1

MYSORE UNIVERSITY

Mysore

A SEMINAR REPORT ON

“TECHNICAL ANALYSIS AS AN APPROACH FOR INVESTMENT ANALYSIS”

Submitted to:

Mrs. PREETHI M FACULTY

Department Of MBA.TTL COLLEGE OF BUISNESS ADMINISTRATION

Submitted By GOVARDHAN .P.K

KARTHIK.S KARTHIK KUMAR.C.S

Department Of MBA.TTL COLLEGE OF BUISNESS ADMINISTRATION

Mysore-57000

2

INDEX

1) INTRODUCTION

2) HISTORY

3) DEFINITION

4) PRINICIPLES

5) USES

6) CHARTING TERMS AND INDICATORS

7) CONCLUSION

8) CHARTS

9) BIBILOGRAPHY

3

INTRODUCTION

Technical analysis is a financial markets technique that claims the ability to forecast the

future direction of security prices through the study of past market data, primarily price

and volume. In its purest form, Technical analysis considers only the actual price and

volume behavior of the market or instrument, on the assumption that price and volume

are the two most relevant factors in determining the future direction and behavior of a

particular stock or market. Technical analysts may employ models and trading rules

based, for example, on price and volume transformations, such as the relative strength

index, moving averages, regressions, inter-market and intra-market price

correlations, cycles or classically through recognition of chart patterns.

Technical analysis is widely used among traders and financial professionals, but is

considered in academia to be pseudoscience. Academics such as Eugene Fama say the

evidence for technical analysis is sparse and is inconsistent with the weak form of the

generally-accepted efficient market hypothesis. Economist Burton Malkiel argues,

“Technical analysis is an anathema to the academic world." He further argues that under

the weak form of the efficient market hypothesis, "...you cannot predict future stock

prices from past stock prices."

However, there are also many stock traders who proclaim technical analysis not as a

science for predicting the future but instead as a valuable tool to identify favorable

trading opportunities and trends. The assumption is that all of the fundamental

information and current market opinions are already reflected in the current price and

when viewed in conjunction with past prices often reveals recurring price and volume

patterns that provide clues to potential future price movement.

In the foreign exchange markets, its use may be more widespread than fundamental

analysis. While some isolated studies have indicated that technical trading rules might

lead to consistent returns in the period prior to 1987, most academic work has focused on

the nature of the anomalous position of the foreign exchange market. It is speculated that

this anomaly is due to central bank intervention.

4

HISTORY

The principles of technical analysis derive from the observation of financial markets over

hundreds of years. The oldest known example of technical analysis was a method

developed by Homma Munehisa during early 18th century which evolved into the use of

candlestick techniques, and is today a main charting tool.

Technical analysis as a tool of investment for the average investor thrived in the late

nineteenth century when Charles Dow, then editor of the Wall Street Journal, proposed

the Dow Theory. He recognized that the movement is caused by the action/reaction of the

people dealing in stocks rather than the news in itself.

Walter Deemer was one of the technical analysts of that time. He started at Merrill Lynch

in New York as a member of Bob Farrell'sdepartment. Then when the legendary Gerry

Tsai moved from Fidelity to found the Manhattan Fund in 1966, Deemer joined him. Tsai

used to consult him before every major block trade, at the start of a time when large

volume institutional trading became the norm and the meal ticket for brokers. Deemer,

could recreate market history on his charts and cite statistics. He maintained contact with

the group of other pros around then, who shared their insights with each other in a

collegial confidence worthy of the priesthood.

5

DEFINITION

We can define technical analysis as a study of the stock market considering factors

Related to the supply and demand of stocks. Technical analysis doesn’t look at underlying

earnings potential of a company while evaluating stocks {unlike fundamental analysis}.

It uses charts and computer programs to study the stock’s trading volume and price

movements in the hope of identifying a trend. In fact the decision made on the basis of

technical analysis is done only after inferring a trend and judging the future movement of

the stock on the basis of the trend. Technical analysis assumes that the market is efficient

and the price has already taken into consideration the other factors related to the company

and the industry. It is because of this assumption that many think technical analysis is a

tool, which is effective for short-term investing.

Technical analysis is done by identifying the trend from past movements and then using

it as a tool to predict future price movements of the stock. It can be done by using any of

the following methods:

a) Moving Averages—This method is used to predict the trend and specify various

support and resistance levels in the short and long term period. Most commonly used

moving averages are 30 DMAs and 200 DMAs. Where DMA means Days Moving

Average.

b) Charts & Patterns—Some analysts’ uses charts and patterns to decide on the trend

and then judge the future movement. The tool used by such analyst is converting the chart

in one of the many form of many shapes commonly formed by stocks. Some of such

patterns are:

6

Reversal Patterns: -

Continuation Patterns: -

1. Bump and Run

1. Cup with Handle

2. Double Top

2. Flag Pennant

3. Double Top

3. Symmetric Triangle

4. Double Bottom

4. Ascending Triangle

5. Head and Shoulders Top

5. Descending Triangle

6. Head and Shoulders Bottom

6. Price Channel

7. Falling Wedge

7. Rectangle

8. Rising Wedge

8. Measured {Bear} Move

9. Rounding Bottom

10. Triple Top

11. Triple Bottom

7

Types of trends: Trends can be classified broadly in 3 types. They are:

a) Uptrend: - Generally a stock moves in any direction with phases of consolidation

or moving against the trend for a short period. But still it creates higher Highs

and Lows in case of an uptrend. In short each short rally will create new High for

the stock.

b) Downward: - In this case as against Uptrend the stock creates lower Highs and

Lows. Furthermore in case of Downtrend the fall is much more steeper than the

rise in case of Uptrend.

c) Range-bound: - In case of such a trend the price moves in a small range for the

long period. There is no apparent direction as far as trend is concerned in this

case.

Role of Volume: Volume plays a key role in deciding about the kind of future movement

in stock. Whenever there is a sudden rise in the volume of the stock and if it is not

followed by a price fall, it is a sign of consolidation and that the price may rise in near

future. Generally if any stock breaks any trend it is accompanied by huge rise in volume.

In case of range bound trend the volume tends to die down to a great extent. Smart

investors uses technical analysis to judge the rise in volume and take early positions in

the stock during breakthroughs

8

Principles

Stock chart showing levels of support (4, 5, 6, 7, and 8) and resistance (1, 2, and 3);

levels of resistance tend to become levels of support and vice versa.

Technicians say that a market's price reflects all relevant information, so their analysis

looks more at "internals" than at "externals" such as news events. Price action also tends

to repeat itself because investors collectively tend toward patterned behavior – hence

technicians' focus on identifiable trends and conditions.

9

Market action discounts everything

Based on the premise that all relevant information is already reflected by prices, pure

technical analysts believe it is redundant to do fundamental analysis – they say news and

news events do not significantly influence price, and cite supporting research such as the

study by Cutler, Poterba, and summers titled "What Moves Stock Prices?"

On most of the sizable return days [large market moves]...the information that the press

cites as the cause of the market move is not particularly important. Press reports on

adjacent days also fail to reveal any convincing accounts of why future profits or discount

rates might have changed. Our inability to identify the fundamental shocks that accounted

for these significant market moves is difficult to reconcile with the view that such shocks

account for most of the variation in stock returns.

Prices move in trends

Technical analysts believe that prices trend. Technicians say that markets trend up, down,

or sideways (flat). This basic definition of price trends is the one put forward by Dow

Theory.

An example of a security that had an apparent trend is AOL from November 2001

through August 2002. A technical analyst or trend follower recognizing this trend would

look for opportunities to sell this security. AOL consistently moves downward in price.

Each time the stock rose, sellers would enter the market and sell the stock; hence the

"zig-zag" movement in the price. The series of "lower highs" and "lower lows" is a tell

tale sign of a stock in a down trend. In other words, each time the stock edged lower, it

fell below its previous relative low price. Each time the stock moved higher, it could not

reach the level of its previous relative high price.

Note that the sequence of lower lows and lower highs did not begin until August. Then

AOL makes a low price that doesn't pierce the relative low set earlier in the month. Later

in the same month, the stock makes a relative high equal to the most recent relative high.

10

In this a technician sees strong indications that the down trend is at least pausing and

possibly ending, and would likely stop actively selling the stock at that point.

History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the investors

that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to

$50 again, I will buy it," "This company's technology will revolutionize its industry,

therefore this stock will skyrocket" – these are all examples of investor sentiment

repeating itself. To a technician, the emotions in the market may be irrational, but they

exist. Because investor behavior repeats itself so often, technicians believe that

recognizable (and predictable) price patterns will develop on a chart.

Technical analysis is not limited to charting, but it always considers price trends. For

example, many technicians monitor surveys of investor sentiment. These surveys gauge

the attitude of market participants, specifically whether they are bearish or bullish.

Technicians use these surveys to help determine whether a trend will continue or if a

reversal could develop; they are most likely to anticipate a change when the surveys

report extreme investor sentiment. Surveys that show overwhelming bullishness, for

example, are evidence that an uptrend may reverse – the premise being that if most

investors are bullish they have already bought the market (anticipating higher prices).

And because most investors are bullish and invested, one assumes that few buyers

remain. This leaves more potential sellers than buyers, despite the bullish sentiment. This

suggests that prices will trend down, and is an example of contrarian trading.

11

Use

Many traders say that trading in the direction of the trend is the most effective means to

be profitable in financial or commodities markets. John W. Henry, Larry Hite, Ed

Seykota, Richard Dennis, William Eckhardt, Victor Sperandeo, Michael Marcus and Paul

Tudor Jones (some of the so-called Market Wizards in the popular book of the same

name by Jack D. Schwager) have each amassed massive fortunes via the use of technical

analysis and its concepts. George Lane, a technical analyst, coined one of the most

popular phrases on Wall Street, "The trend is your friend!"

Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do

many hedge funds. A relatively recent trend, both in research and industrial practice, has

been the development of increasingly sophisticated automated trading strategies. These

often rely on underlying technical analysis principles (see algorithmic trading article for

an overview

Investors for their short-term trading decisions use technical analysis. This short-term

may be further divided in day trading, short-term investment and for hedging purposes.

The role played by technical analysis in each case is as follows:

1) Day Traders: A day trader is one who takes and squares off his position both on

thesame day. Mostly a day trader counts on turnover rather than margin.

2) Short term investors: These people form the biggest clientele base of both the

brokers and the technical Analyst.

3.Hedgers: These are generally big investors, who have lot of money at stake and

hencethey look to have some hedging of their risk. The strategy followed by this section

of investors is that they compare the stock in consideration with the index and on the

basis of the result of this comparison they take their position in the stock.

12

Charting terms and indicators

Concepts

Average true range - averaged daily trading range.

Coppock - Edwin Coppock developed the Coppock Indicator with one sole

purpose: to identify the commencement of bull markets.

Dead cat bounce - generically refers to what turns out to be a significant but

temporary price rise during a sustained decline, typically for what are thought to

be technical reasons.

Elliott wave principle and the golden ratio to calculate successive price

movements and retracements.

Hikkake Pattern - pattern for identifying reversals and continuations.

Momentum - the rate of price change.

Point and figure charts - charts based on price without time.

BPV Rating - pattern for identifying reversals using both volume and price.

13

Overlays

Overlays are generally superimposed over the main price chart.

Resistance - an area that brings on increased selling.

Support - an area that brings on increased buying.

Breakout - when a price passes through and stays above an area of support or

resistance.

Trend line - a sloping line of support or resistance.

Channel - a pair of parallel trend lines.

Moving average - lags behind the price action.

Bollinger bands - a range of price volatility.

Pivot point - derived by calculating the numerical average of a particular

currency's or stocks high, low and closing prices.

14

Price-based indicators

These indicators are generally shown below or above the main price chart.

Accumulation/distribution index—based on the close within the day's range. Average Directional Index — a widely used indicator of trend strength. Commodity Channel Index - identifies cyclical trends. MACD - moving average convergence/divergence. Parabolic SAR - Wilder's trailing stop based on prices tending to stay within a

parabolic curve during a strong trend. Relative Strength Index (RSI) - oscillator showing price strength Rahul Mohindar Oscillator - a trend identifying indicator. Stochastic oscillator, close position within recent trading range. Trix - an oscillator showing the slope of a triple-smoothed exponential moving

average, developed in the 1980s by Jack Hutson.

Volume based indicators

Money Flow - the amount of stock traded on days the price went up. On-balance volume - the momentum of buying and selling stocks. PAC charts - two-dimensional method for charting volume by price level.

15

Basic Types of Price Charts

Price charts provide the fundamental building block in the analysis of market action.

The use of charts and technical indicators provide the average investor with the only

real edge available in trading the markets.

As you become familiar with viewing and using charts, readily identifiable patterns will

become apparent that can immediately give you a good notion of the profit potential for a

particular stock, mutual fund or commodity. See the discussion of the use of Trendlines

and Three Simple Rules.

The following basic types of price charts are the most commonly used. These charts

provide the "background" or "foundation" for most of the common indicators. In most

cases indicators are shown superimposed on the price chart itself or in a separate chart

below the price chart. Most of the analytical tools compare the action of an indicator

against that of the price.

Bar: each bar represents a day's trading showing the lowest to highest price, open &

close. This is the most common type of chart used. Time is factored into the price

movements. Volume charts often accompany bar charts.

16

Line: the line represents the closing prices only for a given time. This tends to smooth

out daily fluctuations in price, sometimes giving a better picture of the overall trend.

Point and figure: shows price changes with X columns for rising prices and O columns

for declining prices. Unlike the other basic charts, time itself is not a factor. Point and

figure charts plot only the direction of a price move and the change in value. Proponents

believe this gives them a clearer view of the underlying actions of supply and demand.

Candlesticks: use a wider bar to represent the difference between open and closing

prices - black for a decline and white for a rise. Patterns of black versus white (declining

vs rising markets) readily become apparent with candlestick charts.

17

Bar Chart: This is likely the most common type of chart used. Bar charts simply plot the

change in price over time (daily, weekly, monthly or minute-by-minute).

18

Dow Theory

Dow Theory at a Glance

Overview

Dow Theory is based on the philosophy that the market prices reflect every significant

factor that affects supply and demand - volume of trade, fluctuations in exchange rates,

commodity prices, bank rates, and so on. In other words, the daily closing price reflects

the psychology of all players involved in a particular marketplace - or the combined

judgment of all market participants.

The goal of the theory is to determine changes in the major trends or movements of the

market. Markets tend to move in the direction of a trend once it becomes established,

until it demonstrates a reversal. Dow theory is interested in the direction of a trend and

doesn't offer any forecasting ability for determining the ultimate duration of a trend.

Much of today's technical analysis is based on Dow's original "trend following'

system -

← Classification of a trend

← Principles of confirmation or divergence

← Use of volume to confirm trends

← Use of percentage retracement

← Recognition of major bull and bear markets

← Signaling the large central section of important market moves

← Dow theory has been successful in identifying 68% the major trends over

the years

19

The three trends are:

← Uptrend: successively higher peaks (highs) and higher troughs (lows)

← Downtrend: successively lower peaks and troughs

← Sideways Channel: peaks and troughs don't successively rise or fall

Each market trend has three parts compared to tides, waves and ripples.

← The primary (major) trend or tide is a long term trend lasting from a year

to several years

← The secondary trend (or mid-term trend) or wave lasts three weeks to three

months and represents corrections of one third to two thirds of the previous movement -

most often fifty percent of the movement.

← The minor trends (short-term trends) or insignificant ripples last less than

three weeks and represent fluctuations in the secondary trend.

←

20

The major trend has three phases:

Accumulation phase: knowledgeable investors buy issues with good potential.

Public Participation phase: Prices increasing rapidly and bullish markets are reported.

Distribution phase: Astute investors sell first, thereby leading the public.

A Major or Long-term Stock Market Trend:

Must be confirmed by the Dow Averages, calculated on closing prices only, not the daily

high or low (this provides the overall stock market trend).

Should have volume increase/decrease in the direction of the trend

Stays in effect until it gives definite reversal signals

Shortcomings of the Dow Theory:

The major criticism of the Dow Theory is its slowness: It misses about 25% of a move

before giving a signal, primarily because it is a trend following system designed to

identify existing trends.

21

Candlestick Patterns

Candlestick charting was popularized in Japan and has received world wide recognition.

Each candlestick is composed of four values, the high, low, open and close. The

advantage to this form of charting is that it provides more visual information about the

trading day as well as many trading signals to help decision making.

The body of the candlestick (or jittai) is the open and the close of the trading day. The

high and the low of the day create the upper and lower shadows of the main candle body.

(Most charting programs will allow you to use other colors in the bar, typically green for

white candle and red for black candle)

22

23

24

Moving Averages:-

Moving Averages (MAs) provide a set of very useful indicators for tracking trends and

trend reversals.

Overview

The Moving Average is a lagging indicator, or trend following formula, that

smoothes the volatile swings in a market.

MAs are used to track the progress of a trend and to signal when a trend has

ended or reversed.

There are 4 common types of moving averages: simple, linearly weighted,

exponential and variable.( See Table below for Types of Moving Averages)

The Moving Average (MA) is one of the simplest, yet most versatile and widely used of

all technical indicators. The MA attempts to tone down the fluctuations of market prices

to a smoothed trend, so that distortions are reduced to a minimum. MAs help in tracking

trends and signaling reversals. You could think of the MA as a curved trend line, fitting

itself to the market.

25

Interpretation

Signals to buy or sell are generated when the price crosses the MA or when one MA

crosses another, in the case of multiple MAs. As with trend lines, the MA often provides

an area of support and resistance. The more times an MA has been touched (i.e., acts as

support or resistance) the greater the significance when it is crossed.

Since the MA is a lagging indicator, a crossover will usually signal a trend reversal well

after a new trend has begun and is used largely for confirmation. Generally speaking, the

longer the time span covered by an MA, the greater the significance of a crossover signal.

For example, the crossover of a 100 or 200-day MA is significantly more important then

the crossover of a 20-day MA.

Moving averages differ according to the weight assigned to the most recent data. Simple

moving averages apply equal weight to all prices. Exponential and weighted averages

apply more weight to recent prices. Variable moving averages change the weighting

based on the volatility of prices.

When prices fluctuate up and down in a broad sideways pattern for an extended period

(trading-range market), longer term MAs are slow to react to reversals in trend, and when

prices move sideways in a narrow range shorter term MAs often produce false signals.

Flat and conflicting MAs generally indicate a trading-range market and one to avoid,

unless there is pronounced rounding that suggests a possible new trend.

26

Simple (This is the most commonly used MA)

Use of multiple MAs can provide good signals Useful periods

Short term 10-30 day Mid term 30-100-day Long term 100-200+day

There is no perfect time span

Crossover of short term through long term

Convergence/ Divergence

Crossover of MA by price

Linearly Weighted

With this MA, data is weighted in favour of most recent observations. Has the ability to turn or reverse more quickly than simple MA.

Warning of trend reversal given by change in direction of the average rather than crossover.

Exponential

(EMA)

An exponential (or exponentially weighted) moving average is calculated by applying a percentage of today's closing price to yesterday's moving average value. Exponential moving averages place more weight on recent prices.

Crossover of short term through long term

Convergence/ Divergence

Crossover of MA by price

Variable An automatically adjusting exponential moving average based on the volatility of the data.

The more volatile the data, the greater the weight given to the current data and the more smoothing used in the moving average calculation.

27

Relative Strength Index

The Relative Strength Index (RSI) can provide an early warning of an opportunity to buy

or sell.

Overview

The RSI is a momentum indicator, or oscillator, that measures the relative internal

strength of a market (not against another market or index).

As with all oscillators, RSI can provide early warning signals but should be used

in conjunction with other indicators.

Divergences are the most important signal provided by RSI.

The Relative Strength Index (RSI) is a popular oscillator developed by Welles Wilder, Jr

(see his book, New Concepts in Technical Trading Systems). RSI measures the relative

changes between higher and lower closing prices, and provides an indication of

overbought and oversold conditions.

The term "Relative Strength" is slightly misleading and often causes some confusion.

Relative strength generally means a comparison between two different markets or

indices. RSI, on the other hand, looks at the internal strength of a single market.

28

Interpretation

RSI is plotted on a vertical scale of 0 to 100. The 70% and 30% levels are used as

warning signals. An RSI above 70% is considered overbought and below 30% is

considered oversold. The 80% and 20% levels are preferred by some traders. The

significance depends upon the time frame being considered. An overbought reading in a

9-day RSI is not nearly as significant as an RSI for a 12-month period.

An overbought or oversold condition merely indicates that there is a high probability of a

counter reaction. It is an indication that there may be an opportunity to buy or sell, but

does not provide the final signal. RSI signals should always be used in conjunction with

trend-reversal signals offered by the price itself.

29

RSI can be plotted for any time span. Wilder originally recommended using a 14-day

RSI. Since then, the 9, 10 and 25-day RSIs have also become popular. The shorter the

time period, the more sensitive the oscillator becomes. If the user is trading short-term

moves, the time period can be shortened. Lengthening the time period makes the

oscillator smoother and narrower in amplitude.

In using RSI, a crossover above the 70% level is a warning signal to prepare to sell and,

conversely, when the RSI falls below 30% you have a notice to prepare to buy. The

actual buy and sell signals are given when the RSI reverses (see below). RSI crossings

through the 50% level are also used as buy and sell signals by some traders.

30

Fibonacci arcs & Retracements

Fibonacci arcs & retracements help anticipate support and resistance levels along with

price targets.

Overview

After making long sustained moves in one direction, many markets retrace a part of the

move before continuing on further. The Fibonacci indicator, popularized by Ralph

Nelson Elliot, is used to try and forecast potential support levels and price targets, based

on the height of the overall move and any wave patterns.

For example, if a stock increased from $5 to $10 and then slipped back 50%, this

retracement would take it to $7.50 before it continued upwards again.

This indicator uses mathematical ratios discovered by Leonardo Fibonacci's in the 12th

century. The Fibonacci summation series is 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... and

so on to infinity. Interestingly, these numbers have the following constant relationships:

The sum of any two consecutive numbers equals the next higher number.

The ratio between any number and the next higher number approaches 0.618 after

the first four calculations.

The ratio between any number and the next lower number is approximately 1.618

(the inverse of 0.618).

The number 1.618 is commonly referred to as the Golden Mean or the Golden Section.

The real value of this number series is that it is "the most important mathematical

presentation of natural phenomena ever discovered" (R. Fischer). It keeps popping up in

everything from the proportions of the Egyptian pyramids... the number of florets in

flower heads... the double helix of the DNA molecule... to the logarithmic spiral of the

nautilus shell.

(The well-known Elliot Wave Principle is also based on the application of Fibonacci

numbers to the waves evident in any price chart.)

31

Interpretation

The most commonly used numbers in this analysis are 61.8% (usually rounded off to

62%), 38% and 50%. This means that, in a strong trend, the minimum retracement is

usually close to the 38% level and may go as far as the 62% level.

Constance Brown, a well known technical analyst, has written, "If the market has shown

respect in the past to a Fibonacci grid drawn on the chart, the chances are much higher

that it will also respect those levels in the future market action."

Fibonacci Retracements

Fibonacci Retracements are based on a trendline drawn between a significant

trough and peak.

If the trend is rising, the retracement lines will descend from 100% to 0%

If the trendline is falling, the retracement lines will ascend from 0% to 100%

Horizontal lines are drawn at the common Fibonacci levels of 38%, 50%, & 62%

As the price retraces, support and resistance often occur at or near the Fibonacci

Retracement levels.

32

Fibonacci Arcs

Fibonacci arcs can be added to the same chart, or they can be charted alone. The arcs are

drawn centered on the last peak or trough, crossing the original trendline at the points

where the retracement lines intersect. The price will tend to "react" to both the arcs and

the retracement levels, as they provide support and resistance.

33

Charts

Stock making double bottom:-

This Stock is making Double bottom at 38.00 on Chart. So 38.00 can be taken as short

term Support.

34

Stock making double top:-

This Stock is making Double Top at 387.50 on Chart. So 387.50 can be taken as short

term Resistance.

35

Stock making a new year low:-

36

Over sold stock with improving relative strength index:-

37

Stock Bullish with 50 day/200day MA cross over:-

38

Bearish moving average:-

39

Strong volume gainers:-

40

Conclusion

If we use only technical analysis in itself and do not consider other aspects it is very

unlikely that we will have much success in the long run, particularly in case of short-term

investments. But if we use technical analysis along with fundamental analysis or

discount the industry and company related news while considering the valuation, our

chances of minimizing the risk brightens.

One thing that we must realize is that technical analysis provides us only with the trend

and judge future on that basis, it can be far from actual in few cases. The best use of

technical analysis is to realize the trend and levels at which it will break the trend so that

one is prepared to take positions when such trend breaks. It is because of this

Disadvantage that technical analysis more useful only for short-term investing…

41

Bibliography:-

1) Brock, William, Josef Lakonishok and Blake Lebaron (1992). "Simple Technical

Trading Rules and the Stochastic Properties of Stock Returns," The Journal of Finance,

47(5), pp. 1731–1764.

2) Security analysis and Portfolio management: D.E.Fisher & R.J.Jordon.

3) http://www.datek.smartmoney.com

4) http://www.tradersedgeindia.com

5) http://www.vfmdirect.com

6) http://www.stockcharts.com

7) http://www.nseindia.com