Stock Market Course - Technical analysis step by step full guide

Determine the Trend

In technical analysis, trends are used to identify the direction in which the price of an asset is moving. There are three main types of trends: uptrend, downtrend, and sideways (or horizontal) trend.

To determine the trend of a security, one commonly used method is to draw a trendline. A trendline is a straight line that connects two or more price points and is used to identify a current trend in the market. An uptrend is defined as a series of higher highs and higher lows, and can be identified by connecting the lows with a trendline. A downtrend is defined as a series of lower highs and lower lows, and can be identified by connecting the highs with a trendline.

Another way is to use Indicator like Moving Averages, these are lines which indicate a trend by smoothing out the price fluctuations over a certain period of time. For example, if a 50-day moving average is above a 200-day moving average, it indicates an uptrend. You may also use other indicators such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) to confirm the trend or detect changes in the trend.

Keep in mind, trends are not always clear-cut, so it is important to evaluate different time frames, such as daily, weekly, and monthly charts, to get a more accurate picture of the current trend.

Scan for Stock Making 52 Week Hights of All Time High or 52 Week Lows or All Time Lows 

There are a few ways to scan for stocks that are making 52-week highs or lows, or all-time highs or lows. One method is to use a stock screener, which is a tool that allows you to filter stocks based on a set of criteria. Many financial websites, such as Yahoo Finance, Google Finance, and FINVIZ, offer free stock screeners that allow you to filter stocks based on various criteria, such as price, market capitalization, and 52-week high/low.

Here is an example of how to use the Yahoo Finance stock screener:

1. Go to the Yahoo Finance website and click on the "Screener" link.
2. On the left side of the page, click on the "Price" tab and select "52-week high" or "52-week low" from the drop-down menu.
3. You can further narrow down your search by adding additional criteria, such as market capitalization, sector, and industry.
4. Click on the "Search" button to see a list of stocks that match your criteria.

Alternatively, you can use Tradingview Screener which have more advance filters.

You can also use stock scanning software programs or subscription-based services, like Trade-Ideas, that can scan the market in real-time and alert you when a stock meets your criteria.

Keep in mind, that although 52 week or All-time Highs and lows could be significant indicators but they should not be considered in isolation and it's important to always consult with a financial advisor before making any investment decisions.

Spot Patterns if any

In technical analysis, patterns are used to identify potential buying or selling opportunities in the market. There are a variety of different patterns that traders can look for, including:

1. Reversal patterns: These patterns indicate a potential change in the trend of a security. Examples include head and shoulders, double and triple tops and bottoms, and trendline breaks.
2. Continuation patterns: These patterns indicate that a current trend is likely to continue. Examples include flag and pennant patterns, and symmetrical and ascending triangles.
3. Gap patterns: these patterns indicate that there is an abnormal price movement and a gap between the closing price and the next day's opening price, these can be bullish or bearish.
4. Candlestick patterns: Candlestick charts are used to represent the open, high, low, and close prices of a security. Certain candstick patterns can indicate potential buying or selling opportunities. Examples include the hammer, shooting star, bullish and bearish engulfing patterns, and the doji.
5. Elliott wave pattern: a sequence of five waves impulse and three waves correction, which can be used to identify the trend and possible reversal points.

To spot patterns, it's important to look at charts with different timeframes, starting from an higher timeframe to a lower one. Also using different indicators can help to confirm the patterns, like Fibonacci retracements, trendlines, and moving averages.

Keep in mind that technical analysis is not an exact science and that the interpretation of patterns can vary from trader to trader. Therefore, it's important to use multiple sources of information, including both fundamental and technical analysis, before making any trading decisions.

Spot Divergence if any

Divergence is a term used in technical analysis to describe a scenario in which the price of a security and an indicator move in opposite directions. There are two types of divergence: bullish divergence and bearish divergence.

Bullish divergence occurs when the price of a security makes a lower low, while a technical indicator such as the Relative Strength Index (RSI) makes a higher low. This divergence is considered to be a bullish signal, suggesting that the underlying security may be experiencing bullish momentum and that a possible upward price move could occur in the near future.

Bearish divergence occurs when the price of a security makes a higher high, while a technical indicator such as the RSI makes a lower high. This divergence is considered to be a bearish signal, suggesting that the underlying security may be experiencing bearish momentum and that a possible downward price move could occur in the near future.

To spot divergence, it is important to use chart and indicators together, for example, you can use a price chart and an RSI chart, or a price chart and a MACD chart, to spot divergence. Traders look for divergences by comparing a security's price action to the action of an indicator like RSI,MACD or stochastics.

Keep in mind that divergence is not a guarantee of a trend reversal, and it should be used with other technical analysis tools, like trendlines and support and resistance levels, to confirm a potential reversal. also it's important to consider other fundamental factors, such as economic data and news, that could impact the security's price.

Check Oscillator Supports and Resistances 

An oscillator is a type of technical indicator that oscillates between two extreme values, typically zero and 100. Oscillators are used to identify overbought and oversold conditions in the market, and can also be used to identify potential support and resistance levels.

To check oscillator supports and resistances, traders typically use indicators such as the Relative Strength Index (RSI), the Stochastic Oscillator, and the Moving Average Convergence Divergence (MACD) indicators.

For example, with the RSI, when the indicator is above 70, it is considered overbought and a potential resistance level, and when it is below 30, it is considered oversold and a potential support level. With the Stochastic Oscillator, when the indicator is above 80, it is considered overbought, and when it is below 20, it is considered oversold. Similarly, with the MACD, when the indicator is above the zero line, it can be considered a bullish signal and when it is below the zero line it can be considered a bearish signal.

Keep in mind that indicators are lagging and should be used with other analysis tools, like chart patterns, trends and candlestick patterns to make a more accurate decision, also it's important to use multiple timeframes when using Oscillators as different timeframes have different meanings and indicators that might signal a reversal at one time frame can mean the opposite in another time frame.

Check Moving Averages 

Moving averages are a popular technical analysis tool used to identify trends and potential buying or selling opportunities in the market. A moving average is a line on a chart that shows the average price of a security over a certain period of time. The most common types of moving averages are the simple moving average (SMA) and the exponential moving average (EMA).

To check moving averages, traders typically use charts with multiple moving averages plotted on them, such as a 50-day SMA and a 200-day SMA. When the shorter-term moving average (50-day) crosses above the longer-term moving average (200-day), it is considered a bullish signal, suggesting that the security may be experiencing upward momentum and that a possible upward price move could occur in the near future. When the shorter-term moving average crosses below the longer-term moving average, it is considered a bearish signal, suggesting that the security may be experiencing downward momentum and that a possible downward price move could occur in the near future.

Another way is to use a combination of moving averages with different timeframes and compare them, such as using a short-term moving average (e.g. 5-day moving average) and a long-term moving average (e.g. 200-day moving average) which can help to identify trends and potential trend changes.

Additionally, it's common to use a crossover strategy that generates a buy or sell signal when two moving averages cross, such as when the 5-day moving average crosses above the 20-day moving average, indicating a buy signal.

Keep in mind that moving averages are lagging indicators and can be affected by volatility and noise. It's essential to use multiple sources of information, including both fundamental and technical analysis, before making any trading decisions. Also, keep in mind that moving averages are best used to identify trends and not for precise entry and exit points.

Check Momentum 

Momentum is a term used in technical analysis to describe the rate of change of a security's price. It is used to identify whether a security is gaining or losing strength and can be used to identify potential buying or selling opportunities. There are several different ways to check momentum in technical analysis, some of the most common methods include:

1. Rate of Change (ROC): The ROC is a momentum indicator that compares the current price of a security to its price a certain number of periods ago. The ROC is calculated by taking the current price and subtracting the price n periods ago, and then dividing that number by the price n periods ago. A positive ROC is considered bullish, indicating that the security is gaining momentum, while a negative ROC is considered bearish, indicating that the security is losing momentum.
2. Moving Average Convergence Divergence (MACD): The MACD is a momentum indicator that uses the difference between a short-term moving average and a long-term moving average to identify changes in momentum. A positive MACD is considered bullish, while a negative MACD is considered bearish.
3. Relative Strength Index (RSI): The RSI is a momentum indicator that compares the magnitude of a security's recent gains to the magnitude of its recent losses. The RSI is calculated by dividing the average gain over a certain period of time by the average loss over that same period. When the RSI is above 70, it is considered overbought, indicating that the security may be losing momentum, while when the RSI is below 30, it is considered oversold, indicating that the security may be gaining momentum.
4. Stochastic Oscillator: The Stochastic Oscillator is a momentum indicator that compares the closing price of a security to its price range over a certain period of time. It is calculated by taking the current closing price and dividing it by the high and low over a certain period of time. When the indicator is above 80, it is considered overbought and when it is below 20, it is considered oversold.

Keep in mind that momentum indicators alone should not be used to make a trading decision and should be used along with other technical and fundamental analysis tools and methods. Also, it's important to be aware that momentum indicators are lagging in nature and can be affected by volatility and noise.

Check Candlestick Formations 

Candlestick charting is a popular method of technical analysis that is used to identify potential buying and selling opportunities in the market. Candlestick patterns are formed by the open, high, low, and close prices of a security over a certain period of time and they can provide insight into the market sentiment and investor psychology. Some common candstick patterns include:

1. Bullish patterns: Patterns such as the bullish engulfing pattern and the hammer pattern indicate that bulls (buyers) are in control and that a possible upward price move could occur in the near future.
2. Bearish patterns: Patterns such as the bearish engulfing pattern and the shooting star pattern indicate that bears (sellers) are in control and that a possible downward price move could occur in the near future.
3. Doji: This pattern occurs when the open and close prices are almost the same indicating indecision in the market and could be a potential reversal point.
4. Spinning Tops: this pattern occurs when the length of the real body is small, indicating indecision in the market.
5. Harami patterns: these patterns occur when a small real body of the second candle is completely inside the previous candle and it indicate a potential trend reversal or consolidation.

To check candstick formations, you can use charts that display candstick patterns such as TradingView, candstick patterns should be analyzed in the context of the larger trend and along with other technical indicators such as support and resistance levels, moving averages and momentum indicators,

Keep in mind that candstick patterns are often more effective when they occur after a prolonged trend, they are not always reliable and not all patterns occur in every market, also the interpretation of candstick patterns can vary depending on the trader. It's important to use multiple sources of information, including both fundamental and technical analysis, before making any trading decisions.