Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Meghe Group of Institutions Department for Technology Enhanced Learning Department for Technology Enhanced Learning 1

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies SECURITY ANALYSIS & PORTFOLIO MANAGEMENT Unit – 5 EMH & Technical Analysis 2

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Syllabus – Unit -5 Trends – Reversal of Trend. Flat Trends. Chart Patterns/Price Patterns – Reversal Patterns, Continuation Patterns. Trends – Reversal of Trend. Flat Trends. Chart Patterns/Price Patterns – Reversal Patterns, Continuation Patterns.

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Learning Objectives To study the meaning of trend and trend reversal and different types of patterns which show an upward or downward trend.

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Tools Retracement – Movement opposite to primary trend(correction). Primary(main) Trend Secondary (correction) trend,Retracement UPWARD TREND

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Trends Support & Resistance Resistance Support E F G H A B POINT B – Retracement in trading zone or break the resistance???? Volumes transaction at point B is decisive factor. SHARE PRICE MOVEMENT

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Trends(Continued) Tools for Support & Resistance a)Previous significant Highs & Lows(52 week) b)Trendlines c)Fibonacci retracement levels Tools for Support & Resistance a)Previous significant Highs & Lows(52 week) b)Trendlines c)Fibonacci retracement levels A(Trendline violation)Aggressive trader B(Previous low)Cautious trader

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Patterns Head & Shoulders Pattern on Chart Shoulder Head Shoulder A Trading Idea – Sell at A Approximate target should be B B

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Patterns(Contd.) Reverse Head & shoulders B Trading Idea –Buy at B Must have significant rise in volume Approximate target

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Patterns Double Bottom Trendline C Trading Idea- Buy at C, Must have significant rise in volume Target- Nearest significant high

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Patterns Double Top Trendline D Trading Idea-Sell at D Target –Nearest significant low

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Trade Set Up For generation of a trading idea 1)Set a time horizon. 2)Keep an extra buffer of some points for calculated Stop Loss price. 3)If setting target through Fibonacci retracement levels always choose the least ratio(23.6%) for achievement of target, no matter how sure you are of achieving higher targets. For generation of a trading idea 1)Set a time horizon. 2)Keep an extra buffer of some points for calculated Stop Loss price. 3)If setting target through Fibonacci retracement levels always choose the least ratio(23.6%) for achievement of target, no matter how sure you are of achieving higher targets.

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Summary Trend reversal spotting with help of Fibonacci retracement, Support and resistance lines and significant highs and lows is a very important info. for trend reversal of price.

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies SAQ 1)What are the tools for support and resistance ? 2) What is a trend reversal? 3) What is a continuation pattern? 1)What are the tools for support and resistance ? 2) What is a trend reversal? 3) What is a continuation pattern? 14

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies LAQ 1)Explain the different types of reversal patterns? 2)Explain trend reversal with an example. 1)Explain the different types of reversal patterns? 2)Explain trend reversal with an example. 15

Datta Meghe Institute of Management Studies Datta Meghe Institute of Management Studies Reference Strategic Financial Management by J.B. Gupta.