Share market investors analyse market on the basis of historical data and predicts future prices.
There are two main types of analysis to study the stocks for buying:
A. Fundamental analysis
B. Technical analysis
Fundamental analysis is related to study of financial data of the company, industry and economy.
Technical analysis or ‘charting’ is the study of behavior of market participants in the form of price
and volume patterns on the stock chart.
A: Despite of advances in science, human mind is same as it was 50000 years ago.
Human behaves in certain predictable manners which reflects in the price patterns on the Stock’s
Chart, an experienced chartist can predict probable future behavior and stock price based on the
past and present behavior patterns on the chart.
A:While Fundamental analysis helps us to choose strong companies, technical analysis helps in
guiding Entry and Exit timing. Combination of both the methods has potential to give better
A- Moving average is trend indicator and used frequently by technical analysts.
It denotes a stock’s average price over a certain period of time. For example 50 day simple
moving average is the sum of the closing price of the stock for last 50 days divided by 50. Oldest
value is dropped and newest is added.
It is plotted on the chart over the stock price and appears as a line. It is ready available on all
A: Commonly 50, 200 DMA are used for long term investment analysis.
A: Daily and weekly charts.
A: When 50 DMA crosses 200 DMA from BELOW upwards, it is a buy signal.
A: When 50 DMA crosses 200 DMA from ABOVE downward, it is a sell signal.
A: When stock price moves below 200 DMA it is assumed to be in a bear phase.
Similarly Prices above 200 DMA in a trending market can be a good guide for continue holding a stock in
portfolio for long period.
A: Buy on dips. 50DMA can act as support to good stocks. Usually price bounce from 50 DMA.
Similarly 20, and 100 moving average can also be watched for support for dip buying in
fundamentally good stock – one need to find out what works best for which stock.
A: NOTHING is foolproof. All is game of probability.
EXPERIENCE is very important to understand mind of market. We cannot find single person
who is correct 100% in market. If one is correct at 70% times it is a great achievement.
A: PRICE ACTION.
We need to use past price action to find demand and supply zones on the chart.
People’s reaction to certain price level determines support and resistance.
A: We need to use multiple parameters simultaneously.
Volume has also significance to understand strength of trend.
A: RSI and Stochastic can tell it.
A: BEST is elusive. Find which is suitable for you.
ALWAYS use Combination of Fundamental and Technical analysis.
Price Action, Ichimoku, BB, RSI , Stocahstic, Volume, Supertrend. MA.
PE ratio, International market trends, Politics at centre And most important indicator. GUT
A: It depends upon various factors. Broader Market , Industry and business and also investors goal,
risk profile. It varies with each company and each investor.
A: Trade Tiger, investing.com and Chartink.com.