01
Introduction to Technical Analysis
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Three Core Tenets
- Price Discounts Everything — all known information is already reflected in price
- Trends Exist — prices move in directional trends, not randomly
- History Repeats — market psychology creates recurring patterns
Technical vs Fundamental
TechnicalUses price & volume charts; answers "when to buy/sell"
FundamentalUses financial data; answers "what to buy"
💡 Best Practice: Use fundamental analysis to find good companies, and technical analysis to time your entry and exit.
02
Candlestick Basics & Patterns
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OHLC Structure
Each candlestick represents a time period (1 min, 1 hour, 1 day, etc.) and shows: Open, High, Low, Close
Bullish
(Close > Open)
(Close > Open)
Bearish
(Close < Open)
(Close < Open)
Doji
(Indecision)
(Indecision)
Important Patterns
DojiOpen ≈ Close; market indecision
HammerBullish reversal at bottom; long lower wick
Shooting StarBearish reversal at top; long upper wick
Bullish EngulfingLarge green candle engulfs prior red; reversal signal
Bearish EngulfingLarge red candle engulfs prior green; reversal signal
Morning Star3-candle bullish reversal at bottom
Evening Star3-candle bearish reversal at top
⚠️ Important: Never trade on a single candlestick pattern alone. Always confirm with context — where is it on the chart? Is there volume?
03
Support and Resistance
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The Foundation of Chart Analysis
- Support — price level where buyers step in; floor where price tends to bounce
- Resistance — price level where sellers appear; ceiling that stops price from rising
- Breakout — price moves decisively above resistance with volume confirmation
- Breakdown — price falls below support level (bearish signal)
- Retest — after breakout, price returns to test the broken level (old resistance = new support)
Demand & Supply Zones
Support = Demand Zone (buyers are present). Resistance = Supply Zone (sellers are present). These zones are more powerful than single price lines — look for a range, not just one level.
📌 Trading Tip
Buy near strong support, sell near strong resistance. The more times a level has been tested, the stronger it is — until it breaks.
04
Trend Analysis
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Types of Trends
UptrendHigher highs + higher lows; bullish
DowntrendLower highs + lower lows; bearish
SidewaysHorizontal range; no clear direction
Drawing Trendlines
- Uptrend line: connect at least 2 higher lows from below
- Downtrend line: connect at least 2 lower highs from above
- More touches = stronger trendline
- A break of the trendline signals a potential reversal
💡 Rule: "The trend is your friend — until it ends." Trade with the trend, not against it. Avoid counter-trend trades as a beginner.
05
Chart Patterns
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Reversal Patterns
Head & ShouldersBearish reversal; three peaks with middle highest
Inverse H&SBullish reversal; three troughs with middle lowest
Double TopBearish; two highs at same resistance level
Double BottomBullish; two lows at same support level
Continuation Patterns
Bull FlagBrief consolidation after strong upward move
Bear FlagBrief consolidation after strong downward move
Ascending TriangleBullish; flat top + rising lows
Descending TriangleBearish; flat bottom + falling highs
Cup & HandleBullish; U-shaped base + small pullback
📐 Measuring Targets
After a breakout, the price target = height of the pattern added to the breakout point. This gives a minimum expected move.
06
Technical Indicators
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Momentum Indicators
RSI0–100; above 70 = overbought, below 30 = oversold
MACDMoving average crossover; shows trend direction & momentum
Trend Indicators
20 EMAShort-term trend guide
50 SMAMedium-term trend
200 SMALong-term trend; above = bull market
ADXMeasures trend strength (above 25 = strong trend)
Volatility & Volume Indicators
Bollinger BandsPrice envelope; squeeze signals breakout incoming
ATRAverage True Range; measures volatility for stop sizing
OBVOn Balance Volume; tracks smart money flow
⚠️ Less is More: Using 2–3 indicators from different categories is better than cluttering your chart with 10. Indicators confirm each other, not replace price action.
07
Volume Price Analysis
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Why Volume Matters
Volume is the fuel of price movements. A breakout with high volume is far more reliable than a breakout with low volume.
- Volume Breakout — price breaks key level + volume spikes = high conviction move
- Low Volume Rally — weak, likely to reverse; institutions not participating
- Institutional Footprint — sudden large volume on small-cap = smart money accumulating
- Fake Breakout — price breaks out briefly but falls back with low volume; trap for retail
📌 Volume Rule
In a healthy uptrend: volume increases on up days, decreases on down days. Reverse = distribution (smart money selling into rally).
08
Trading Strategies (Intermediate)
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Core Strategies
Trend FollowingBuy pullbacks in uptrend; sell rallies in downtrend
Breakout TradingEnter when price breaks above resistance with volume
Pullback TradingBuy the dip back to support in an uptrend
MA CrossoverBuy when fast EMA crosses above slow SMA
RSI DivergencePrice makes new low but RSI doesn't = hidden strength
Trade Setup Structure
- Entry — specific trigger condition (e.g., breakout candle close above resistance)
- Stop Loss — below the setup's invalidation level
- Target — next resistance or measured move
- Risk:Reward — minimum 1:2 (risk ₹1 to make ₹2)
💡 Process Over Outcome: A trade can follow a perfect setup and still lose. Judge yourself on whether you followed your rules, not just whether you profited.