Power of Technical Analysis

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Posted by Power of Technical Analysis June 15, 2020

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What Is a Hammer Candlestick?

A hammer is a price pattern in candlestick charting that occurs when a Security trades significantly lower than its opening, but rallies within the period to close near opening price. This pattern forms a hammer-shaped candlestick, in which the lower shadow is at least twice the size of the real body. The body of the candlestick represents the difference between the open and closing prices, while the shadow shows the high and low prices for the period. Hindustan Unilever is forming Hammer Pattern on Daily Chart ( 26-Aug-2020 )

The Power of RSI with an example

Relative strength Index or just RSI, is a very popular indicator developed by J.Welles Wilder. RSI is a leading momentum indicator which helps in identifying a trend reversal. RSI indicator oscillates between 0 and 100, and based on the latest indicator reading, the expectations on the markets are set. RSI is the most popular leading indicator, which gives out strongest signals during the periods of sideways and non trending ranges. A value between 0 and 30 is considered oversold, hence the trader should look at buying opportunity. A value between 70 and 100 is considered overbought, hence the trader should look at selling opportunity. If the RSI value is fixed in a region for a prolonged period, it indicates excess momentum and hence instead of taking a reversed position, the trader can consider initiating a trade in the same direction. To start trading click here Example: In the below chart of M&M Finance, the 15 min chart and 5 min charts are shown. M&M Finance chart In...

History of Technical Analysis

It is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable. The principles of technical analysis are derived from hundreds of years of financial market data. Some aspects of technical analysis began to appear in Amsterdam-based merchant Joseph de la Vega 's accounts of the Dutch financial markets in the 17th century. In Asia, technical analysis is said to be a method developed by Homma Munehisa during the early 18th century which evolved into the use of candlestick techniques, and is today a technical analysis charting tool. In the 1920s and 1930s, Richard W. Schabacker published several books which continued the work of Charles Dow and William Peter Hamilton in their books Stock Market Theory and Practice and Technical Market Anal...

Factor affecting Gold prices

Gold is held by central banks as a part of their reserves. If trade wars worsen and if the central bankers want to further diversify away from the US dollar, the demand for gold may go up, thus pushing up prices. Enroll for Certification in Online Macroeconomics for Financial Markets 1. Demand for Jewellery China and India account for more than half of the global demand for gold, mostly for making jewellery. Rising gold prices and the lockdown ensured that gold demand fell 65 per cent (China) and 41 per cent (India) in the first quarter. Global demand declined 39 per cent. When gold prices rise quickly, jewellery buyers may take time to adjust with the new normal. 2. Demand for Gold as Investment Investors consider gold as a safe haven. Exchange traded funds backed by gold added 170 tonnes in April 2020 – a five per cent growth in value terms, according to World Gold Council. Gold ETF (Exchange Trade Funds) assets have grown over 80 per cent over the past o...

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