Stock market: Game of Technicals

Author:-  Shailesh Bhardwaj

                 ( Student at NIT Kurukshetra)

It’s wisely said in the markets that “What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.” – William O’Neil”

I am writing this article, to explain  all my friends how Technical’s play a great role in equity markets, and how do a single candle can changes Trend .How do we all get fooled by behavior of stock.

So, with my experience in equity market I have learned that we have to be extra-ordinary, fast and different from the investors/Traders to make big money in Stock Market which I will explain further

Now first discuss about what is TECHNICAL ANALYSIS?

At the most basic level, technical analysis refers to the use of price charts and other bits of market information to make investment decisions.

 Technical analysts try to predict price movements by looking at chart patterns and using them to inform their decisions to buy, sell, or hold a stock, sector, or even the market as a whole.

The ups and downs of the stock market are, after all, influenced by changes in supply and demand as investors react to information, decide whether to buy or sell, and collectively determine which way stocks are headed. These decisions are reflected in the charts. A Technical analyst looks for trends, support, and resistance in chart. To know more about what all are these things you can read NCFM – Technical analysis module by clicking here. And always remember “Don't make friends with trend, make friends with each candlestick”.

Now talking about what kind of chart an trader and investor see’s, to be very precise all the charts of stock market are based on LTP(last traded price). There are different types of charts for technical analysis but the most common type of chart an analyst uses is Candlestick chart. In Candlestick chart different candles says different things so knowledge of candlestick is must. To know more about different candlestick pattern I have prepared notes on candlestick that have over 100+ candlestick pattern you can purchase it from store.

Now coming to how technicals become so important in stock market lets understand this with the help of one example In 2019-20, Indian market roars to make new highs in spite sluggish Indian economy. A lot of bad news in the market but index was making new highs besides that index also showing signs of bearish divergence. For reference you can look into chart that I made at that time nifty was around 12K and started falling after that. When the fall starts a lots of supporting news came like cronavirus pandemic, IMF declares biggest ever recession etc. From Jan 2020 to April 2020 FII’s sold 89,126 Crore of shares from Indian market and nifty falls below 8k i.e. around 40% fall from high. This is how charts predicted fall earlier and many Traders opens short position in market. I hope you guys gets little bit idea about technical analysis.

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