using Candlestick Patterns

Find Area of Support and Resistance

Identify potential entry and exit points

Confirm trend reversals

Assess market sentiment

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