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com - HP44016644455192

TECHNICAL

AND
GRAPHICAL

ANALYSIS
T H E A R T OF T R A DI NG
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INTRODUCTION
Trading can be profitable for the informed

trader, like how you will be after reading this

book. This book is written for anyone new to

trading Stocks, Crypto, or Forex. Any prior

knowledge in these financial markets is a plus.

so

Why is Technical Analysis so

important?

The charts don't lie; the beauty of technical

analysis is that it is "scam proof" It relies on

your ability to read the charts and price data.

In technical analysis, price patterns often sign

transitions between rising and falling trends.

It is helpful to understand patterns and spot

them out in the trading world, whether it is

Stocks, Crypto or Forex.

TA helps investors anticipate the future but

doesn't make accurate predictions.

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ALL

CHAPTERS

1. CANDLE STICK

PATTERNS

GRAPH

2.
INDICATORS

CHART
3.
PATTERNS
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TABLE OF
CONTENTS

Chapter 1: Candlestick Patterns.

Page. 6 What is a candlestick?

Page. 7-11

Bullish patterns
Page. 12-17 Bearish patterns
Page. 18-20 Bilateral patterns

Chapter 2: Graphic Indicators.

Page. 22 What are technical indicators?

Chapter 3: Chart Patterns.

Page. 31,32 What is Support and resistance?

Page. 33-41 Bullish patterns
page. 42-46 Bearish patterns
Page. 47-49 Bilateral patterns
 CANDLE
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STICK

PATTERNS Chapter. 1
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What is a

Candle Stick?
A candlestick is a single bar on a candlestick

price chart, showing traders market movements

at a glance.
Each candlestick shows the open price, low

price, high price, and close price of a market for

a particular period of time.

The body, Which represents the open-to-

close range.
The wick, or shadow, that indicates the

intra-day high and low.

The color, which reveals the direction of

market movement – a green body indicates a

price increase, while a red body shows a

price decrease.
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BULLISH
CANDLE-STICK PATTERNS

= Uptrend
Hammer
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Hammer candlestick pattern consists of a

small body and a long wick extending from

the bottom.

This pattern can be seen at the support line

of a downward trend (see example below).

Hammer candlesticks typically occur after a

price decline.

Hammer candlesticks indicate a potential

price reversal to the upside. The price must

start moving up following the hammer; this

is called confirmation.

Little to no
upper wick
Long lower

wick

Hammer

candle-stick

bouncing off

support
Morning

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Star
This is a three-stick pattern: one short-
bodied candle between a long red and a long
green candle.

The middle candle of the morning star

captures a moment of market indecision
where the bears begin to give way to bulls.

The third candle confirms the reversal and

can mark a uptrend.

Bullish candle

stick

In some cases

there will be a

gap down
Second candle

stick can be

red or green
Bullish

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Engulfing
The bullish engulfing pattern is formed of
two candlesticks. The first candle is a short
red body that is completely engulfed by a
larger green candle.

The buying pressure increases, leading to a

reversal of the downtrend.

The second Bullish candlestick is engulfing

the body of the first bearish candle stick.

Second

candle is

bullish

Bearish

candle stick
Three White

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Soldiers
This pattern is made up of three long green
candles in a row, this pattern also has to
open and close higher than the previous
period.

Three White Soldiers is a strong bullish

signal that shows up after a downtrend.

This pattern is considered a reliable

reversal pattern when confirmed by other
technical indicators like the relative
strength index (RSI).

Bullish

Direction

Three long

candle sticks
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BEARISH
CANDLE-STICK PATTERNS

= Downtrend
Hanging

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Man
Hanging man candle has a small real body

(distance between open and close) and a

long lower shadow. There is little to no

upper shadow.

It shows up at the end of an uptrend,

indicating that bears are stepping in.

An extensive selling pressure was present

during a part of the candle stick which

created a wick

Little to NO

upper wick

Long lower

wick
Shooting

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Star
The shooting star is the opposite of an

inverted hammer. It consists of a red candle

with a short body and a long upper shadow.

Generally, the market will gap a bit higher

on the candlestick opening and close just

below the open.

If the price rises after a shooting star, the

formation may have been a false signal.

Long upper

Wick

Little to no

lower wick
Bearish

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Engulfing
A bearish engulfing pattern occurs at the

end of an uptrend.

The real body—the difference between the

open and close price—of the candlesticks is

what matters. The real body of the down

candle must engulf the up candle.

A bearish engulfing pattern can occur

anywhere, like an uptrend or a pullback to

the upside with a larger downtrend.

Bearish candle opens

at, or above the

pervious candles

close.

Bearish candle closes

below the pervious

candle's open
Evening

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Star
The evening star is a three-candlestick

pattern equivalent to the bullish morning

star.

It is formed of a short candle sandwiched

between a long green candle and a large red

candlestick.

Although this candle stick pattern is rare,

the evening star pattern is considered by

traders to be a reliable technical indicator.

Star

Strong finish into first

candle body
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Three Black

Crows
The pattern shows on the pricing charts as

three bearish long-bodied candlesticks with

short or no wicks.

Each session opens at a similar price to the

previous, but selling pressures push the

price lower and lower with each close.

Traders use it alongside other technical

indicators such as the relative strength

index (RSI).

The opposite pattern of three black crows is

three white soldiers, which indicates a

Bullish trend.

Bearish

Direction
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BILATERAL
CANDLE-STICK PATTERNS

These

candle-stick

patterns

can move in

either

direction
Doji
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Doji candlestick has an open and close that

are virtually equal.

It is important to emphasize that the Doji

pattern does not mean reversal, it means

indecision.

The market explores its options both

upward and downward, but cannot commit

either way.

Indecision

reversal of trend
Spinning

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Top
A spinning top is a candlestick pattern that

has a short real body that's vertically

centered between long upper and lower

wick.

Since buyers and sellers both pushed the

price, but couldn't maintain it, the pattern

shows indecision and that more sideways

movement could follow.

This candle stick pattern is much stronger in

a trending market, be it uptrend or

downtrend.
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GRAPHIC

INDICATORS Chapter. 2
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What are Technical

Indicators?
Trading indicators are mathematical

calculations, which are plotted as lines on a

price chart and can help traders identify certain

signals and trends within the market.

There are different types of trading

indicator, including leading indicators and

lagging indicators.
Leading Indicator is a forecast signal that

predicts future price movements.

Lagging Indicator look at the past trends

and indicates momentum.

SMA
Simple Moving Average
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It is simply the average price over the

specified period. And should be used on the

DAILY timeframe.

To get a 50-Period SMA for example, you

add up all the price closings over the last 50

days and then divided by 50.

10, 50 and 200-day simple moving averages

are often used as default indicators.

SMAs are often used to determine trend

direction, either bullish or bearish.

Price crossing

over SMA lines

indicates uptrend.
MACD
Moving Average

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Convergence

Divergence

This is a technical indicator of momentum

that uses moving averages to determine a

trend's strength.

MACD crossing above zero is considered

bullish, while crossing below zero is bearish.

Also when the MACD line crosses from

below to above the signal line, the indicator

is considered bullish.

MACD crosses

below signal line

MACD crosses

above signal line

indicates uptrend
RSI
Relative Strength Index
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This is a momentum oscillator that measures

the speed and change of price movements,

the RSI oscillates between zero and 100.

Traditionally the RSI is considered

overbought when above 70 and oversold

when below 30.

Similar to the MACD, RSI is also used to

confirm price action.

Above 70,

indicates

Overbought

Below 30,

indicates

Oversold
VWAP
Volume-Weighted

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Average Price

VWAP, is a trading benchmark that gives the

average price has traded throughout the
day, based on both volume and price.

It is also used for support, resistance, entry

and exit levels.

Volume-Weighted Average Price is only

used on the intraday time frame.

VWAP might be as simple as buying the first

closing price above VWAP as an entry, and
selling at a predetermined point above it.

Price breaks

VWAP indicates

a downtrend

support

off VWAP
Bollinger
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Bands
There are three lines that compose

Bollinger Bands: A simple moving average

(middle band) and an upper and lower band.

The bands are dynamic/sensitive to changes

in volatility. When the bands widen, price

volatility is increasing. When the bands

contract, volatility is decreasing.

Breakouts above the upper band or below

the lower band are often used as trading

signals.

Band Tightening
Upper Band

Band Widening

Lower Band
Ichimoku

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Cloud
Ichimoku Cloud is a collection of technical

indicators that show support and resistance

levels, as well as momentum & trend

direction.

When the price is below the cloud, consider

bearish. When the price is above the cloud,

consider bullish.

The lines include a 9-period average, a 26-

period average, an average of those two

averages, a 52-period average, and a

lagging closing price line.

Ichimoku
Cloud
Pivot
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Points
They're calculated based on the high, low,

and closing prices of previous trading

sessions.

Pivot Points are used to predict support and

resistance levels in the current or upcoming

session.

This indicator will automatically graphs 7

Pivot Point levels, R1, R2, R3, S1, S2, S3 and P.

Pivot Points
R1=Resistance1 &

R2=Resistance 2

S1=Support 1 &

S2=Support 2
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CHART

PATTERNS Chapter. 3
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What is Support

and Resistance?
Support & Resistance levels are key price

levels, where supply and demand interaction

create significance levels.

When the price passes through resistance,

that resistance could potentially become

support.
The more often price tests a level of

resistance or support without breaking it,

the stronger the area of resistance or

support gets.
Traders can take either a long position,

meaning go bullish or a short position,

meaning bearish.

Breakout

Resistance Resistance

Breakout

Support Support
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What is Support

and Resistance?
How to draw them?
Support and resistance lines need to have at

least two price-point to be drawn. Simply

connect two swing highs or two swing lows in a

price chart with a trendline, and project the

trendline into the future.

Trade the "Break"

Buy when the price falls towards support.
Sell when the price rises towards resistance.

Trade the "Bounce"

Buy when the price breaks up through

resistance.
Sell when the price breaks down through

support.
Breakout
Resistance

Support
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BULLISH
CHART PATTERNS

= Uptrend
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Pattern Type:

Flag Continuation

The Flag Pattern forms in a time of

consolidation.

Flag's rectangular shape develops from

parallel trendlines, which form the support

and resistance until the price breaks out.

A breakout occurs out of the flag in the

same direction as the initial move. This

pattern can be viewed on larger time

frames, like daily and weekly.

Traders will typically enter into a long

position after the breakout and an increase

in volume.

Resistance

Support
Inverse

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Pattern Type:

Continuation

Head &

Shoulder
As price hit lows below the neckline, a

trough is formed. Until it creates three

troughs, or low points: the left shoulder,

head which is the lowest , and right shoulder.

A Inverse Head & Shoulder pattern can be

viewed on larger time frames, like weekly

and monthly.

Traders typically enter into a long position

when the price rises above the resistance of

the neckline.
Rounding

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Pattern Type:

Continuation

Bottom
A rounding bottom is a chart pattern that

graphically forms the shape of a "U."

This trend is similar to the chart of the cup

and handle but without the downtrend

handle.

A Rounding Bottom pattern can be viewed

on larger time frames, like hourly and daily.

Traders will feel safe buying at the

breakout, Which is also the starting of a

bullish trend.

U Shape
Falling

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Pattern Type:

Continuation &

Reversal

Wedge
This Pattern starts wider at the top and

gets narrower as it moves down.

The wedge pattern results in breakout-

causing the price to move up. A Falling

Wedge pattern can be viewed on larger time

frames, like hourly and daily.

Many buyers will show up, and volume

should increase as the price breakouts.

Traders will look for buying opportunities at

the breakout and potentially exit at the

start of the Pattern. Dotted line: Potential

exit trade

Draw

Resistance

line

Draw

Support

line
Ascending

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Pattern Type:

Continuation

Trinagle
This Ascending Triangle pattern is a bullish

continuation pattern, which means that a

breakout is likely.

To draw this pattern, you need to place a

horizontal line over the resistance points.

And then draw an ascending line along with

the support points. This pattern can be used

on any time frame, even minutes.

Traders will look for a breakout with

volume, and in some cases, price will come,

retest the breakout level and then continue

the uptrend.

Horizontal

resistance

line

Ascending

support line
Cup and

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Pattern Type:

Continuation

Handle
The Cup with Handle Pattern resembles the

shape of a cup and a handle. It is an arched

pattern that can be identified by its u-shape,

followed by the handle having a slight

downward drift.

Ultimately the pattern becomes bullish,

completing the 'handle.'

Rounding bottom pattern almost looks the

same as this, but without the handle

formation

Traders will wait for the falling handle to

form and enter at the breakout.

Look for

falling trend

U Shape
Triple

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Pattern Type:

Reversal

Bottom
A triple bottom is generally seen as three

roughly equal lows bouncing off the support

line.

Later, it is followed by a breakout point,

Which is the best opportunity to enter a

bullish position.

After the breakout point, the price usually

does not retest the neckline.

Traders will enter into a long position after

the breakout point. A triple Bottom pattern

can be viewed on larger time frames, like

hourly and daily.

Most of

the time,

Price will

not

retest

Watch

for 3

bottoms
Double

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Pattern Type:

Reversal

Bottom
The pattern indicates a reversal in the overall

trend. Double Bottom resembles the look of a

"W.' The price will drop two times and bounce

off the support line, eventually breaking out.

In this case, the price will retest the

breakout point, unlike the Triple Bottom

pattern.

Double Bottom pattern can be viewed on

larger time frames, like hourly and daily.

Traders will look for a breakout BUT will

wait for a retest and bounce of the

resistance line.

Most of

the time,

price WILL

retest the

resistance

Watch

for 2

bottoms
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BEARISH
CHART PATTERNS

= Downtrend
Double

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Pattern Type:

Reversal

Top
Double Top is a bearish pattern that occurs

after the price has peaked two times.

And the trend has reversed when the price

breaks support, completing an "M" shape.

This results in an increase in selling volume.

Double Top pattern can be viewed on larger

time frames, like hourly and daily.

Traders will sell when the price breaks

below the support line or, in some cases,

take short positions to make profits.

Look for 2

Tops
Support Line
Head &

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Pattern Type:

Reversal

Shoulder
A head and shoulder appear as a baseline

with three peaks, where the outside two are

close in height, and the middle is highest.

This pattern is looked at on a daily or, in

some cases, on an hourly time frame.

Keep in mind that the Head & Shoulder

pattern is never in perfect formation.

Traders will look for a break below the

neckline to go short on a position.

Support Line
Descending

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Pattern Type:

Continuation

Triangle
Descending Triangle is a well-known bearish

pattern, the support line is horizontal, and

the resistance line is descending alongside.

Breaking through the resistance level will

cause the price action to fall.

This pattern can be used on any time frame,

even minutes.

Traders will look for a break below the

horizontal support line to take a short

position.

Descending

resistance line

Horizontal

support line
Triple

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Pattern Type:

Reversal

Top
Triple Top pattern occurs when the price

creates three peaks at the same price levels.

This pattern is a reversal pattern representing

buying weakness and results in a sell-off.

Triple Top pattern can be viewed on larger

time frames, like hourly and daily.

Traders will look to enter a short position or

exit a long position, once the price breaks

below support (neckline).

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BILATERAL
CHART PATTERNS

These chart

patterns can move

in either the Bullish

or Bearish direction.
Symmetric

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Pattern Type:

Reversal or

Continuation

Trinagles
This Pattern includes a triangle, similar to

an angle bracket ( > ) which is used in

mathematics.

The trend lines start to meet and get

squeezed at the end, which means a bullish

or bearish trend is possible.

The Symmetrical Triangle can extend for a

few weeks or many months.

Traders will look for a breakout or a break

below and take either a long or short

position.
Breakout
Bullish

Bearish

Price getting

squeezed in between

the trendlines

Breakout
Price

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Pattern Type:

Reversal or

Continuation

Channels
Price Channel slopes up or down and is bound

by an upper and lower trend line. The upper

trend line marks resistance and the lower marks

support.

Price stays in between this support and

resistance levels until it is broken out.

In some cases the price will retest the

breakout point.

Traders can sell when price approaches the

price channel's upper trendline and buy

when it tests the lower trendline.

Breakout

Bearish
nce
a
ist
s
Re

t
por Bullish
p
Su Re
si
st
an
ce

Su
pp
or
t

Breakout
 PRINTABLE

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PATTERN

SHEETS
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Reversal

Patterns

Continuation

Patterns

Bilateral

Patterns
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