Terminology of Moving Averages Scans

Bullish Golden Crossover (SMA)- Stocks where short term moving average has crossed above the longterm moving average indicating a bullish breakout.

Inputs settings will be: SMA (20) crosses above SMA (50)

Bullish Death Crossover (SMA)- Stocks where Short term MA has crossed below the Long term MA indicating a bearish breakout.

Inputs settings will be: SMA (20) crosses below SMA (50)

Price crosses Above SMA- Stocks where price has crossed above the MA indicating a bullish crossover.

Inputs settings will be:  SMA (20) crosses below price

Price crosses below SMA- Stocks where price has crossed below the MA indicating a bearish crossover.

Inputs settings will be: SMA (20) crosses above price

Now in EMA same as SMA but selection of indicator of MA sma we should select MA ema

You can used Tradingview.com for use a indicator like Moving averages and many more.

Difference Between SMA and EMA

SMA means Simple Moving Average which is called a slower moving average usually used to confirm a trend rather than predict it. 

EMA means Exponential Moving Average which is called a faster moving average that places more emphasis on recent price data.

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Price Action Analysis

 

Price action forms the basis of technical analysis and helps you in timing entries and exits better without relying on news or opinions. Price action can be analyzed using charts that plot prices over time.

Support and Resistance

If the market is in an advancing phase, one can initiate long positions. If the market is in a downtrend phase, one can initiate short positions. After making this decision, one needs to analyze the support and resistance levels, i.e. the potential buying or selling pressure zones.

Support is a zone of potential buying pressure where buyers could step in and push the price higher, whereas resistance is a zone where sellers could step in and push the price lower.

The support and resistance zone tells us where to buy and sell. If the prices reverse back from the resistance level, one can short the stock.

And if the prices reverse back from the support level, one can buy the stock.

Entry Level

 

When the prices breakout from any price pattern, candlesticks, support or resistance levels, the price action trader can take a long/short position at that point.

 

Like in Candlestick pattern, if you see a Bullish Harami candlestick pattern after the downtrend, you should enter a long position if the prices open higher the next day.

 

Stop Loss

 

This helps you protect your position so that you don’t incur losses if the trade goes against your expectations.

Like, if you spot a Bullish Harami candlestick pattern, then you can place a stop loss at the support or low of the previous day’s candlestick.

Higher-Timeframe

 

If you trade by using daily charts, you should also look at the weekly charts to determine whether the trend is in uptrend or downtrend.

 Volume

 

If there is no rise in the volume when the breakout happens, then the price action trader should be doubtful in taking that position. A trend reversal should always be supported by an increase in volume. There are many volume indicators with the help of which you can analyze volume in the stock.

 

Exit Level

 

You should also determine the exit level before even entering the position, this is also called target. The exit level can be determined by a certain percentage, support/resistance level, or the price target in the case of chart patterns. After determining all these things, you are now ready to place your trading order, whether long or short.

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General Terminology of Stock Market

 From Bull Market when it is Down:

Minimum 5% drop then it is pullback

10% drop, it is correction

20% drop, it is Bear Market

35% drop, it is Crash

50% drop, it is Recession

Bid Price :- It is a price when buyer willing to pay for a stock.

Ask Price :- It is a specific price at which you are looking to sell a share.

Beta:- It is measurement of relationship between stock price of any stock and movement of whole market.

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Most used Intraday Trading Indicators

 

Intraday trading refers to short-term trading in which the traders take benefits of price fluctuations in the stock market and earn profits.

To be successful in the trading we need to analyse the technical charts using Price actions and Intraday trading indicators for making profits.

1.      VWAP

 VWAP- Volume Weighted Average Price. When trading intraday traders need to track the volume in the stock. VWAP is a volume indicator of the ratio of the value of a stock traded in a particular time to the total volume traded at that stock for a particular stock.

This indicator indicates a bullish trend when the price of a stock is above VWAP. This means that the price is above average volume and the trend is positive. We can enter the stock in this particular condition on a retracement to VWAP in the direction of the trend. 

Similarly, a bearish trend can be confirmed when the price moves below the VWAP line. You can sell at the VWAP in the direction of the trend.

2. Average Directional Index

 ADX indicator helps us in determining the trend’s strength.

ADX tells us whether the ongoing trend has the strength to continue going up or down. 

Its values oscillate between 0 to 100, and one should remember that the higher the value higher will be the strength of the trend. The default look-back period of ADX is 14 periods but can be changed according to the volatility of stock or index.

ADX value below 25 indicates a very weak trend whereas value above 75 indicates a very strong trend. ADX is generally not used alone, rather it is used along with other trend-following indicators like Supertrend for filtering the false signals.

            If values of ADX is between in this, then we should follow this:

10-20 = means nothing in this share, exit now

20-30 = it is medium we should wait for few months

30-40 = high probability to go up

Above 40 = very high 98% probability is going up, so pick the share in this movement

 

 3. Donchian Channel

 

When doing intraday trading one also needs to analyse volatility indicators that help us in analysing if the volatility in the stock is high or low. We can use the Donchian channel for this purpose in intraday trading. Donchian Channel is constructed by calculating Highest High and Lowest Low for a pre-defined period. 

When there is a breakout of the Donchian channel from the upper or lower band then it is considered as the starting of a new trend. The Donchian channel is also useful for studying the volatility of the price as shown in the above chart. If the price is stable then the Donchian channel will be narrow. But if the price fluctuates often then the channel will be wider.

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Three Outside Up and On-Neck Pattern candlestick patterns

 

Three Outside Up

The Three Outside Up is multiple candlestick pattern which is formed after a downtrend indicating bullish reversal.

It consists of three candlesticks, the first being a short bearish candle, the second candlestick being a large bullish candle which should cover the first candlestick.

The third candlestick should be a long bullish candlestick confirming the bullish reversal.

 

The relationship of the first and second candlestick chart should be of the Bullish Engulfing candlestick pattern.

Traders can take a long position after the completion of this candlestick pattern.

On-Neck Pattern

 

The on neck pattern occurs after a downtrend when a long real bodied bearish candle is followed by a smaller real bodied bullish candle which gaps down on the open but then closes near the prior candle’s close.

The pattern is called a neckline because the two closing prices are the same or almost the same across the two candles, forming a horizontal neckline.

Three Triangles Patterns of Trading

A triangle is a chart pattern, depicted by drawing trendlines along a converging price range, that connotes a pause in the prevailing trend. Technical analysts categorize triangles as continuation patterns.

In technical analysis, a triangle is a continuation pattern on a chart that forms a triangle-like shape.

There are three triangle charts patterns:

1.  Ascending Triangle
2. Symmetrical Triangle
3.  Descending Triangle                                                                                                                                                                                                                                                                                 The ascending triangle is a continuation pattern defined by an entry point, stop loss, and profit target. On the price chart, it appears as a horizontal support line connecting the highs to an upward moving trendline to the lows. Each ascending triangle has a minimum of two highs and two lows.

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 Important Points of Ascending Triangle:

hh   Pattern type: Continuation

·         Indication: Bullish

·        Breakout confirmation: The confirmation for this pattern is a close above the highs on average trading volume.

·        Measuring: Subtract the height from the lowest low of the pattern and then added to the breakout level.

·    Volume: The volume declines throughout the ascending triangle formation, expanding when the breakout occurs.

The symmetrical triangle is a chart that can be recognized by its lower highs and higher lows. When two trend lines converge with the converging trend lines connecting and containing several peaks and troughs, then this pattern is indicated.

Important Points of Symmetric Triangle:

·         Pattern type: Continuation or reversal

·         Indication: Bullish or bearish

·     Breakout confirmation: The confirmation for this pattern is a close above or below the converging trend lines on above-average trading volume.

·     Measuring: subtract the height of the lowest low and the highest high of the pattern and then add or subtract this amount to the breakout level depending on which way the breakout moves.

·   Volume: The volume declines throughout the ssymmetrical triangle formation, expanding on the breakout.

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  j  The descending triangle pattern is a popular bearish continuation pattern that is created by drawing a horizontal line that connects low points and a trend line that connects lower highs. 

Important Points of Descending Triangle:

·         Pattern type: Continuation

·         Indication: Bearish

·        Breakout confirmation: The confirmation for this pattern is a close below the lows on above-average trading volume.

·       Measuring: Subtract the height from the highest highs and the low of the pattern and then subtracted from the breakout level.

·      Volume: The volume declines throughout the descending triangle formation, expanding on the breakout.

 

 

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3)     

Tweezer Bottom and Inverted Hammer Candlestick Patterns

 Tweezer Bottom

The Tweezer Bottom candlestick pattern is a bullish reversal candlestick pattern that is formed at the end of the downtrend.

It consists of two candlesticks, the first one being bearish and the second one being bullish candlestick.

Both the candlesticks make almost or the same low.When the Tweezer Bottom candlestick pattern is formed the prior trend is a downtrend.

A bearish tweezer candlestick is formed which looks like the continuation of the ongoing downtrend. On the next day, the second day’s bullish candle’s low indicates a support level.

The bottom-most candles with almost the same low indicate the strength of the support and also signal that the downtrend may get reversed to form an uptrend. Due to this the bulls step into action and move the price upwards.

This bullish reversal is confirmed the next day when the bullish candle is formed.

Inverted Hammer

 Inverted Hammer is formed at the end of the downtrend and gives bullish reversal signal.

In this candlestick the real body is located at the end and there is long upper shadow. It is the inverse of the Hammer Candlestick pattern.

This pattern is formed when the opening and closing prices are near to each other and the upper shadow should be more than the twice of the real body.

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