Technical Analysis Masterclass¶

Study guide covering market structure, price action, indicators, chart patterns, risk management, and live examples.

Part 1 — Foundations¶

Market Cycle (4 Stages)¶

Four stages repeat in every market cycle:

Stage	Phase	Action
1	Consolidation / accumulation (sideways)	Cash
2	Uptrend	Long
3	Consolidation / distribution	Cash
4	Downtrend	Short

Transition signals

Stage 1 → 2: positive divergence on momentum + breakout of reversal pattern
Stage 2 → 3: euphoria → reversal warning
Always trade in direction of trend

Timeframes & Trading Perspectives¶

A candle shows OHLC for a chosen period.

Style	Hold Period	Chart	Look-back
Scalper	Minutes	5 min	Same session
Intraday	Same day	15 min	Days–weeks
Swing	3–7 days	Daily	Weeks–months
Short-term positional	≤ 1 month	Daily	~1 year
Intermediate positional	Weeks–months	Daily	2–4 years
Long-term investor	Months–years	Weekly	7–8 years

Short Selling¶

Sell borrowed stock; buy back later to return to broker
Initial margin = % deposited at entry
Maintenance margin = minimum balance broker requires
Futures sold in lots only
Exit: Buy to exit short | Sell to exit long

Basic Terms & Platform¶

TradingView tools: candlestick, line, Heikin-Ashi, Fibonacci retracement, S&R zones, H&S, XABCD, harmonic patterns (bat, crab, butterfly, cypher), RSI, SMA, EMA

Demand & supply

Support = demand strong enough to halt decline (a zone, not an exact level)
Resistance = supply strong enough to halt rise (a zone)
Speed of price into a zone indicates level strength
Dynamic S&R: moving averages, price channels, Fibonacci (e.g. 61.8% as support)

Stock Selection¶

Divide capital into 5 equal parts across sectors
Long-term (>2–3 yr): fundamentally strong + uptrend + support on 200 EMA or trend line
Short-term: blue-chip stocks (high liquidity, clear trends)
Screener filters: market cap ≥200B, 90-day avg volume >500K
Options: NIFTY 50 (liquid, clear charts)
Day trading: high volatility stocks

Part 2 — Price Action¶

Trend Lines¶

Purpose

Join lows in uptrend, peaks in downtrend
Confirms trend; trade with trend (counter-trend = high risk)
Shows where retracement/profit booking should stop
Breakout → new trend (reversal, continuation, or sideways)
After breakout, price often retests the line and fails → new trend established

Rules

Uptrend line = support (positive slope → rising demand)
Downtrend line = resistance (negative slope → rising supply)
Break below uptrend line → demand weakness
Break above downtrend line → demand exceeds supply
Above trend line → buy only; below → sell only

Drawing accurately

Use log scale on Y-axis for long-term charts
Ignore spikes; connect meaningful swing points
Positional: draw on daily chart, 2–4 year look-back
Draw main trend line + optional internal trend line for signals

Support & Resistance¶

Drawing

Use higher timeframe from 3D setup (e.g. weekly for positional)
Horizontal line joining swing highs (resistance) or lows (support)
Minimum 2 touches; more touches = stronger level
Adjust on lower TF using wick precision
Role reversal: broken support → resistance (and vice versa)
Two nearby levels = S/R zone (stronger than a single level)

Volume¶

Shares traded in a period; independent of price
Long bar vs average = high relative volume (unusual activity)
Every buyer has a seller (and vice versa)
Smart money trades in millions → huge volume at extremes of trends
Volume at resistance breakout → continuation more likely

Candlestick Patterns¶

Anatomy: Green/bullish = close > open | Red/bearish = open > close | Real body + wicks/shadows

Pattern	Structure	Rules
Hammer	Small body top; lower wick ≥ 2× body; in downtrend	Reversal up; confirm next close above hammer close; SL below support
Hanging Man	Same shape; in uptrend	Reversal down; confirm next close below; SL above resistance
Shooting Star	Small body bottom; upper wick ≥ 2× body; at resistance	Reversal down; green candle before = stronger signal
Doji	Open ≈ close	Indecision; reversal near S&R
Dragonfly Doji	Open = high = close; long lower shadow	Bullish reversal (like hammer)
Gravestone Doji	Open = low = close; long upper shadow	Bearish reversal (like shooting star)
Marubozu	Long body; no/minimal wicks	Momentum candle — green = strong bulls; red = strong bears; volume confirms
Bearish Engulfing	Red candle fully engulfs prior at S&R after sharp move	Pullback/reversal signal
Bullish Engulfing	Green candle fully engulfs prior red at support	Uptrend after downtrend correction

Color notes: green hammer / red hanging man = higher significance

Critical rule: never trust patterns alone — must be at S&R + confirmed by other indicators

Heikin-Ashi & 3D Charting¶

Heikin-Ashi (“average pace”): smoother candles; filters false signals; easier trend read than standard candles

3D charting — always monitor 3 timeframes:

Trader Type	Focus (middle)	Higher TF	Lower TF
Intraday	15 min	60 min (major S&R)	5 min (entry)
Positional	Daily	Weekly (major S&R)	1 hour (entry)
Long-term	Weekly	Monthly (S&R limits)	Daily (entry)

Middle TF → trend line + current trend
Higher TF → major S&R levels
Lower TF → precise entry/exit
Don’t enter fresh longs near upper resistance; wait for retracement to trend line

Part 3 — Indicators¶

Overview¶

Two categories

Leading — lead price; early entry/exit; e.g. oscillators
Lagging — trend-following; catch and stay in moves; signal late; poor in sideways markets

Principles

Use a small selected set — too many = confusion
No single indicator works in all conditions
Combine indicators of different nature (not RSI + Stochastic together)

Moving Averages (Lagging)¶

Types

SMA — simple average; use on large TFs (weekly/monthly)
EMA — weights recent prices; use on small TFs (hourly/15 min); reacts faster

200-day MA rule

Bulls live above 200 MA | Bears live below 200 MA
Acts as dynamic support (uptrend) or resistance (downtrend)

Period sets

Trader	MA Periods
Long-term investor	200, 100, 50 day
Positional	50, 21, 14
Intraday	14, 7, 3 EMA or 20, 10, 5

Crossover signals

Fast MA crosses above slow MA → buy
Fast MA crosses below slow MA → sell/exit
Positional: 14 EMA + 21 EMA for signals; 50 MA as trend filter * Longs only when price + fast MAs above 50 MA * Shorts only when fast MAs below 50 MA

Rules: trending markets only; check monthly/weekly first; combine with leading indicators

MACD¶

Settings: 12 EMA, 26 EMA, 9 signal line

Components: MACD line (12 − 26 EMA) · signal line · histogram · zero line

Trend read: MACD above zero → bullish | below zero → bearish

Signals

Buy: MACD crosses above signal line, both above zero, histogram rising
Exit long: lines converging, histogram falling
Short: bearish crossover + both lines below zero
Exit short: lines converging

Rules: trending markets only; never short in uptrend if MACD above zero; never counter-trend as beginner; determine trend on middle TF, signals on lower TF

RSI (Oscillator)¶

Basics: momentum oscillator; range 0–100; default 14-day; key levels 70, 60, 50, 40, 30

Overbought / oversold

RSI > 70 → overbought | < 30 → oversold
RSI > 50 → bullish bias | < 50 → bearish bias

Trending vs ranging — critical

Market	RSI Behavior	Action
Ranging	Buy near 30/40 support; sell near 70/60 resistance	Standard OB/OS rules apply
Trending (bull)	RSI can stay > 70 for extended periods	Do NOT short overbought; hold long until RSI breaks below 70
Trending (bear)	RSI can stay < 30 for extended periods	Do NOT buy oversold blindly

Entry/exit

Buy: RSI breaks above 30, confirm when crosses above 50
Exit long: RSI breaks below 70 after being overbought
Short: RSI breaks below 50 in downtrend; exit when RSI rises above 30
Divergence between RSI and price → early reversal signal

Stochastic (Oscillator)¶

Settings: K = 14, D = 3; range 0–100; key levels 20, 80, 50

Signals

Buy: K crosses above D, both cross above 20
Sell: K crosses below D, both cross below 80
K & D above 50 → bullish | below 50 → bearish

Pattern read

Narrow bottom + broad top → bears weak, bulls strong (uptrend)
Narrow top + broad bottom → bulls weak, bears strong (downtrend)

Rules: accurate on short TF / ranging markets; fails in strong trends; do NOT use with RSI; best with different-nature indicators (e.g. MA + Stochastic)

Divergence (Leading)¶

Mismatch between price and an oscillator (RSI, MACD, Stochastic). Often used for early exit, not primary entry.

Type	Price	Indicator
Bullish (positive)	Lower lows (downtrend)	Higher lows (e.g. RSI troughs rising)
Bearish (negative)	Higher highs (uptrend)	Lower highs (e.g. RSI peaks falling)

How to read

Uptrend: compare RSI peaks on price vs RSI
Downtrend: compare RSI troughs
Prefer RSI; primary use = exit long (bearish div near resistance) or exit short (bullish div near support)

Validity rules

Invalid if oscillator is in middle range (RSI 30–70)
Bearish: RSI peaks in overbought zone; first peak > 70
Bullish: RSI troughs in oversold zone (< 30)
Reversal can be delayed — wait for confirmation

Bollinger Bands (Leading)¶

Construction (defaults): middle = 20-period SMA · upper = +2σ · lower = −2σ

Three uses

Volatility gauge — expanding = high vol; contracting = range-bound; don’t trade higher TF while contracting
Breakout warning — extreme contraction → breakout likely; watch for expansion
Trend continuation — close outside bands = momentum; body fully outside = pullback signal; riding upper/lower band = trend continuation

Rules

Avoid buying upper band / selling lower band in sideways range on same TF
If hourly is range-bound, trade range on 15m/5m with other indicators
Exit when bands contract during trend (volatility decreasing)
Combine with RSI, MAs, and S&R to filter fake breakouts

Fibonacci¶

Role: S/R tool — predicts where retracements/extensions may stall; most useful after a clear move

Key ratios

Ratio	Derivation	Role
0.236, 0.382, 0.5, 0.618, 0.786	From golden ratio (1.618)	Retracement levels — corrections pause here
1.272, 1.618, 2.618	√ and multiples of 1.618	Extension levels — profit targets

Retracement — draw direction

Trend	Draw from → to	Levels act as
Uptrend	Low → high	Support on pullback
Downtrend	High → low	Resistance on pullback rally

Extension — reverse the anchors

Trend	Draw from → to	Levels act as
Uptrend	High → low	Target / resistance above
Downtrend	Low → high	Target / support below

Entry/exit logic

Buy at retracement support: SL below next lower Fib level
Short at retracement resistance: SL above level / candle high
If level breaks, next Fib level becomes new S/R
Add MA, Bollinger, MACD, RSI — retracements vary (38.2%, 50%, 78.6% all common)
Pick the current swing on the higher TF (weekly → daily → hourly)

Multi-TF workflow (positional)

Timeframe	Purpose	Action
Weekly	Trend + retracement context	Fib low → high (uptrend); mark levels near current price
Daily	Intermediate swing	Retracement high → low; extension for targets
Hourly	Entry/exit timing	MA (50, 21, 14) + RSI at Fib S/R

Part 4 — Chart Patterns¶

Gap Theory¶

Gap = unfilled area between close and next open. Filled gaps often reverse then continue in gap direction.

Type	Context	Rule
Common	Sideways range; filled in days	Not trade-worthy
Breakaway	Congestion breakout; high volume	Buy up / sell down; gap → support (up) or resistance (down)
Runaway (continuation / measuring)	Mid-trend; 2–3× volume	Rarely filled; target = trend-start-to-gap distance projected from gap
Exhaustion	End of move; low vol into gap, vol spike; no new HH/LL	Filled fast; trend reverses
Island reversal	Gap opposite exhaustion gap leaving an island	Strong reversal confirm

Reversal Patterns¶

Pattern	Structure	Entry / stop
Head & Shoulders (top)	Left shoulder → higher head → right shoulder below head; neckline through lows	Short neckline breakdown; SL at right-shoulder peak
Inverted H&S	Mirror in downtrend	Buy daily close above neckline; SL below head
Rising wedge	HH + HL, wide bottom → narrow top	Short lower trendline break + negative RSI divergence
Falling wedge	Bullish reversal in downtrend	Buy upper trendline break + positive RSI divergence
Double bottom	W at support, retest resistance, breakout	Buy resistance break; SL at second bottom low
Double top	M; two peaks same level; 3–4 week min between peaks	Short neckline break; SL at second peak; vol on 2nd peak < 1st
Broadening triangle	3–4 higher highs + lower lows	Short lower trendline break; SL at last peak
Rounding bottom	Long-term U/saucer (weekly clearer)	Buy near curve end

Continuation Patterns¶

Pause → breakout resumes prior trend.

Pattern	Entry
Symmetrical triangle	HH/HL converge; vol fades then spikes; trade breakout + heavy volume
Ascending triangle	Flat top + rising lows; buy top break + vol
Descending triangle	Flat bottom + lower highs; short bottom break + vol
Flag	Up trend: flag slopes down → buy upper break; down trend: flag up → short lower break
Rectangle	Horizontal flag; range-trade or breakout
Cup & handle	Cup + handle (often falling wedge); buy handle break + rising volume
Falling wedge (cont.)	In uptrend only; buy upper break
Rising wedge (cont.)	In downtrend only; short lower break

Wedge rule: falling wedge — downtrend = reversal, uptrend = continuation. Rising wedge — uptrend = reversal, downtrend = continuation. Reversal wedges need RSI divergence; continuation wedges don’t.

Part 5 — Risk & Execution¶

Stop Loss¶

Primary SL — fixed below entry (long) / above (short): S/R break, Fib, trendline, MA, or entry-candle low/high (e.g. below 200 MA)

Trailing SL — locks profit via faster MA below slower (7/14, 8/20: exit when fast crosses under slow), trendline, % profit, or RSI (exit long when RSI drops below 70)

Example: buy 50% Fib cross; primary SL at 61.8%; trail slowest short MA; exit on fast/slow cross or trendline rejection

Paper Trading & Order Types¶

Paper trading — TradingView simulation with fake money

Order	vs Market	Use
Market	Current price	Immediate fill; attach SL/target
Limit	Buy below / sell above	Discount/premium entry; fill at limit
Stop	Buy above / sell below	Breakout above resistance / breakdown below support

Scale out; move SL to breakeven. Use position tool for R:R (min 1:1, target 1:2).

Common Mistakes¶

Trade only on confirmed signals — analyze, don’t react to noise or FOMO mid-trend
Don’t fear-exit without analysis; don’t overtrade from boredom
Min 1:1 R:R; avoid big risk for small reward
Control greed/regret (holding for “deserved” profit or chasing past wins)
No permanent bull/bear bias — adapt to trend; buy support on triggers in uptrends

Part 6 — Case Studies & Advanced¶

Yes Bank¶

Trend: Downtrend → short only
S/R (positional): Weekly + daily, lookback 3–4 yrs; horizontal lines at swing peaks/lows with multiple touches; close levels = S/R zones; levels flip on breach

3D charting

Perspective	3D TFs	Per-TF role
Long-term positional	Monthly / Weekly / Daily	Higher: S/R + Fib
Short-term positional	Weekly / Daily / Hourly	Higher: S/R · Middle: trendline · Lower: signals
Intraday	Hourly / 15m / 5m	Higher: S/R (6–8 mo) · Middle: trendline · Lower: signals

Draw primary + internal downtrend lines on sharp falls; no trendline in range
Don’t short when far below downtrend line (expect pullback)

EMA signals

Perspective	Lower TF	Rules
Positional	Hourly	50, 21, 14 EMA — short: 14 < 21 < 50; hold while 14 < 21; exit 14 > 21
Intraday	5m	20, 10, 5 EMA — same logic

MACD: Short = bearish cross + both lines below zero (downtrend only)
Fib: Weekly for positional; downtrend high→low retracements; extension supports at 1.272, 1.414
Long example: Positive RSI div at support → targets 47.80, 54; SL ~**39.30**
Mar 2020 levels: Support 29.05 · Resistance 34.9

AAPL (Long-Term Positional)¶

3D: Monthly / Weekly / Daily
Monthly: Diverging uptrend channel; EMA 100/200/50 — 50 EMA = TIZ; RSI > 50 confirms uptrend
No fresh entry at upper resistance; wait for 50 EMA or trendline retrace
Daily: 100 EMA = TIZ; negative RSI div → expect pullback

Microsoft (Intermediate Positional)¶

3D: Weekly / Daily / Hourly
Weekly 100 EMA = TIZ — buy on support touches
Daily: Cup & handle continuation; entries at 50 EMA + uptrend line
Fresh entry on retrace to trendline/50 EMA; hold targets 1.272 Fib ext, 76.18

Live Analysis — Stocks¶

Symbol	Setup	Rule
IBN	Neg RSI div at ATH; H&S	Buy trendline break; avoid resistance buys with new neg div
Infosys	Range	RSI at resistance → sell; RSI ~30 → buy
AAPL	−9.5% to trendline/100 MA	Buy breakout; SL below signal candle low
MSFT	Neg div; in-between trade	Wait trendline retrace; Bollinger squeeze → range then buy

Live Analysis — NIFTY 50¶

Weekly: Uptrend; 200-week MA support; 50% Fib retrace = last major buy; 1.618 (~10303) = support while above
Daily: Cup & handle; 100 DMA ∥ uptrend line = TIZ; retrace support 38.2% Fib, next 10621 (50 DMA + 50% Fib)
Hourly warnings (pre-budget fall): Broke uptrend; 21 EMA < 50; RSI + MACD neg div; sloping H&S gap below neckline
Buy: Bounce 10625 (50 DMA, SL below) · Ultimate: 100 DMA / trendline

Advanced Indicators¶

Indicator	Key points
Accumulation / Distribution	Leading vol/price divergence; +div (price ↓, A/D ↑) → buy trendline break; −div → sell break
Stochastic RSI	Stochastic on RSI; default 14,14,3,3; OB >80, OS <20; combine with Chaikin on 15m/1h
Chaikin Oscillator	3-day EMA(A/D) − 10-day EMA(A/D); long: +div + cross above 0; never alone; no counter-trend
VWMA vs SMA	VWMA between price & SMA + VWMA > SMA → bullish; gap widens then overlaps → liquidate
Parabolic SAR	Dots below = buy, above = sell; wide gap = strong trend; pair with 8/21 MA or MACD
SMI Ergodic	Faster filtered signals vs MACD; default 20,5,10; buy blue > orange
Super Trend	ATR 7, multiplier 3–4; green below = buy; pair with RSI; check Choppiness first
Choppiness Index	Period 40; >61.8% = choppy, <38.2% = trending; buy/sell on break below 38.2%
ADX	ADX >20 = trending, <20 = range; +DI > −DI = buy pressure

Multi-Collinearity¶

Don’t stack same-category indicators (e.g. RSI + Stoch + CCI)
Categories: Momentum · Trend-following · Volume/volatility · Chart studies
Good combo: RSI + ADX + SuperTrend — use 3–4 complementary indicators

Indicator Settings — Multiple Timeframes¶

Define perspective → select 3D set
Higher TF: S/R + Fib on last swing
Middle TF: Trend, patterns, trendlines (log scale), divergences, indicators
Lower TF: Entry/exit via MA crossovers

Perspective	3D Set	Middle-TF / Lower-TF
Long-term investor	Daily / Weekly / Monthly	RSI, ADX, Chaikin, Fib · Lower: 200/100/50 EMA — hold 50>100
Short-term	Hourly / Daily / Weekly	RSI, Chaikin, MACD, Fib · Lower: RSI (trend) or Stoch RSI (range)
Day trader	5m / 15m / 60m	RSI, MACD, Chaikin · Lower: 14/7/3 or 20/10/5 EMA + RSI + Bollinger

Fib rules: Uptrend below peak → low-to-high retracement; above peak → high-to-low extension. Downtrend: mirror.

Five Important Things¶