Technical Analysis

Technical Analysis


Have you ever wondered why only a few people are able to make money but others are not? What is it that the others lack? Some say it is luck but the ones who actually make money say it is a matter of correct decisions at the correct time, And this decision making comes from experience and knowledge. Most pro-active traders use either Technical or Fundamental Analysis to make money. Here we take an in-depth look at technical analysis.

Technical analysis is a means for examining and predicting price movements in the financial markets using historical price charts and market statistics. It is based on the idea that past trading activity and security price changes can be valuable indicators of future price movements.

It is one of the two most common methodologies of market analysis, the other being fundamental analysis. Whereas basic research focuses on an asset’s ‘true value,’ with the external factors and intrinsic value both considered, technical analysis is based purely on the price charts of an investment.

For analysing historical data, technical analysts use indicators to predict future price movements. Examples of standard technical indicators include Moving Averages (MA), Relative Strength Index (RSI), Money Flow Index (MFI), stochastics, moving average convergence divergence (MACD), and Pivot Points.

We at IIFL provide you with ready-to-use technical analysis. We have aimed towards cutting down your efforts and providing a seamless experience. In our recent update, you can go to the Technical Analysis tab on the Company Details page and look at the font colours of the indicator values. Red font colour means the indicator is giving a bearish signal Yellow font colour means the indicator is giving a Neutral signal Green font colour means the indicator is giving Bullish Signal. Colours have always proven to stay in people's memories for a much longer time as compared to listed numbers. 

Moving averages(MA): If the MA is below the last traded price of the stock/scrip, it will indicate bullish sentiment. If the MA is above the last traded price, it indicates bearish sentiment in the market.
It is used to analyse data points by creating a series of averages of multiple subsets of the full data sets. It smooths out the price data and it is done by creating a constantly updated average price.

 Many technical traders tend to incorporate the "power of various technical indicators", for example moving averages, to help in the prediction of upcoming future short-term momentum, however, these traders are never fully able to realize the ability that these tools hold in themselves, for the identification of levels of support as well as resistance. 

Traders can use moving averages in various methods, for example, to anticipate and predict changes to the upside, while price lines tend to cross over a critical moving average. Also, exit the trades while the price falls below a particular moving average. Irrespective of how the moving average is used, it often creates "automatic" support and resistance levels. Most traders will experiment with different periods in their moving averages to find the one that works best for this specific task.

Delivery and Traded Volumes: Delivery Volume is the volume of the shares that are transferred from one Demat account to the other and are not squared off within the time period specified. Traded Volume is the total number of shares traded within a given time period.
A high percentage of delivery volume means that a larger section of traders is holding on to the stock, trusting the stock price to go up in the mid to long term. An increase in delivery volume shows the higher trust in the price growth of the stock and vice versa.

Support and Resistance:  Support and Resistance are the two technical terms that can be defined as specifically predetermined and formulated levels of the price of a security at which it is expected that the price will tend to stop and reverse. Here we show the Resistances and Supports based on Pivot Points. Support/Resistance shown in Red colour means that LTP is below that level indicating a bearish signal. Support/Resistance shown in Green colour means that LTP is above that level indicating a bullish signal.

  • Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favour a pause or reversal of a prevailing trend. 

  • Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply. 

  • Market psychology plays a major role as traders and investors remember the past and react to changing conditions to anticipate future market movement.

  • Support and resistance areas can be identified on charts using trendlines and moving averages.

Other Indicators

Values of various commonly used indicators - RSI, MACD, MFI, ADX, ATR, etc. along with the signal given by each of these using colour codings.

  • Indicators in red means bearish sentiment
  • Indicators green means bullish sentiment
  • Indicators in yellow means neutral sentiment

Price change analysis

It shows how the stock has performed in the past 1M, 3M, 6M, and 1Y Providing market sentiment based on Standard and Exponential Moving Averages.

A general rule of thumb can be that if you see more Red values than Green, it means

that the stock is technically bearish. If you see more Green values than Red, it means that the stock is technically bullish. 

Well here is all of the technical aspects our company can offer for you while you invest in stock. It is everything you need simply given to you at your fingertips. Now go on and explore the realms of the stock market with the help of our app IIFL Markets. Download now!!!

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