╔══════════════════════════════════════════════════════════════════╗ ║ TECHNICAL ANALYSIS QUICK REFERENCE GUIDE ║ ║ ProfitPros Education ║ ╚══════════════════════════════════════════════════════════════════╝ ═══════════════════════════════════════════════════════════════════ CANDLESTICK PATTERNS ═══════════════════════════════════════════════════════════════════ BULLISH REVERSAL PATTERNS: ────────────────────────────────────────────────────────── ✓ Hammer - Small body at top, long lower shadow - Found at bottom of downtrend - Signals potential reversal up - Confirm with next candle close above ✓ Bullish Engulfing - Large green candle engulfs previous red candle - Strong reversal signal - Volume should increase - Best at support levels ✓ Morning Star - 3-candle pattern - Red candle, small indecision candle, large green candle - Powerful reversal signal - Wait for confirmation ✓ Piercing Pattern - Red candle followed by green candle - Green candle opens below previous low - Closes above midpoint of red candle - Volume should increase on green candle ✓ Three White Soldiers - Three consecutive large green candles - Each opens within previous body - Each closes near high - Strong continuation signal BEARISH REVERSAL PATTERNS: ────────────────────────────────────────────────────────── ✓ Shooting Star - Small body at bottom, long upper shadow - Found at top of uptrend - Signals potential reversal down - Confirm with next candle close below ✓ Bearish Engulfing - Large red candle engulfs previous green candle - Strong reversal signal - Volume should increase - Best at resistance levels ✓ Evening Star - 3-candle pattern - Green candle, small indecision candle, large red candle - Powerful reversal signal - Wait for confirmation ✓ Dark Cloud Cover - Green candle followed by red candle - Red candle opens above previous high - Closes below midpoint of green candle - Volume should increase on red candle ✓ Three Black Crows - Three consecutive large red candles - Each opens within previous body - Each closes near low - Strong reversal signal INDECISION PATTERNS: ────────────────────────────────────────────────────────── ✓ Doji - Open = Close (or very close) - Signals indecision - Potential reversal at extremes - Continuation in trends ✓ Spinning Top - Small body, long shadows both sides - Indecision in market - Pause in trend - Wait for next candle ═══════════════════════════════════════════════════════════════════ CHART PATTERNS ═══════════════════════════════════════════════════════════════════ CONTINUATION PATTERNS (Trend continues): ────────────────────────────────────────────────────────── ✓ Bull Flag - Strong move up (pole) - Consolidation down/sideways (flag) - Breakout up continuation - Target = pole height added to breakout ✓ Bear Flag - Strong move down (pole) - Consolidation up/sideways (flag) - Breakdown continuation - Target = pole height subtracted from breakdown ✓ Ascending Triangle - Flat resistance, rising support - Bullish pattern - Breakout target = height of triangle - Volume contracts then expands on breakout ✓ Descending Triangle - Flat support, descending resistance - Bearish pattern - Breakdown target = height of triangle - Volume contracts then expands on breakdown ✓ Symmetrical Triangle - Rising support, descending resistance - Continuation of prior trend - Breakout direction often continues prior trend - Volume decreases then increases on breakout REVERSAL PATTERNS: ────────────────────────────────────────────────────────── ✓ Head and Shoulders (Bearish) - Left shoulder, head (higher high), right shoulder - Neckline connects lows - Breakdown target = head height - One of most reliable reversal patterns ✓ Inverse Head and Shoulders (Bullish) - Upside down H&S - Breakout above neckline = bullish - Target = head depth - High success rate ✓ Double Top (Bearish) - Two peaks at similar level - Breakdown below middle low = reversal - Target = pattern height - Confirm with volume on breakdown ✓ Double Bottom (Bullish) - Two troughs at similar level - Breakout above middle high = reversal - Target = pattern height - Confirm with volume on breakout ✓ Triple Top/Bottom - Three tests of same level - Stronger than double top/bottom - Same target and trading rules - Third test often the charm ═══════════════════════════════════════════════════════════════════ TECHNICAL INDICATORS ═══════════════════════════════════════════════════════════════════ MOVING AVERAGES: ────────────────────────────────────────────────────────── Simple Moving Average (SMA): - Average price over N periods - Smooth price action - Lags recent price Common periods: • 20 SMA - Short term trend • 50 SMA - Intermediate trend • 200 SMA - Long term trend Exponential Moving Average (EMA): - Weighted toward recent prices - Reacts faster than SMA - Better for day trading Common periods: • 9 EMA - Very short term • 20 EMA - Short term • 50 EMA - Medium term Volume Weighted Average Price (VWAP): - Average price weighted by volume - Institutional benchmark - Dynamic support/resistance - Reset daily Trading Rules: ✓ Price above MA = bullish ✓ Price below MA = bearish ✓ MA slope indicates trend strength ✓ MA crossovers = trend changes ✓ Use as support/resistance RELATIVE STRENGTH INDEX (RSI): ────────────────────────────────────────────────────────── Range: 0 to 100 Period: Usually 14 Levels: • > 70 = Overbought (potential reversal down) • < 30 = Oversold (potential reversal up) • 50 = Neutral Advanced Usage: ✓ Divergence most powerful signal - Price makes higher high, RSI makes lower high = bearish - Price makes lower low, RSI makes higher low = bullish ✓ Trend Zones: - In uptrends, RSI rarely below 40 - In downtrends, RSI rarely above 60 ✓ Centerline Cross: - Above 50 = bullish momentum - Below 50 = bearish momentum Warning: Don't fade strong trends just because RSI is extreme! MACD (Moving Average Convergence Divergence): ────────────────────────────────────────────────────────── Components: - MACD Line (12 EMA - 26 EMA) - Signal Line (9 EMA of MACD) - Histogram (MACD - Signal) Signals: ✓ MACD crosses above Signal = Bullish ✓ MACD crosses below Signal = Bearish ✓ MACD crosses above 0 = Strong bullish ✓ MACD crosses below 0 = Strong bearish ✓ Divergence = Potential reversal ✓ Histogram expanding = Momentum increasing ✓ Histogram contracting = Momentum slowing Best in trending markets, not ranges. BOLLINGER BANDS: ────────────────────────────────────────────────────────── Components: - Middle Band = 20 SMA - Upper Band = Middle + (2 × Standard Deviation) - Lower Band = Middle - (2 × Standard Deviation) Interpretation: ✓ Band Squeeze = Low volatility, breakout coming ✓ Band Expansion = High volatility ✓ Price at upper band in uptrend = Strength ✓ Price at lower band in downtrend = Weakness ✓ Touching band not a sell/buy signal! ✓ Price often returns to middle band Bollinger Bounce: - Buy at lower band in uptrend - Sell at upper band in downtrend - Only in ranging markets VOLUME: ────────────────────────────────────────────────────────── The most important indicator! Rules: ✓ Volume precedes price ✓ Breakouts need volume confirmation ✓ Low volume moves often fail ✓ Volume spikes show institutional activity Patterns: • Volume increasing with price = Healthy trend • Volume decreasing with price = Weak trend • Volume spike on reversal = Capitulation • High volume + small range = Accumulation/Distribution Relative Volume: - Current volume vs average volume - RVol > 2.0 = High interest - RVol < 0.5 = Low interest ═══════════════════════════════════════════════════════════════════ SUPPORT & RESISTANCE ═══════════════════════════════════════════════════════════════════ IDENTIFICATION: ────────────────────────────────────────────────────────── Support: ✓ Previous swing lows ✓ Previous resistance becomes support ✓ Round numbers ($50, $100, $150) ✓ Moving averages ✓ Trendlines ✓ Fibonacci retracements ✓ Gap fill levels Resistance: ✓ Previous swing highs ✓ Previous support becomes resistance ✓ Round numbers ✓ Moving averages from above ✓ Trendlines ✓ Previous day's high/low ✓ Premarket high/low TRADING RULES: ────────────────────────────────────────────────────────── ✓ More touches = Stronger level ✓ Round numbers act as psychological barriers ✓ Support/Resistance zones, not exact prices ✓ Broken support becomes resistance (and vice versa) ✓ Look for confirmation (volume, candle pattern) ✓ False breakouts common - wait for close beyond level Breakout Trading: 1. Identify strong S/R level 2. Wait for volume confirmation 3. Enter on close beyond level 4. Stop loss just inside the level 5. Target next S/R level Bounce Trading: 1. Identify strong S/R level 2. Wait for price to reach level 3. Look for reversal pattern 4. Enter with stop just beyond level 5. Target middle of range ═══════════════════════════════════════════════════════════════════ FIBONACCI RETRACEMENTS ═══════════════════════════════════════════════════════════════════ Key Levels: • 23.6% - Shallow retracement • 38.2% - Common retracement • 50.0% - Psychological level • 61.8% - Golden ratio (most important) • 78.6% - Deep retracement Usage: 1. Identify significant swing high and low 2. Draw Fibonacci from low to high (uptrend) 3. Or high to low (downtrend) 4. Watch for bounces at key levels 5. Cluster with other support/resistance Trading: ✓ Buy at 38.2-50% in strong uptrends ✓ Buy at 61.8% in normal trends ✓ Breakout above 23.6% = Trend resumption ✓ Break below 78.6% = Trend failure ✓ Combine with candlestick patterns Extensions: • 127.2% - First target • 161.8% - Primary target • 261.8% - Extended target ═══════════════════════════════════════════════════════════════════ TREND IDENTIFICATION ═══════════════════════════════════════════════════════════════════ Uptrend: ✓ Higher highs ✓ Higher lows ✓ Price above rising MAs ✓ MAs in bullish order (short > medium > long) ✓ Support holding Downtrend: ✓ Lower highs ✓ Lower lows ✓ Price below declining MAs ✓ MAs in bearish order (short < medium < long) ✓ Resistance holding Range/Sideways: ✓ Horizontal highs and lows ✓ Price choppy around MAs ✓ MAs flat/intertwined ✓ Low volatility Trading with Trend: • Only buy in uptrends • Only short in downtrends • Avoid trading in ranges • Trend is your friend! ═══════════════════════════════════════════════════════════════════ QUICK REFERENCE CHART CHECKLIST ═══════════════════════════════════════════════════════════════════ Before Every Trade, Check: ☐ What is the overall trend? (MAs, higher highs/lows) ☐ Where is support/resistance? ☐ What is the volume telling me? ☐ Any candlestick patterns forming? ☐ Is RSI showing divergence? ☐ Is MACD confirming the move? ☐ Where would I place my stop loss? ☐ What is my risk/reward ratio? ☐ Does this fit my trading plan? ☐ Am I trading with the trend? ═══════════════════════════════════════════════════════════════════ Remember: No single indicator is perfect. Use multiple confirmations! © ProfitPros 2025 - For Educational Use Only