Professional Documents
Culture Documents
WHAT IS MARKET?
Market is in the mind. Market is not certain, but probable. Market is always right. I can be wrong. Buyer v/s Seller.
www.malkansview.com
www.malkansview.com
First identified in Japan in Eleventh Century. Study of Price and Volume. Uses Charts and Patterns to identify and predict future activity. Does not measure Intrinsic Value.
www.malkansview.com
Cause and Effect Charts v/s Financial Statements Time Horizon Trading v/s Investing Fundamental Analysis No capacity to judge Market Risk Can they Co-exist?
5
www.malkansview.com
www.malkansview.com
WHAT IS A CHART
A Chart is a Visual Representation of Price Movements in a given period of time. Types of charts: 1. Line chart 2. Bar chart 3. Candle chart
www.malkansview.com
DOW THEORY
Origination Charles Dow Used since 100 years Higher Tops & Higher Bottoms indicate Uptrend. Lower Tops & Lower Bottoms indicate Downtrend.
www.malkansview.com
No Randomness in Price movement - Prices always move in Trends. Volumes confirm a trend. Trend is your friend Dont buck the trend Types of trends: - Uptrend - Downtrend - Sideways / Horizontal Trend
www.malkansview.com
MARKET CYCLE
DISTRIBUTION MATURITY
DECLINE
GROWTH
DEGENERATION
ADVANCE
DEATH ACCUMULATION
www.malkansview.com
10
Price is low
Price goes high Price goes further High Price goes down Price goes further Down
www.malkansview.com
You avoid.
You buy. You hold / buy more. You keep holding. You sell.
11
SUPPORT / RESISTANCE
Support sends the Price moving UP. Resistance sends the Price moving DOWN. Role Reversal of Support and Resistance. Support is formed when demand exceeds supply. Resistance is formed when supply exceeds demand.
www.malkansview.com
12
www.malkansview.com
13
Shift in Psychology - New Levels of Support & Resistance. Resistances are overcome in Growth phase. Supports are breached in Decay phase.
www.malkansview.com
14
VOLUME
What is Volume? Why is volume important? Prices can be hidden, Volume cannot be hidden. If Price moves with Volume, move is likely to sustain. Change in Price-Volume Relationship indicates weakness in prevailing trend. Volume & Chart Patterns.
www.malkansview.com
15
RETRACEMENTS
Fibonacci Series:
Founded by Leonardo Fibonacci in the Twelfth Century. Obtained by adding the two preceding numbers in the series. Series 1, 1, 2, 3, 5, 8, 13, 21, Quotient of the adjacent terms possesses an amazing proportion i.e. 1.618 / 0.618
www.malkansview.com 16
RETRACEMENTS (contd.)
Fibonacci Ratios:
R1 R2 R3 R4
= = = =
# / Immediate preceding No. # / Immediate succeeding No. # / Alternate preceding No. # / Alternate succeeding No.
www.malkansview.com
17
RETRACEMENTS (contd.)
Examples:
5, 8, 13, 21, 34, 55, 89 >1 1.615 2 (double) 2.625 4.225 61.8% or 0.618% <1 0.618 0.5 (mid-point) 0.382 0.236 GOLDEN RATIO
18
www.malkansview.com
RETRACEMENTS (contd.)
Fibonacci Retracements: Uses horizontal lines to indicate Support and Resistance levels.
Retracement Projection Coming back (into chartered territory) Going into future (into unchartered territory) Retracement (<1) Uptrend Downtrend Support Resistance Projection(>1) Resistance Support
www.malkansview.com
19