WHY TECHNICAL ANALYSIS? WHAT IS THE NEED FOR IT?

WHY TECHNICAL ANALYSIS?

WHAT IS THE NEED FOR IT?

Mohamad Shaker

Karachi Stock Exchange

Why Technical Analysis? What is the Need for It?

Only by using technical analysis and charts, we can read the historical performance of stock movements within specific periods.

Only by using charts ,we anticipate turning points and identify patterns based on the stock’s history, behavior and characteristics.

Only by using charts we can clearly recognize participants and their intentions and we act accordingly. Knowing the participants intentions makes take good decisions.

Only by using technical analysis and charts, we can read perfectly the Trading environment and identify participants; long term investors, swing traders, day traders or scalpers.

Only by using charts, we can watch different time frames and choose the best time frame for our stock entry and exit points.

Only charts, indicators, patterns repetitions and setups reflect the reality of the market. Without them, you trade in the dark.

Are you ready to become a chartist?

Case Studies of Local Stocks

Stocks traded on Karachi Stock Exchange for example are probably the most influenced stocks in the world by technical analysis.

Probably some market makers, fund managers and professionals use technical analysis based on their good reading of traders behaviors and intentions. Those professionals lead stocks very professionally.

Most traded stocks trade with clear trends, use repetitive patterns and technical indicators perfectly.

Karachi Stock Exchange listed stocks are very predictable and follow trend, pattern formations and reflect professionalism.

Those who lead the market are joined by the rest of investors and traders once professionals ignite the stock and start the process.

Resistance Resistance

Five bottom formation Double bottom formation

Watch this area

KS 100 Index - Daily Chart

Pakistan Oilfields Ltd - Daily Chart

Clear Uptrend with many Pattern Formations

Double Bottom

Resistance Resistance

Bearish Flag

Watch this area

Trading Setups

Ready for breakout or breakdown

Engro Group Ltd - 5 minutes Chart

Consolidation and Ascending Triangle breakouts and

breakdowns

Consolidation breakout and then

breakdown

Bulls and Bears Controlled Market

Two powerful groups control the financial markets; (Bulls and Bears - they are both traders - winners)

There is one weak and losing group between them: (the betweeners)

BULLS ARE IN CONTROL MARKETS GO UP U P T R E N D BEARS ARE IN CONTROL MARKETS GO DN DOWNTREND

UPTREND DOWNTREND

Bank Alfalah Ltd - Daily Chart

Big Trend includes smaller trends

Summit Bank - Daily Chart

Market Turning Points - Trend Change

Bulls and Bears exchange places and thus exchange control Bulls can become Bears and Bears can become Bulls

Fighting takes place over control at market turning points because Bulls want to keep the market going higher and Bears want to bring it down

At market turning points, many support and resistance levels get tested and retested, broken down and penetrated

You are not advised to participate in the fighting over control unless you are one of the market makers or you lead a huge fund that weights on the market. Wait until a winner and a clear direction emerge and then go with the winner

A clear trend is every one’s path. Trading the trend makes your life easy

Summit Bank - Daily Chart

D. G. Khan Cement Ltd - Daily Chart

Turning points and change of trend

Choose stocks with that have

D. G. Khan Cement Ltd - Daily Chart

Stock Consolidation

Consolidation is simply another description of a trading range and the complete absence of a trend.

These periods can make for frustrating trading if you are looking for a large price move, as price remains range-bound within a consolidation area.

Consolidations often follow uptrends or downtrends, and are a

representation of a stable market which lacks emotion ahead of the next significant move in prices.

Consolidations are healthy in stocks which have just made large price moves, and help to alleviate the overbought or oversold readings of indicators.

Choose stocks in consolidation and wait for increasing volume supported breakout or breakdown to enter. The longer the consolidation is, the more powerful the breakout or breakdown is.

Breakout and Breakdown Trading

SUPPORT LEVEL DOWNTREND CONTINUES

BREAKOUT CONTINUES Buy breakout

Nimir Industrial Chemical- Daily Chart

Attock Refinery - Daily Chart

Breakout and Breakdown points

World Telecom- Daily Chart

Consolidation breakout

Using the most advanced technology

in trading for professional day traders

Take Care of Your brain now,

it will take care of you later

Using the most advanced technology

in trading for professional day traders

Trading with limited resources will not bring you wealth.

Trade like a professional using advanced technology. You will be rewarded

You need:

- Trading Money (not borrowed)

- Knowledge (fundamental and technical analysis) - Trading corner (desk) at home or better yet office

- The best PC in the world with four or more attached screens - Fast internet line

- Great charting system. MetaStock is great. - Cool emotions, no pressure during trading

Don’t be cheap spending on developing yourself.

You will make more money as you spend on

Do you trade from a similar corner?

This is not enough

What about this trading room