1. The asset travels within a significant uptrend.
2. A strong area of resistance causes the price to decline, creating Top #1.
3. The price of the asset retraces by about 1020% until it finds support.
4. The price rises again to the same level that was reached by Top #1.
5. The price level that caused the price to fall from Top #1 proves to be too strong of a resistance and the asset heads lower again.
Bullish candlestick 
Bearish candlestick 
White candlestick with small body Little price movement and represent consolidation. 

Black candlestick with small body Little price movement and represent consolidation. 

White candlestick with long body Intense buying pressure. 

Black candlestick with long body Intense selling pressure. 

White Marubozu White candlestick with long body. The opening price is equal to the lowest and the closing price is equal to the highest. Marked buying pressure. Sellers did not succeed to pushing price under opening price. 

Black Marubozu Black candlestick with long body. The opening price is equal to the highest and the closing price is equal to the lowest. Marked selling pressure. Buyers did not succeed to pushing price on top of opening price. 

White Candlesticks with a long upper shadow and short lower shadow Marked selling pressure but sellers did not succeed to pushing closing price under opening price. 

Black Candlesticks with a long upper shadow and short lower shadow Bear signal. More the upper shadow is long, more the signal is strong. 

White Candlesticks with a short upper shadow and long lower shadow Bull signal. More the lower shadow is long, more the signal is strong. 

Black Candlesticks with a short upper shadow and long lower shadow Marked buying pressure but buyers did not succeed to pushing closing price on top of opening price. 

White Spinning Top Spinning tops represent indecision. It's a potential change or interruption in trend. 

Black Spinning Top Spinning tops represent indecision. It's a potential change or interruption in trend. 

Hammer (White) and Hanging Man (Black) White candlestick (or black) with a long lower shadow and a (almost) null upper shadow. It's potential trend reversal. Hammers can mark bottoms or support levels. 

Inverted Hammer (White) and Shooting Star (Black) White candlestick (or black) with a (almost) null lower shadow and a long upper shadow. It's potential trend reversal. Inverted Hammers can mark support levels. A Shooting Star can mark a resistance level. 

Doji The doji appears when opening and closing price are (almost) equal. Neutral pattern, it often precedes an important price movement. 

Longlegged Doji Longlegged doji have long shadows that are (almost) equal in length. Longlegged doji represent strong indecision. 

Doji with a short upper shadow and long lower shadow Bull signal if it appears in a bear trend. 

Doji with a long upper shadow and short lower shadow Bear signal if it appears in a bull trend. 

Dragon fly Doji Dragon fly Doji is a potential trend reversal. Strong signal if it appears in a bear trend. 

Gravestone Doji Gravestone Doji is a potential trend reversal. Strong signal if it appears in a bull trend. 
Charles Dow & Edward Jones founded Dow Jones & Company in 1882. Technical Analysis has its origin in theories published by Dow in series of editorials he wrote for the Wall Street Journal. Dow Theory still holds good in age of sophisticated computer technology. Dow created two separate index that would provide good indication of health of economy, Industrial Index and Stock Rail index. Dow relied on closing prices and did not considerintraday penetrations valid.


There are six basic tenants of Dow Theory. They are : 


Elliott Wave Theory interprets market actions in terms of recurrent price structures. Basically, Market cycles are composed of two major types of Wave : Impulse Wave and Corrective Wave. For every impulse wave, it can be subdivided into 5  wave structure (12345), while for corrective wave, it can be subdivided into 3  wave structures (abc).
Fibonacci tools utilize special ratios that naturally occur in nature to help predict points of support or resistance. Fibonacci numbers are 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc. The sequence occurs by adding the previous two numbers (i.e. 1+1=2, 2+3=5) The main ratio used is .618, this is found by dividing one Fibonacci number into the next in sequence Fibonacci number (55/89=0.618). The logic most often used by Fibonacci based traders is that since Fibonacci numbers occur in nature and the stock, futures, and currency markets are creations of nature  humans. Therefore, the Fibonacci sequence should apply to the financial markets. There are many Fibonacci tools used by traders, they include:
Fibonacci Retracements
Fibonacci Tools are very popular, possibly the very reason that they appear to work. Whether or not a trader believes Fibonacci ratios work beyond nature and into the financial markets, traders should be aware of Fibonacci Retracements (most often used) and the other Fibonacci Tools. Because there are many traders out there who do believe that the Fibonacci ratios apply to the financial markets, that means there are real supply and demand forces working on the markets at these important Fibonacci junctures. This is important because, after all, supply and demand is the concept that moves the markets.
The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). They are described in more detail below.
Simple Moving Average (SMA)
A simple moving average is formed by computing the average (mean) price of a security over a specified number of periods. While it is possible to create moving averages from the Open, the High, and the Low data points, most moving averages are created using the closing price. For example: a 5day simple moving average is calculated by adding the closing prices for the last 5 days and dividing the total by 5.
The calculation is repeated for each price bar on the chart. The averages are then joined to form a smooth curving line  the moving average line. Continuing our example, if the next closing price in the average is 15, then this new period would be added and the oldest day, which is 10, would be dropped. The new 5day simple moving average would be calculated as follows:
The formula for an exponential moving average is:
For a percentagebased EMA, "Multiplier" is equal to the EMA's specified percentage.
For a periodbased EMA, "Multiplier" is equal to 2 / (1 + N) where N is the specified number of periods.
For example, a 10period EMA's Multiplier is calculated like this:
This means that a 10period EMA is equivalent to an 18.18% EMA.
Note: StockCharts.com only support periodbased EMA's.
Below is a table with the results of an exponential moving average calculation for Eastman Kodak. For the first period's exponential moving average, the simple moving average was used as the previous period's exponential moving average (yellow highlight for the 10th period). From period 11 onward, the previous period's EMA was used. The calculation in period 11 breaks down as follows:
*The 10period simple moving average is used for the first calculation only. After that the previous period's EMA is used.
Note that, in theory, every previous closing price in the data set is used in the calculation of each EMA that makes up the EMA line. While the impact of older data points diminishes over time, it never fully disappears. This is true regardless of the EMA's specified period. The effects of older data diminish rapidly for shorter EMAs than for longer ones but, again, they never completely disappear.
From afar, it would appear that the difference between an exponential moving average and a simple moving average is minimal. For this example, which uses only 20 trading days, the difference is minimal, but a difference nonetheless. The exponential moving average is consistently closer to the actual price. On average, the EMA is 3/8 of a point closer to the actual price than the SMA.
Which moving average you use will depend on your trading and investing style and preferences. The simple moving average obviously has a lag, but the exponential moving average may be prone to quicker breaks. Some traders prefer to use exponential moving averages for shorter time periods to capture changes quicker. Some investors prefer simple moving averages over long time periods to identify longterm trend changes. In addition, much will depend on the individual security in question. Moving average type and length of time will depend greatly on the individual security and how it has reacted in the past.
The initial thought for some is that greater sensitivity and quicker signals are bound to be beneficial. This is not always true and brings up a great dilemma for the technical analyst: the trade off between sensitivity and reliability. The more sensitive an indicator is, the more signals that will be given. These signals may prove timely, but with increased sensitivity comes an increase in false signals. The less sensitive an indicator is, the fewer signals that will be given. However, less sensitivity leads to fewer and more reliable signals. Sometimes these signals can be late as well.
For moving averages, the same dilemma applies. Shorter moving averages will be more sensitive and generate more signals. The EMA, which is generally more sensitive than the SMA, will also be likely to generate more signals. However, there will also be an increase in the number of false signals and whipsaws. Longer moving averages will move slower and generate fewer signals. These signals will likely prove more reliable, but they also may come late. Each investor or trader should experiment with different moving average lengths and types to examine the tradeoff between sensitivity and signal reliability.
There are many uses for moving averages, but two basic uses stand out:
The first trend identification technique uses the direction of the moving average to determine the trend. If the moving average is rising, the trend is considered up. If the moving average is declining, the trend is considered down. The direction of a moving average can be determined simply by looking at a plot of the moving average or by applying an indicator to the moving average. In either case, we would not want to act on every subtle change, but rather look at general directional movement and changes.
The second technique for trend identification is price location. The location of the price relative to the moving average can be used to determine the basic trend. If the price is above the moving average, the trend is considered up. If the price is below the moving average, the trend is considered down.
The third technique for trend identification is based on the location of the shorter moving average relative to the longer moving average. If the shorter moving average is above the longer moving average, the trend is considered up. If the shorter moving average is below the longer moving average, the trend is considered down.
The advantages of using moving averages need to be weighed against the disadvantages. Moving averages are trend following, or lagging, indicators that will always be a step behind. This is not necessarily a bad thing though. After all, the trend is your friend and it is best to trade in the direction of the trend. Moving averages will help ensure that a trader is in line with the current trend. However, markets, stocks and securities spend a great deal of time in trading ranges, which render moving averages ineffective. Once in a trend, moving averages will keep you in, but also give late signals. Don't expect to get out at the top and in at the bottom using moving averages. As with most tools of technical analysis, moving averages should not be used on their own, but in conjunction with other tools that complement them. Using moving averages to confirm other indicators and analysis can greatly enhance technical analysis.