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Divya E R replied to the topic What is Double TOP? What are their conditions to determine the bearish trend? in the forum Price Patterns and its characteristics 2 years, 7 months ago
A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset’s price falls below a support level equal to the low between the two prior highs.
Conditions are:
It should have two equivalent…[Read more] -
Divya E R replied to the topic What are Price Patterns? in the forum Price Patterns and its characteristics 2 years, 7 months ago
Price Patterns are formations which appear on commodity and stock charts shown to have a certain degree of predictive value. Some of the most common patterns include: Head & Shoulders (bearish), Inverse Head & Shoulders (bullish), Double Top (bearish), Double Bottom (bullish), flag pattern, triangle pattern, cup pattern.
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Divya E R replied to the topic What is triangle pattern? What are the conditions to qualify as perfect triangle? in the forum Price Patterns and its characteristics 2 years, 7 months ago
Triangle chart pattern forms 5 wave corrective pattern (A-B-C-D-E)
Triangle area should be minimum 1.5 months
Volume is required for breakout -
Divya E R replied to the topic What is FLAG pattern? What are the conditions to qualify as perfect FLAG? in the forum Price Patterns and its characteristics 2 years, 7 months ago
A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole).
Conditions are:
Steeper pole with approximately 70 degree steep
Rectangular movement should happen with in 3 to 7 days)
The flag should not drift down, if happens flag significance will be lost. -
Divya E R replied to the topic What is Head and Shoulder? What are their conditions to determine the bearish trend? in the forum Price Patterns and its characteristics 2 years, 7 months ago
A head and shoulders pattern is a chart formation that appears as a baseline with three peaks: The outside two are close in height and the middle is highest.
Left shoulder: Price rise followed by a price peak, followed by a decline.
Head: Price rise again forming a higher peak.
Right shoulder: A decline occurs once again, followed by a rise to…[Read more] -
Divya E R replied to the topic What are the major critics against Dow Theory? How come it remains on top of any analysis? in the forum Dow Theory in Practice 2 years, 7 months ago
The main criticism of the Dow Theory was that trends were lagging indicators and that by the time the primary trend was confirmed, the primary trend was already in place, and the investor lost part of that move. But this theory is top of analysis since it is proven for many years and is good for deriving the trend easily.
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Divya E R replied to the topic When to buy and Sell using Dow Theory? in the forum Dow Theory in Practice 2 years, 7 months ago
Dow theory is based on demand and supply.
When Demand > Supply, Buy the stocks.
When Supply > Demand, Sell the stocks.
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Divya E R replied to the topic What is Dow Theory? in the forum Dow Theory in Practice 2 years, 7 months ago
The Dow Theory is a technical framework that predicts the market is in an upward trend if one of its averages advances above a previous important high, accompanied or followed by a similar advance in the other average.
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Divya E R replied to the topic How to determine the market trend using Dow Theory? in the forum Dow Theory in Practice 2 years, 7 months ago
The market trend can be analyzed by line charts with 2 years of data using Dow Theory.
In the chart, we need to mark the tops and bottoms and qualify them as Higher Top(H.T), Higher Bottom(H.B), Lower Top(L.T), Lower Bottom(L.B).
Follow the sequence with the significance of volume at a breakout to determine the trend.
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Divya E R replied to the topic What are Support and Resistance? in the forum Dow Theory in Practice 2 years, 7 months ago
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. -
Divya E R replied to the topic What type of Charts Used, Minimum look up period, Duration of Trend forecasting for Dow Theory? in the forum Dow Theory in Practice 2 years, 7 months ago
Line charts are used for dow theory. The minimum look-up period should be 2 months and the duration of trend forecasting can be 2 months.
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Divya E R replied to the topic What are the pro / cons of technical analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Pros
1) Advantage of the technical analysis is its flexibility and adaptability
2) Charts can be used to analyze data for intervals ranging from hours to a century.
3) The technical analysis operates with a much smaller set of information compared with the fundamental analysis.
Cons1) The technical analysis is based on the probability of an…[Read more]
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Divya E R replied to the topic Why do we need to do an analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
The main purpose of the analysis is to find meaning in data so that the derived knowledge can be used to make informed decisions.
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Divya E R replied to the topic What is fundamental analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Fundamental analysis is a method of determining a stock’s real or fair market value. Fundamental analysis searches for stocks that are currently trading at prices that are higher or lower than their real value.
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Divya E R replied to the topic What is fundamental analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Fundamental analysis is a method of determining a stock’s real or fair market value. Fundamental analysis searches for stocks that are currently trading at prices that are higher or lower than their real value.
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Divya E R replied to the topic What is technical analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Technical analysis is trading to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. It can be used on any security with historical trading data which includes stocks, futures, commodities, fixed-income, currencies, and other securities.
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Divya E R replied to the topic what are the Pro and cons of fundamental analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Pros
1) The analysis involves evaluating the financial statements of the company.
2) This analysis is useful in the long run as it considers multiple areas affecting the stocks and securitiesCons
1) the analysis involves various approaches like company and economy analysis together, it is a bit time-consuming. Because it tries to cover all…[Read more]
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Divya E R replied to the topic What are different types of charts? in the forum Understanding the Price Movement 2 years, 8 months ago
Line charts: The line chart has the stock price or trading volume information on the vertical or y-axis and the corresponding time period on the horizontal or x-axis. Trading volumes refer to the number of stocks of a company that were bought and sold in the market on a particular day. The closing stock price is commonly used for the construction…[Read more]
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Divya E R replied to the topic What is the input (Data required) to do fundamental / technical analysis? in the forum Understanding the Price Movement 2 years, 8 months ago
Earnings, expenses, assets, and liabilities are all important inputs to fundamental analysis. Technical analysis differs from fundamental analysis in that the stock’s price and volume are the only inputs.
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Divya E R replied to the topic What drives the stock price? Why to price changes so often? in the forum Understanding the Price Movement 2 years, 8 months ago
Stock prices change every day by market forces. By this, we mean that stock prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
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