CONTENT :

Topic 2 : What is technical Analysis ?

Topic 3 : What is Price Action ?

Topic 4 : What is Candlestick or bar ?

Topic 5 : What is Support and Resistance ?

Topic 6 : The Market behavior and structure :

Topic 7 : The Market phase :

Topic 8 : Strategy : Price action pattern strategy

Topic : 2

What is technical Analysis ?

Technical analysis involves studying historical market data such as stock prices and

traded volume. By utilizing insights from market psychology, behavioral economics, and

quantitative analysis, technical analysts aim to forecast future market behavior based on

past performance.

There are numerous methods and strategies available for forecasting future market

behavior through technical analysis. However, one of the most effective approaches is

analyzing price action.

Topic : 3

Now , What is Price Action ??

In technical terms, the price on a chart is represented by candlesticks or bars. When a

candlestick or bar takes on a different shape or size, it is referred to as its action.

Let's understand this in an image. : (1.1)

Image (1.1)
Topic : 4

Now, what is Candlestick or bar ?

Candlesticks or bars are representations of price in the trading world. There are various types of

candlesticks or bars available, but the most effective ones are Japanese candlesticks.

Japanese candlesticks represent four types of price : High, Low, Open, Close.

And, also there are two types of Japanese candlesticks :

1. Bullish, which indicates buying or Long.

2. Bearish, which indicates selling or Short.

Now, There are six important Single candlestick price action :

These single candlestick price action, Indicates buying or selling.

A bullish candlestick indicates a buying signal, and it is effective when it forms on a support

level.

A bearish candlestick indicates selling, and it is only effective when it forms on a resistance

level.

Neutral candlesticks, also known as Indecision candlesticks. In such cases, it is advisable to

wait for additional signals before making any further decisions.

If a Doji candlestick forms on support, there is a 90% chance that it will create buying pressure

and the market will go up. Conversely, if a Doji candlestick forms on resistance, there is a 90%

chance that it will create selling pressure and the market will go down.
Let's understand this in an image. :
Now, there are four additional important candlestick patterns, including bullish and bearish

candlesticks. This time, two or three candles combine together to provide buying or selling

signals.

These two or three candles combine together to Indicate buying or selling signals.

Morning star indicates a buying signal, and it is effective when it forms on a support level.

Bottom tweezer indicates a buying signal, and it is effective when it forms on a support level.

Evening star indicates selling, and it is only effective when it forms on a resistance level.

Top tweezer indicates selling, and it is only effective when it forms on a resistance level.
Let's understand this in an image. :
Topic : 5

Now, What is Support and Resistance ?

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. The concept of Support and Resistance is based on the principles of demand and

supply in trading. Support and resistance are technical terms used to describe specific

levels in the market.

1.It is advisable to avoid buying or going long at resistance levels or resistance zone, as well as

selling or going short at support levels or support zone.

2.It is advisable to always buy or go long at support levels or support zone and sell or go short

at resistance levels or resistance zone.

3.To identify support and resistance levels, always watch for major reversals on either side.
Topic : 6

The Market behavior and structure :

Market behavior depends on buying and selling activities. The market typically moves in a

zigzag or wave pattern due to these transactions. When buying activity is high, the market tends

to move in an upward direction, whereas when selling activity is high, the market tends to move

in a downward direction.

In the market, there are basically three types of market structures.

Uptrend market structure :

In this market structure, prices move upwards due to increased buying activity, and It moves

upward by creating higher highs and higher lows.

Always remember, the market never moves in a straight way; It always moves in a zigzag

pattern.

Downtrend market structure :

In this market structure, prices move downward due to increased selling activity. They continue

to decline by forming lower lows and lower highs.

Sideways market structure :

A sideways market, also known as a range-bound or consolidating market.In a sideways

market, there is limited upward or downward movement, and the price tends to trade within a

relatively narrow range.

Topic : 7

The Market phase :

Whether the market is moving upward or downward, every trend is marked by three phases.

These phases are listed here.

○ Accumulation phase

○ Public participation phase

○ Distribution phase

Let’s look at what happens during these three phases.

The accumulation phase :

This phase generally occurs right after a steep downtrend, during which many investors and

traders lose hope of the prices rising upward. So, although the prices may have touched the

lowest possible point for that cycle, buyers remain hesitant to purchase the stock. Because of

this, the price of the stock continues to stagnate at low levels.

At this point, astute institutional investors enter the market. They recognize that the market has

touched a low, and in a bid to accumulate the stock at such low prices, they begin to purchase

large volumes of the stock regularly, over a prolonged period of time. This is what results in the

formation of support levels, since the huge volumes of stock purchase by these smart investors

kickstarts the sluggish demand and gives the stock price a much-needed upward push.

The public participation phase :

Also known as the response phase, the public distribution phase is when short-term traders,

who follow technical trends, notice the activity that’s taking place and enter the markets. They

begin buying the stock as well, causing a quick rise in the price of the asset. In this manner, a

bullish trend is established, which is why this phase is also known as the mark-up phase. This

rising trend is generally swift and steep, so a large segment of the public is initially left out of the

trading rally. Soon, the news about the markets becomes generally positive, causing more
buyers to enter the trading arena. Analysts and researchers see high price trends, and this

eventually increases the public participation in the markets.

The distribution phase :

At the peak of the mark-up phase, the price of the stock reaches new high levels. As news of

these trends become more publicly available, everybody begins to invest in the stock. Here’s

where the smart investors again enter the picture. Contrary to what occurred in the

accumulation phase, here, institutional investors start to sell off their holdings systematically.

They do so when others in the market are focused on buying.

The supply of the stock thus constantly increases. And whenever the stock price attempts to go

past a certain point, the increased sell-off from institutional investors prevents it from rising past

that mark, leading to the formation of resistance levels. Eventually, the huge sell-off stagnates

the price at certain levels and keeps it from rising further. And then, a downtrend begins, leading

to a bear market.
In the image below, notice how the market is on a primarily downward trend from January 2000

to around August 2001? Then, nearabout September 2001, there’s a panic price action point

after which the institutional investors come in, making the period from around January 2002 to

May 2003 an accumulation phase. Notice how there are many support levels that are formed in

this phase.

Then, in the response phase, as short-term traders throng to the markets, we see a sharp rise in

the index price from around 900 during May 2003 to around 2000 during January 2004. At this

point, there’s a resistance that builds up since institutional investors start to sell off their

holdings, leading to the formation of a distribution phase.

Topic : 8

Strategy : Price action pattern strategy

Now, I hope everyone is now clear about price action. Let's proceed to the strategy segment.

Now, what is the Price Action pattern strategy ?

Each candlesticks (price) movement forms distinct patterns that signal either buying or selling

opportunities.

There are Some price action patterns that work very accurately. They are :

1. Triangle pattern strategy :

The triangle pattern is a commonly observed chart pattern in technical analysis, which

represents a consolidation phase or accumulation phase in the market. And this pattern

indicates a buying or selling opportunity.

Now, how will we confirm that it's a buy or sell signal ?

To confirm whether a triangle is signaling a buying or selling opportunity, we must closely

monitor the price action pattern within the triangle and look for a breakout. If the breakout

occurs upward, the market is likely to move in an upward direction. Conversely, if the breakout

happens downward, the market is expected to move in a downward direction.When the overall

market is in an uptrend, the pattern is more likely to break out to the upside and continue its

upward trajectory. Conversely, when the market is in a downtrend, the pattern is more likely to

break out to the downside and continue its downward movement.

Higher the time frame higher the accuracy.

Lets understand this in Image :

provided below. : https://x.com/Whalestox/status/1508511581856239616?s=20
 2. W pattern or double bottom pattern :

The double bottom pattern is a technical analysis chart pattern that indicates a potential bullish

reversal in the price of an asset. It typically occurs after a prolonged downtrend and consists of

two consecutive troughs at a similar price level, separated by a peak in between. This pattern

suggests that the selling pressure has exhausted, and buyers are stepping in, leading to a

potential upward movement in price.

3. M pattern or double top pattern :

The double top pattern is a technical analysis chart pattern that occurs when the price of

an asset reaches a high point, pulls back, and then retests the previous high before

reversing downwards. It is considered a bearish reversal pattern and is often used by

traders to identify potential trend reversals.

 4. Trendline breakout Strategy :

A trendline breakout strategy is a trading strategy that involves identifying a trendline on a price chart

and entering a trade when the price breaks above or below the trendline.Implementing a trendline

breakout strategy involves using technical analysis tools to draw trendlines on a price chart and

monitoring the price action for breakouts.

How to draw a trendline ?

Identify a trend, whether it is upward or downward, and draw a line connecting the reversals of the

trend.

How to trade trendline breakout ?

Using this image, let's understand :

You can also confirm this by following the link provided below.

https://twitter.com/Whalestox/status/1669609450678923264?t=s2zBuJYRSkMzlBH7dZAaWg&s=35
5. range breakout strategy :

A range breakout strategy is a popular trading strategy used by traders to identify potential

breakouts from a range-bound market. It involves identifying a price range within which the price

has been trading for a significant period of time , this phase also known as accumulation or a

consolidation phase. And then placing trades when the price breaks above or below that range.

Let’s understand this in image :

You can also confirm this by following the link provided below. :

https://twitter.com/Whalestox/status/1494018565657161728?t=Tj4pyY9EUlQvd_YF5iQsVA

&s=19