– Arun Kumar
On November 10th, the Department of Humanities and Social Sciences organised an R&D lecture titled “Harnessing the Power of Charts and Patterns through Technical Analysis” by Dr. Gargi Sanati, Associate Professor at the National Institute of Bank Management. Dr. Sreenath hosted the session, and Prof. Anup Kumar Bhandari also joined. The speaker began by addressing a common curiosity: how investors and traders predict stock price movements and make profitable decisions simply by studying price charts. This is the essence of technical analysis that helps in making investment decisions by examining price movements rather than company fundamentals.
Dr. Gargi Sanati began by giving a clear distinction between fundamental and technical analysis. While fundamental analysis focuses on a company’s intrinsic value to make investment decisions, technical analysis involves observing the price fluctuations to identify the right time to buy and sell a stock. She emphasised that technical analysis is highly effective in liquid equity markets and requires relatively stable market conditions to base the decision.
She discussed various technical indicators, including trends, candlestick patterns, and Fibonacci levels. By analysing these indicators on the price charts, analysts predict the future price behaviour. Among these, candlestick patterns are particularly significant. When the market opens and closes at the same price, but the price fluctuates throughout the day, this feature is termed a Doji and reflects an uncertain market.
Dr. Sanati also elaborated on single candlestick patterns like the hammer, inverted hammer, hanging man and shooting star, which can indicate potential trend reversals. If a hammer appears when the market is in a downtrend, it may signal a bullish reversal, indicating that stock prices may go up. Similarly, a hanging man pattern can suggest an upcoming decline in prices if supported by more such bearish signs. These patterns will only give a preliminary signal of a trend reversal, and she advised observing the market over the subsequent days to confirm such signals.
The lecture also covered double candlestick patterns, such as the Dark Cloud Cover, Piercing Line, and Engulfing Candles. The bullish engulfing pattern signals that a strong upward move may be coming. It happens when a larger bullish candle immediately follows a bearish candle. This signals a reversal upside. Similarly, a bearish engulfing pattern signals a reversal downside, when a small bullish candle is followed by a larger bearish candle. She also explained how triple candlestick patterns, such as the morning star and evening star, help analysts identify market turning points.
Later, the audience was given a hands-on exercise to detect market reversals using the discussed patterns, and we were delighted to see that most of our interpretations were correct. She concluded with essential trading mantras for us to follow. She strongly urged us to control our emotions and not to get carried away by the profits we make in the stock market. It’s always necessary to know how much is enough and when to stop. She advised us to study the market behaviour for a few months before actively trading.
The session ended with a lively question–and–answer interaction, clearing many of our doubts and demystifying the often-intimidating world of stock market investing.
—Edited by Alphin
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