TECHNICAL

GUIDE
CONTENTS

01
CANDLESTICKS

02
PATTERNS

03

DIVERGENCE

04

SUPPORT AND
RESISTANCE
HAMMER KEY CRITERIAS
FORMATION HAMMER SHOULD BE
FORMED AFTER A
PRECEEDING
DOWNTREND

Above chart is an example LOWER SHADOW SHOULD

of Hammer candlestick BEAT LEAST TWICE (WICK)
formation in Glenmark AS BIG AS REAL BODY
Pharma 1 day chart
REAL BODY BULLISH OR
BEARISH BUT BETTER IS
Hammer is a potential
BULLISH
reversal sign if criteria is
met. GREEN HAS MORE
PROBABILITY AS
COMPARED TO RED
HAMMER
 .
BULLISH
ENGULFING
KEY CRITERIA

1. Downtrend

2. Bearish Candle

3. Gap Down

4. Bullish Candle

5. Close above

previous Bearish Red

Candle
BEARISH
ENGULFING
KEY CRITERIA

1. Uptrend

2. Bullish Candle

3. Gap Up

4. Bearish Candle

5. Close below

previous Bullish Green

Candle
BULLISH
HARAMI
KEY CRITERIA

DOWNTREND

BEARISH RED

CANDLE

GAPUP

SMALL BULLISH

CANDLE
BEARISH
HARAMI
KEY CRITERIA

UPTREND

BULLISH GREEN

CANDLE

GAPDOWN

SMALL BEARISH

RED CANDLE
DARK CLOUD
COVER
KEY CRITERIA

UPTREND

BULLISH GREEN CANDLE

GAPUP

BEARISH RED CANDLE

CLOSE BELOW 50% OF

PREVIOUS DAYS BULLISH

CANDLE
HANGING
MAN
KEY CRITERIA
UPTREND

GAPUP

LOWER WICK AT

LEAST TWICE AS BIG

AS REAL BODY

REAL BODY BULLISH

(GREEN) OR

BEARISH(RED)

BETTER IF BEARISH

(RED).

CONFIRMATION RED

CANDLE
SHOOTING
STAR
KEY CRITERIA
UPTREND

UPPER WICK AT

LEAST TWICE AS BIG

AS REAL BODY

REAL BODY BULLISH

(GREEN) OR

BEARISH(RED)

BETTER IF BEARISH

(RED).
INVERTED
HAMMER
KEY CRITERIA

DOWNTREND

UPPER WICK AT LEAST

TWICE AS BIG AS REAL

BODY

REAL BODY BULLISH

(GREEN) OR

BEARISH(RED) BETTER

IF BULLISH (GREEN)
 EVENING STAR

EVENING
STAR
KEY CRITERIA

UPTREND

BULLISH GREEN CANDLE

SMALL RED OR GREEN

CANDLE

GAP DOWN

BEARISH RED BIG

CANDLE
 MORNING STAR

MORNING
STAR
KEY CRITERIA

DOWNTREND

BEARISH RED CANDLE

SMALL RED OR GREEN

CANDLE(GREEN

PREFERRED)

GAP UP

BULLISH GREEN BIG

CANDLE
DOJI
KEY CRITERIA

DOJI REPRESENTS

POSITION OF

INDECISION

REVERSAL OF

PRIOR TREND

POSSIBLE
GRAVESTONE
DOJI
KEY CRITERIA

GRAVESTONE

DOJI FORMS

AFTER A

UPTREND

INDICATES

DOWNTREND

MAY

CONTINUE

FROM THERE
DRAGONFLY
DOJI
KEY CRITERIA

DRAGONFLY

DOJI FORMS AT

BOTTOM AFTER A

DOWNTREND

INDICATES

UPTREND MAY

CONTINUE FROM

THERE
 POSITIONAL PATTERNS

CUP HANDLE
PATTERN
KEY CRITERIA
A CUP AND HANDLE PRICE PATTERN ON CHART RESEMBLES

A CUP AND HANDLE WHERE CUP IS IN SHAPE OF A "U" AND

HANDLE HAS A SLIGHT DOWNWARD DRIFT.

A CUP AND HANDLE IS CONSIDERED A BULLISH

CONTINUATION PATTERN AND IS USED TO IDENTIFY BUYING

OPPORTUNITIES.

AVOID CUPS WITH SHARP "V" SHAPE

TARGET- IT IS DETERMINED BY MEASURING THE DISTANCE

BETWEEN THE BOTTOM OF THE CUP AND PATTERNS

BREAKOUTZ LEVELAND EXTENDING THAT DISTANCE

UPWARD FROM THE BREAKOUT

ROUNDING TOP
PATTERN
KEY CRITERIA

IN ROUNDING TOP , A TRENDLINE FOLLOWING PEAKS

HIGHS FORM AN UPSIDE DOWN "U"SHAPE .

IN THIS PATTERN STOCK PRICE WILL INCREASE TO A NEW

HIGH .IT THEN STEADILY DECREASES FROM RESISTANCE

LEVEL TO FORM ROUNDING TOP.

GENERALLY A ROUNDING TOP WILL REPRESENT A BEARISH

FUTURE OUTLOOK FOR A STOCK.

TARGET- IT MAY REACH THAT LEVEL FROM WHERE IT

STARTED
ROUNDING BOTTOM
PATTERN
KEY CRITERIA

THE ROUNDING BOTTOM IS A LONG TERM REVERSAL

PATTERN THAT IS BEST SUITED FOR WEEKLY CHARTS.

IT REPRESENTS A LONG CONSOLIDATION PERIOD THAT

TURNS FROM A BEARISH BIAS TO A BULLISH BIAS.

ROUNDING BOTTOM PATTERN IS AN INDICATION OF A

POSITIVE MARKET REVERSAL,MEANING MOMENTUM IS

GRADUALLY SHIFTING FROM BEARISH TO BULLISH.

TARGET-IT MAY REACH THE SAME LEVEL FROM WHERE IT

STARTED.
DOUBLE TOP
PATTERN
KEY CRITERIA
A DOUBLE TOP IS AN EXTREMLY BEARISH REVERSAL

PATTERN THAT FORMS AFTER AN ASSET REACHES A HIGH

PRICE 2 CONSECUTIVE TIMES WITH A MODERATE DECLINE

BETWEEN 2 HIGHS.

TAKE SELL TRADE IF RED CANDLE APPEARS

(ON SECOND TOP) AS CONFIRMATION

STOPLOSS - HIGH OF CANDLESTICK AT SECOND TOP

TARGET- IT MAY REACH THE SAME LEVEL FROM WHERE IT

STARTED FORMING "M" SHAPE

DOUBLE BOTTOM
PATTERN
KEY CRITERIA

DOUBLE BOTTOM LOOKS LIKE "W"

DOUBLE BOTTOM ALWAYS FOLLOWS A MAJOR OR MINOR

DOWNTREND IN A PARTICULAR STOCK AND SIGNAL THE

REVERSAL AND THE BEGINNING OF POTENTIAL UPTREND.

ONE MAY BUY THE STOCK AT SECOND BOTTOM WITH

GREEN CANDLE CONFIRMATION '

STOPLOSS - LOW OF THE SECOND BOTTOM CANDLESTICK

TARGET- IT MAY REACH THE SAME LEVEL FROM WHERE IT

STARTED FORMING A "W" SHAPE

 FLAG

FLAG
PATTERN
KEY CRITERIA
BULLISH FLAG FORMATION ARE FOUND IN STOCKS WITH

STRONG UPTREND .

THEY ARE CALLED AS BULL FLAGS BECAUSE PATTERN

RESEMBLES A FLAG ON POLE

THE POLE IS THE RESULT OF VERTICAL RISE IN A STOCK

THE FLAG RESULTS FROM A PERIOD OF CONSOLIDATION.

THE FLAG CAN BE HORIZONTAL ,RECTANGLE BUT IS ALSO

OFTEN ANGLED DOWN AWAY FROM PREVAILING TREND

TARGET-BREAKOUT FROM FLAG OFTEN RESULTS IN

POWERFUL MOVE HIGHER(SAME AS POLE LENGTH)

HEAD AND SHOULDER
PATTERN
KEY CRITERIA

HEAD AND SHOULDER PATTERN IS A CHART FORMATION

THAT RESEMBLES A BASELINE WITH 3 PEAKS ,THE OUTSIDE

2 ARE CLOSE IN HEIGHT AND MIDDLE IS HIGHEST.

IT IT PREDICTS A BULLISH TO BEARISH TREND REVERSAL

POSITIVE DIVERGENCE
Positive divergence signals price
could start moving higher soon.
It occurs when the price is moving
lower but a technical indicator i.e
RSI is moving higher or
showing bullish signals.
NEGATIVE DIVERGENCE
Negative divergence signals to lower
prices in the future.
It occurs when the price is moving
higher but a technical indicator is
moving lower or
showing bearish signals.
SYMMETRICAL
TRIANGLE
Bearish pennant
 Falling wedge

The Falling Wedge is a bullish pattern that

begins wide at the top and contracts as
prices move lower.
 Rising wedge

The Rising Wedge is a bearish pattern that

begins wide at the bottom and contracts as
prices move higher and the trading range
narrows.
DOWN CHANNEL

RISING CHANNEL