SUMMER INTERNSHIP PROJECT REPORT

Topic
“To study the Forex market using Technical Analysis”

Submitted in partial fulfilment of the requirements of

Post Graduate Diploma in Management (Service
Management)
2018-20

Submitted to;
Dr. Pratibha Wasan
(Project Mentor)

Submitted by;
Anshika Gupta
JN180198
PGDM (Service Management)
2018-2020

Jaipuria Institute of Management

A-32 A, Sector 62
Noida 201309
August 2019
ANSHIKA GUPTA

DECLARATION

“I hereby declare that the Summer Training Report entitled “To study Foreign Exchange
Market using Technical Analysis” is an authentic record of my own work as requirements of 2
months of Summer Training during the period from 24th April 2019 to 24th June 2019 for the
award of degree of PGDM (Post Graduate Diploma in Management), Jaipuria Institute of
Management, Noida under the guidance of Mr. R. Gopal Krishna, Director- JMarathon
Advisory Services Private Limited.”

Date: 29th August 2019 (Signature of student)

Anshika Gupta
JN180198

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ACKNOWLEDGEMENT

“It has been my pleasure and honour to get placed in J Marathon Advisory Services Private
Limited. It really feels good getting the chance to work with such a great management. “The
project would not have been possible without the kind support and help of many individuals.” I
would like to extend my sincere thanks to all of them.”

I am highly indebted to Mr. R. Gopal Krishna, Director- J Marathon Advisory Services Private
Limited for his valuable and fruitful guidance and constant support throughout this project. I am
really thankful to him for providing a deep insight about the forex trading as well as for providing
necessary information regarding the project.

I would also like to express my gratitude towards” Mr. Neelesh (Employee) for his co-operation
and encouragement which helped me in completion of this project.

I am really thankful to my Faculty Mentors Ms. Pratibha Wasan and Prof. Abdul Qadir for their
continuous support and valuable guidance throughout this project.

Last but not the least; I would like to express my special gratitude and thanks to Jaipuria
Institute of Management, Noida for giving me a chance to work with such a great organization.

ANSHIKA GUPTA
JN180198

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TABLE OF CONTENTS

CHAPTER PARTICULARS PAGE NO

NO
1. Introduction & Company Description 5
1.1 Industry Description 6-8
1.2 Company Description 9
1.3 Services Offered by the Company 10-12
1.4 SWOT Analysis 13
2 Job Description 14
2.1 Rationale of The Project 15
2.2 Objective of The Project 16
2.3 Job Description 17
2.4 Scope of the Project 18
2.5 Limitations of the Project 19
3 Analysis of Job Done 20
3.1 Job Analysis 21-45
4 Learning Outcomes 46
5 Suggestions 47
6 Conclusion 48
8 References 49

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CHAPTER 1
INTRODUCTION
&
COMPANY
DESCRIPTION

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INDIAN FINANCIAL SERVICES INDUSTRY

According to IBEF, rising incomes are driving the demand for financial services across income
brackets. Financial inclusion drive from RBI has expanded the target market to semi-urban and
rural areas.
Investment corpus in Indian insurance sector can rise to US$ 1 trillion by 2025. Indian stocks
markets, S&P Sensex and Nifty50, rose 17 and 15 per cent respectively in FY19. The number of
companies listed on the NSE rose from 135 in 1995 to 1,942 by the end of May 2019.
India has scored a perfect 10 in protecting shareholders' rights on the back of reforms
implemented by Securities and Exchange Board of India (SEBI) in World Bank's Ease of Doing
Business 2018 report.

Indian Financial Services Industry in mainly divided into 3 segments, Capital Markets, Insurance
and NBFCs. This market is increasing day by day, one of the reasons is High Net worth
Individual Clients Participation and it is growing in the wealth management segment.

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The number of listed companies on NSE and BSE were 1,942 and 5,461, respectively. The total
amount of Initial Public Offerings (IPO) increased to Rs 84,357 crore (US$ 13,089 million) by the
end of 2017-18. The total number of IPO’s reached 161 and amounted to US$ 5.52 billion
between January-November 2018.

WEALTH MANAGEMENT IS AN EMERGEING SEGMENT:

The number of HNWIs in India reached 278,000 by the end of 2017. Between 2011 and 2017,
number of HNWIs in India has seen a steady rise at a CAGR of 13.52 per cent. By the end of
2025, global HNWI wealth is estimated to grow to over US$ 100 trillion.
High net worth households would grow at an even faster rate till 2019 growing at a CAGR of
about 21.5 per cent. Advisory asset management and tax planning has one of the highest
demands among wealth management services by HNWIs; this is followed by financial planning.

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Financial sector growth can be attributed to rise in equity markets and improvement in corporate
earnings. In FY17, individual wealth in India expanded to Rs 344 lakh crore (US$ 5,337.47
Billion) from Rs 310 lakh crore (US$ 4,620.66 billion) in FY16. Its increased growth rate from
10.91 per cent in FY17 to 8.50 per cent in FY16. By 2022, India’s personal wealth is forecasted
to reach US$ 5 trillion at a CAGR of 13 per cent. It stood at US$ 3 trillion in 2017.
Investments by Foreign Portfolio Investors (FPIs) in Indian capital markets have reached Rs
5,400 crore (US$ 748.44 million) up to December 30, 2018.

The Indian equity market is expanding in terms of listed companies and market cap, widening the
playing field for brokerage firms. Sophisticated products segment is growing rapidly, reflected in
the steep rise in growth of derivatives trading.

With the increasing retail penetration there is immense potential to tap the untapped market.
Growing financial awareness is expected to increase the fraction of population participating in
this market. Total wealth held by individuals in unlisted equities is projected to grow at a CAGR
of 19.54 per cent to reach Rs 17.64 lakh crore by FY22. Private Equity (PE) investments grew at
the rate of 36 per cent year-on-year to reach US$ 33.1 billion with about 720 deals in 2018 from
US$ 24.3 billion with 734 deals in 2017.

The total number of companies listed on National Stock Exchange by end of May 2019 was
1,942. Turnover for derivatives segment for 2018-19 was Rs 2,375.91 lakh crore (US$ 33.91
billion) and stood US$ 0.16 trillion in FY20 (up to May 2019). In October 2018, Bombay Stock
Exchange (BSE) became the first Indian stock exchange to launch the commodity derivative
contracts in gold and silver.

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INTRODUCTION TO COMPANY

J Marathon Advisory Services Private Limited was established in 2012 as a full -fledged advisory
firm based on the principles of Independence, Transparency and Client Advocacy. The founders
have been in this financial services industry from 9 years before making it a private limited
company. Since the financial markets are highly volatile and constantly changing from time to
time, So the people who are investing in these markets face difficulties so they need Qualified and
Unbiased Professionals to assist these investors so that they can meet their short term and long-
term investment goals.

They are acting as a Promoter for Grand Bloom Financial Services a Dubai based Company
which serves in forex market. In India they have also collaborated with Edelweiss brokerage
limited which serves in Indian market.

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Services They Offer:

• Advisory Services on matters related to Overall Wealth Management, Risk

Management & Strategic Management Advice to Individuals, Entrepreneurs and
Families: They offer technology-based services to monitor and manage their portfolio and
reach their financial objectives. They provide trusted and credible advice being a council
of professional and unbiased financial advisors so that the clients can properly manage
their wealth.

• Financial Planning: This service involves preparing a financial plan for the businesses
which includes calculating capital requirements for initiating a business and also
identifying the sources for getting those funds. Financing Decisions are generally long-
term investment decisions for a period of 3-5 years and includes growth decisions also.
The company assist businesses in taking their decisions on the same matter.

• Intense Training: Since stock market investment and trading requires skills, knowledge
and strategies and without a proper training it is not easy to trade confidently and take
informed decisions. Their training courses aim at providing necessary knowledge and
skills among new and emerging traders so that they can make informed decisions
regarding investments. Company provides intense training to individuals on currency
and commodity market through an online course costing Rs.4000, which is a 20-hour
course and after that Certificate will be provided to the trainees.

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Aim:

• To assist the clients with dedication and integrity so to exceed their expectations and build
enduring and long-term relationships with them.

• To be most reliable, prompt and efficient provider of financial services.

• To become a trusted and credible source of unbiased financial adviser and counsel to help
individuals and families properly manage their wealth and other financial matters.

Competitors:

Star Fing (star financial group): It is a leading stock, share, currency and commodity broking
headquartered in India. They operate on a retail focused stock trading model that provides
revolutionary trading platforms and expertise to a diversified client base.

Currentree: Its team consist of experts and advisors who come with many years of experience
and are up to date with business practices. It provides training, consulting and advisory services.
They believe in success of client, trainees or program participants can impact their success.

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Managerial Structure:

Here the company follows Line organizational structure.

Founders

Chennai- Branch Bangalore- Head Hyderabad-

Manager Office Branch Manager

Portfolio Managers Portfolio Managers Portfolio Managers

Assistance Assistance Assistance

Portfolio Managers Portfolio Managers Portfolio Managers

Style of Leadership

J Marathon follows Democratic type of leadership i.e. also known as participative leadership
which means members in the company take active role in decision making process.

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SWOT analysis:

J Marathon Advisory strengths, weaknesses, opportunities and threats are expressed as follows:

Company Exchange Registrations Details:

Bombay stock exchange: AP0132610175939

National stock exchange: AP2258094

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CHAPTER 2

JOB DESCRIPTION

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RATIONALE OF THE TOPIC

Being a financial analyst and business consultant, one should be able to analyse the trends in the
financial markets which the prices are showing and also try to find out what could be direction of
the prices of a particular currency or a commodity in the markets and also he/she should be able
to predict whether the market would be bullish or bearish in the future keeping in mind the
current global situations. After analysing all the situations, he/she should be able to give
recommendations to the clients regarding various calls to take in the forex market and what
could be the result of a particular call on their portfolio.
This project deals with various tools and techniques of analysing the forex market i.e. Technical
Analysis and the various indicators which a trader should use to generate good returns on his
clients’ investment.
This topic is completely in sync with what I have learnt in the 2 months of my internship and after
doing some more research on this topic, I will get some more insights about this market.

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OBJECTIVES OF THE PROJECT

The objectives of this project work are:

1. Initially to study Foreign Exchange Market, Various Constituents of this market, various
technical terms used timings of its operations, its functioning, current market situations,
etc.
2. To perform technical analysis on various currencies that too on daily basis to assist the
clients on taking the calls
3. To select best performing currencies and commodities, deciding on size of lot to trade in,
create a customer’s portfolio including various currencies and commodities and manage it
carefully for a period of at least 3 months and earn a good amount of return.

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JOB DESCRIPTION

Job Title: Financial Analyst & Business Consultant

Department: Finance

Summary: Responsible for Analysing Indian Stocks, commodity, Derivative, Currency and
Global Forex Market and then handling portfolios.

Duties to be performed (KRAs):

1. Analysing Indian Stocks, commodity, Derivative, Currency and Global Forex Market.
2. Analysing based on Fundamentals and technical, with the available data in the markets.
3. Assisting Research Calls for Long Term trading, Short Term Trading and Intraday
Trading.
4. To generate lead and Handling the portfolios.
5. Advise individuals on investment decisions.

Working Conditions: Flexible and includes working 6 hours per day and 5 days a week.

Reporting to: Mr. R. Gopal Krishna-Director

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SCOPE OF THE PROJECT

This project will touch upon these areas and subjects:

1. Live Trading in Forex Market: Intraday traders are ones who do not hold any
positions overnight, i.e., they Buy and Sell within the same day while the short terms traders are
those who hold positions for a few days to less than a year. We are supposed to do intra-day
trading in foreign exchange markets initially with a demo account in Meta 5 which is a platform
for windows. GBCFX is the broker and it is operating in Malaysia and Dubai. We will be
involved in trading in the following currencies and commodities throughout this project:
a) Commodities: Gold and Silver
b) Currencies: EURO/USD(Euro), USD/CHF(Swiss Franc), USD/CAD(Canadian Dollar),
AUD/USD(Australian Dollar), USD/JPY(Japanese Yen), GBP/USD(Great British Pounds)
c) Major Currencies are those which trade with the dollar. For e.g. Euro/USD, AUD/USD,
GBP/USD, USD/JPY (Yen). All the above currencies are major currencies. These are the 8
most important tradable currencies: US Dollar USD
European Euro EUR, Japanese Yen JPY, British Pound GBP, Swiss Franc CHF, Canadian
Dollar CAD, Australian Dollar/ New Zealand Dollar (AUD/NZD)
South African Rand ZAR. These currencies have less volatility, and these are comparatively
predictable. Initially the investor should invest in these currencies.

2. Marketing: The project will also include some work related to area of marketing. Since
the company is actively engaged in providing training to thousands of emerging traders and
students, for that they have created a 30-hour online course costing Rs. 2500 plus 18% GST
and the interns are required to increase the subscriptions for this video and contribute to the
business of the firm. So, we are supposed to market this product among a suitable audience.

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3. Portfolio Management: We are also required to manage portfolios worth Rs.15000/-

each, of our clients for the period of 3 months and give them reasonable returns on their
investments.

LIMITATIONS OF THE STUDY

There are some problems faced while working on this project, sometimes they even restrict the
learning. Since the project is majorly dependent upon past year data, facts and figures, so
definitely Collection, Handling and Analyzing such a huge bunch of data is a cumbersome and
difficult task.

1. Information explosion: Since this project is mainly based on the past data-facts and figures,
there is so much of information available on internet which is published that the problem of
managing that information/data becomes more difficult which sometimes lead to a situation
where the relevant information is left behind.

2. Multiple Indicators: There are so many indicators which needs to taken into consideration
while deciding on which currency/commodity to invest in. Sometimes it happens that one
indicator shows different call to be taken from another indicator and then it becomes difficult
to decide on which indicator to rely upon.

3. Fluctuations in market: The Forex market and stock market is highly volatile. Volatility refers
to a situation where price change every time i.e. seconds or minutes. Even after doing so much
of analysis, it is very difficult to predict the price changes and future trends in the market.

4. Lack of interest of general public in stock markets: Since the company asked us to bring 2
portfolios, but it is very difficult to gain their confidence that they will not lose their money
since most of the people find stock markets very risky and volatile, so they do not prefer them
for their investments instead they prefer fixed income securities to invest in. Also, most of the
people are not willing to share their investment interests with the outsiders and then it even
becomes more difficult to talk to them.

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CHAPTER 3
ANALYSIS OF
JOB DONE

ANALYSIS OF JOB DONE

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i. Analysing Global Forex Market {Commodity & Currency} based on Technical

Analysis

A) FOREX MARKET AND ITS WORKING

Forex i.e. Foreign Exchange Market is a global market where currencies are being traded
which means the currencies are bought, sold and exchanged at a current price. It is the
largest in terms of trading volume and the most liquid market. It is the electronic network
of banks, brokers, institutions and individual traders. This market is 24 hours and 5 days
open. It opens at 3.30 on Monday morning and closes at Saturday morning 3.30. The
Major Players in Forex are Deutche Bank, UBS, Citigroup, Bank of America, Goldman
Sachs, HSBC, JP Morgan, European Central Bank, Bank of England and Federal Reserve.
In a foreign exchange transaction, a party purchases some quantity of one currency by
paying with some quantity of another currency.

In this market, the currencies are traded in pairs, not individually, so the market
determines the value of a currency in relation to other currency rather than absolute value
of a particular currency for example US$ 1 is worth 108.483 JPY.

The most important and major trading centres are London and New York City, although
Singapore, Hong Kong and Tokyo are also important. Trading happens throughout the day
continuously, Asian trading session ends, the European Session begins, followed by North
American session and then back to Asian Session. These are the 8 most important tradable
currencies:
1. US Dollar USD
2. European Euro EUR
3. Japanese Yen JPY
4. British Pound GBP
5. Swiss Franc CHF
6. Canadian Dollar CAD

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7. Australian Dollar/ New Zealand Dollar (AUD/NZD)

8. South African Rand ZAR

The foreign exchange market works on the forces of demand and supply, for e.g. If the demand
for US Dollar is high for Japanese People holding Japanese Yen, then they will exchange
Japanese Yen into Dollars, so the value of US Dollar will rise while the value of JPY will fall but
this transaction will only affect the currency pair of USD/JPY rather than any other currency pair.

This market allows government, reserve banks, commercial banks, other financial institution, and
retail traders etc to exchange one currency for another and also it allows the traders to easily enter
and exit positions whenever they want as at every second, there are millions of buyers and sellers
for exchange. The US Dollars is the mostly traded market in this market.

There are 2 types of market:

a) Retail Market: Tourists and Travellers exchange one currency for another. The total
turnover in this market is very small.
b) Wholesale Market: This market includes large commercial banks, brokers, and
commercial customers like Central Banks.
According to a study, 90% of total volume of transactions is Interbank Transactions and 10% are
between banks and their non-bank customers.

B) CONSTITUENTS OF FOREX MARKET

There are so many participants in this market, the most important and giant being BANKS. The
interbank transactions carry the largest volume of foreign exchange trading within this market.
Central Banks, Investment Managers, Hedge Funds, Corporations and a very small portion of
retail traders run the market.

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a) Commercial Banks
The commercial banks serve their customers in transacting foreign currencies or making
foreign international investments in financial assests, this comes under retail level and at the
wholesale level they conduct bulk of activity in a network of large international banks and
brokers.

b) Central Bank
The major player in this market is the reserve bank of different countries wherein they
intervene to maintain the exchange rate of their respective countries within a desired range
and to ensure the smooth fluctuations in the prices.

c) Brokers
They operate as agents who facilitate trading between investors. In the process they try to find
a proper match and they do not put their own money at risk. They are the most active in this
market that constantly monitor the exchange rates and quickly find opposite party for a client
without revealing identity of either party.

d) MNCs
They are the non-bank, non-financial institutions or companies who participate in forward
market as they exchange cash flows associated with the multinational operations. They are
largely exposed to foreign currency exchange risk because they contract to either pay or
receive fixed amount in foreign currencies at future dates. So they use forward market to
hedge their risk.

e) Individuals and Small Businesses

These people use forex market to execute commercial and investment transactions. These
players’ transactions are very small in volume and value also and account for only a fraction
of foreign exchange transactions.

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C) KEY FOREX TERMS:

Base currency: This is the first currency that Pip (Point in Percentage): A pip or point
appears when quoting a currency pair for e.g. refers to a one digit move in the 4th decimal
In EUR/USD; the Euro is the base currency. place. A pi is a standardized unit and is the
smallest amount by which a currency quote can
change.

Leverage: It denotes the virtual credit given to

Variable/quote currency: This is the second the client by the broking company. It allows
currency in the quoted currency pair for e.g.US traders to trade positions while only putting up
Dollar in the EUR/USD is variable currency. a fraction of the full value of the trade and
traders to control larger positions with a small
amount of capital. Leverage increases gains
AND losses.

Bid: It is the highest price that a buyer (bidder) Margin: This is the amount of money needed
is ready to pay. When we are selling a forex to open a leveraged position and is the
pair this is the price we will see. It is generally difference between the full value of your
shown in red to the left. position and the funds being lent to you by the
broker.

Ask: This represents the lowest price a seller is Volume: Currencies are traded in 3 lots: Micro
willing to accept. When we are buying a Lot- 0.01 to 0.10; Mini Lot- 0.10 to 0.90;
currency pair, this is the price we see. It is Standard Lot- 1. 1 pip movement in 1 standard
shown in blue colour in the right. lot means $10 Dollars; 1 pip movement in 1
mini lot means $1 Dollar; 1 pip movement in
micro lot means 10 cents.

Spread: This is the difference between the bid Long & Short: If the value of a currency is
and the ask price. The more liquid a currency expected to appreciate, we’ll buy the currency
pair is, the less is the spread. On the other and is called “long”. If value of the currency is
hand, the less liquid a currency pair is, the going to depreciate, we’ll sell that currency and
more is the spread. is called “short”.

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D) Spread
Spread is the difference between the bids and ask price of a currency. When a trader wants to buy
a currency, he is going to hit the bid/buy side which is placed just after the ask/sell price.
The spread is how “no commission” brokers make their money. Instead of charging a separate fee
for making a trade, the cost is built into the buy and sell price of the currency pair you want to
trade. For most currency pairs, one pip is equal to 0.0001.

An example of a 2-pip spread for EUR/USD would be 1.1051/1.1053. This quote indicates
a spread of 2 pips.

E) Leverage

It denotes the virtual credit given to the client by the company. The leverage available in FX
market is one of the highest that traders and investor can find the anywhere. Leverage is a loan
given to an investor by their broker. With this loan, investors are able to increase their trade size,
which could translate to greater profitability. For example, investors who have a $1,000 forex
market account can trade $100,000 worth of currency with a margin of 1 percent. This is referred
to as having 1:100 leverage. Their profit or loss will be based on the $100,000 notional amount.

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F) 10 Biggest Players in the foreign exchange market in 2018 (FX Survey,

2018)

S. No. Major player Market share%

1. JP Morgan Chase 12.13%

2. UBS 8.25%

3. XTX Markets 7.36%

4. Bank of America Merrill Lynch 6.20%

5. Citi Group 6.16%

6. HSBC 5.58%

7. Goldman Sachs 5.53%

8. Deutsche Banks 5.41%

9. Standard Charted 4.49%

10. State Street 4.37%

G) The currency pair which are mostly traded in market are:

S. No. Currency Symbol Country name

1 EUR/USD Euro zone / United Kingdom

2 USD/JPY United States / Japan

3 GBP/USD United Kingdom / United states

4 USD/CHF United States / Switzerland

5 USD/CAD United States / Canada

6 AUD/USD Australia / United State

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H) The exotic currency pair are some:

S. No. Currency Symbol Country name

1 USD/NOK United states / Norway

2 USD/MXN United states / Mexico

3 USD/ZAR United states / South Africa

4 USD/SGD United states / Singapore

5 USD/HKD United states / Hong Kong

6 USD/DKK United states / Denmark

7 USD/INR United states / India

8 USD/THB United states / Thailand

Exotic currency pairs are currency pair that involves USD and currency of an emerging economy.
USD is involved in each of these currency pairs. The reason behind this is that the USD is the
reserve currency of the world, as it has the world's biggest economy with a stable political system.
The USD can be trusted as a fall-back currency as it has the highest amount of strength when
compared to other currencies.

I) WORKING OF FOREX MARKET

In Forex, we exchange one currency for another, for e.g. when we are buying GBP/USD, we are
buying Great Britain Pound and selling dollars because of the assumption that this exchange rate
will rise and this will help us to sell GBP at a higher rate or for a larger amount at some future
date.

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On the contrary, we will sell GBP/USD, where we are selling GBP and buying Dollars and we
expect the exchange rate to fall so that in the future we can buy back these GBPs for fewer
dollars.

So not only do we have a goal of buying low and later selling high, we have the option to sell
high first, and then buy low later. There are no restrictions on short selling, and we do not need to
own any GBP prior to selling the GBP/USD. This is what people refer to as a “two-way market.”

SELL GBP/USD BUY GBP/USD

Selling Great Buying Great
British Pounds BID British Pounds and ASK
and buying Dollars Selling Dollars

There are 2 ways to analyse the markets: Technical Analysis and Fundamental Analysis.
Technical Analysis includes seeing the historical data and then anticipating the future market
trends. This analysis believes that current market trends/information is already reflected in the
price movement. This kind of analysis is generally used by Intraday Traders and short-term
traders.

Technical analysis focuses on the studies of the price movements themselves. Technical analysts
use historical data to forecast the direction of future prices.

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By studying historical price movements, investors can make informed trading decisions. The
primary tools of technical analysis are the charts. Charts are used to identify trending and ranging
markets. Charts show how to identify support and resistance levels, trend lines and price
channels.

There are 3 types of charts: Line Chart, Bar Chart and Candlestick Chart. Line Chart and Bar
Chart were used by traders traditionally in 1960s. Nowadays Candlestick Charts are the mostly
used charts for analysing the markets. 1 Candlestick show for example in 1 minute,

CANDLE STICK PATTERNS

Below A candlestick is shown, where opening price, closing price, high and low price of a particular
currency or commodity is shown. A green hollow candle shows Bullish market while a white
candlestick shows a bearish market. Candlesticks show transaction of that currency happening in the
stock market. There is weekly candlestick, monthly candlestick, daily candlestick, 1-hour candlestick,
4- hours Candlestick etc.

By analysing the candlestick, we can analyse the price movements and identify support and resistance.
Support means more buyers are showing interest to buy a particular stock and resistance means more
sellers are showing interest to sell a particular stock. Resistance can act as support and support can act
as resistance. This is how candlesticks shows how the prices are moving in the market.

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As we can see that in a candlestick there are 4 data points OPEN, HIGH, LOW and CLOS E.
There are 2 observations to be noted down:

a) If a currency or a stock or a commodity closes higher than its opening price, a green or
blue candlestick is formed, wherein the top of the body representing closing price and
bottom showing opening price and in all the market is bullish.
b) If a currency closes lower than its opening price, a white or red candlestick is formed with
top of the body representing the opening price and the bottom of the body representing the
closing price.

CANDLESTICK SHOWING CANDLESTICK SHOWING

BULLISH MARKET BEARISH MARKET

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The commonly used candlestick patterns are:

1. Hammer:

• When there is significant downtrend in the market, A “HAMMER” will form with a small
body (very low difference in open and closing price), a long spike below and little to no wick
above.

• This candle suggests that now there is a potential end of downtrend and now the bullish
reversal will happen.

• EXPLANATION: When there is a long spike formed below the candlestick, it means that
the bearish market forces are unsuccessful in pushing down the price more and bullish market
forces will now push back the price to high before period is closed.

HAMMER

2. Hanging man

• This candlestick is same in shape as hammer but hanging man forms in uptrend in
contrast to hammer which forms in downtrend.

• A long spike in the below will be formed, when there is uptrend, and there are potential
chances of reversal of the bullish trend.

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• EXPLANATION: This candlestick suggests that uptrend is now coming to an end and
bearish market forces are now capable of pushing down the price.

3. Doji, Dragon Fly Doji, Gravestone Doji

• This candlestick has zero or almost zero range between its open and close. This candle
suggests that there is balance between both bullish and bearish market forces. Neither buyers
not sellers are controlling the price of a particular currency.
• The “dragonfly” and “gravestone” Doji imply, respectively, that sellers and buyers
controlled the market for most of the trading period, but then the opposite group managed to
push price back to the open before the close. Gravestone and Dragonfly are generally clearer,
stronger indicators that a force is stepping in to push the market in the direction of the wick
and away from the body.

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4. Piercing Line

This pattern occurs when there is significant downtrend in the market and after a long bearish
candlestick, a bullish candlestick forms a new low and it closes at more than halfway up the
body of the previous candlestick.

5. Bullish Engle Fing

• In this pattern, the body of a bearish candle (the range from open to close) is encompassed
by the body of a next bullish candle. The new candle makes a new low.
• EXPLANATION: This candle suggests that both the bullish and bearish have increased
their activity and overall the bullish trend is about to come.

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6. Evening Star

• This pattern gives signal that trend will now be reversed from Bullish to bearish trend.
This pattern gives strong call to sell.

• It is a small-bodied candle of a 3-bar pattern in this particular order:

o A long bullish candle

o A small-bodied bullish or bearish candle or a Doji that opens at or above the close
of the previous candle.
o A black candle that opens at or below the low point of the previous candle’s body
and closes at or below the center of the first candle.

7. Morning Star

• This pattern is opposite of evening star and it signals potentially bullish market forces
to push back the prices and decline of bearish market forces, therefore giving strong
buy signal.

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• It is also a 3-bar pattern in which the “star” is a small-bodied candle, typically opening
at the close of the previous candle or opening a gap below it.
• The three candles are as follows:
o A long bearish candle
o A small-bodied bullish or bearish candle or a Doji that opens at or below the close
of the previous candle
o A white bullish candle that opens at or above the high point of the previous candle
and closes at or above the centre of the first candle.

8. Double Bottom

The Double Bottom chart pattern starts with a bearish trend, which gets interrupted at
some point. The price then enters a range, which creates two bottoms on the chart. After
the second bottom, the price breaks the range to start a new bullish trend.

9. Double Top

The Double Top technical formation starts with a bullish trend. The trend gets interrupted
at some point and the price of the currency pair starts to range. The range consists of two
swing tops on the chart. After the creation of the second top, the price action drops and
starts a new bearish trend.

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Major Indicators

I. Support & Resistance

According to one major technical analysis manual, “Support is a level or area on the chart under
the market where buying interest is sufficiently strong to overcome selling pressure. As a result, a
decline is halted, and prices turn back again.
Support is a price level where the trader can expect the downtrend to pause due to high demand.
As the price of a currency drops, demand for that currency increases and thus the support line is
formed.
Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of
supply.

In the Graph above, the first Red horizontal line is the resistance point and where the candles for
past few days have not been able to break and go beyond. Similarly, the bottom horizontal line is
the support price where one can expect the market to stabilize there for some time and then again
shoot up.

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➢ Potential Buy signal

It is a general expectation that when prices touch a historical level of support, prices will cease the
negative momentum downward; hence a potential buy signal could be triggered when price
touches the support line.

➢ Potential sell signal

If prices reach a historical price ceiling (resistance), typically it is expected that prices will stop at
that level, unless something big happens, hence a potential sell signal is triggered when price
touches the historical resistance line.

➢ Breaking Support and Resistance

If price breaks below support, then that support level can become new resistance level.
If price breaks above support, then that resistance level can become new support.

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II. Pivot Points

Support and resistance levels are important because they represent points at which major
price movements are expected to occur. It is important for the traders to identify these levels and
then take a call based upon expected price movements. One common method of identifying
support or resistance levels is using pivot points. Furthermore, pivot points can help determine the
direction of the market and as such are leading or predictive indicators.
Calculation of pivot point
Pivot point = Open+ High + low + close/4
Resistance 1 = (2* Pivot point) – Low
Support 1 = (2* Pivot point) + High
Resistance 2 = Pivot point + (High - low)
Support 2 = Pivot point - (High - low)

PIVOT POINTS AS ON 18th August 2019

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Interpretation
Calculated pivot points serve as the primary support and resistance levels. We expect the largest
price movements to take place at those prices, so it is important to watch price action closely
when these levels come into play. Traders use pivot points in two ways. The first is in
determining the overall market trend, while the second is as enter and exit price points in the
market. When a pivot point is broken by prices moving upward, this is a bullish signal, and vice
versa. As a trader, we can use pivot points to set a limit order to buy shares when a price breaks a
resistance level or set a stop-loss order on an active trade if a support level is broken. Traders also
use the second support and resistance levels to identify potentially overbought or oversold
situations. Price movement above the second resistance level is a sign of strength, but also
indicates a potential overbought situation that may lead to a pullback in price. Likewise, a move
below the second support level is a sign of weakness, but also suggests a possible oversold
situation that may lead to a price rebound.

3) Bollinger Band
Bollinger Bands are volatility bands placed above and below a moving average. Volatility is
based on the standard deviation, which changes as volatility increases and decreases. The bands
automatically widen when volatility increases and contract when volatility decreases. Their
dynamic nature allows them to be used on different securities with the standard settings.
Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple
moving average that is usually set at 20 periods. A simple moving average is used because the
standard deviation formula also uses a simple moving average. The outer bands are usually set 2
standard deviations above and below the middle band.

4) Relative Strength Index

It is an indicator developed by Welles Wilder to assess the strength or the weakness of the current
price movements and to measure the velocity of price changes by comparing price increases with
its losses over a certain period. Usage the Relative Strength Index allows to identify possible
overbought and oversold areas.

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Generally, if the indicator climbs above 70, the asset may be overbought; if the indicator drops
below 30, the asset may be oversold. Crossing the overbought boundary from above, the RSI
signals a possible sell opportunity; crossing the oversold boundary from below, the RSI signals a
possible buy opportunity.
If the price climbs to a new high, but the indicator does not, that may be a sign of the uptrend
weakness; if the price falls to a new low, but the indicator does not, that may be a sign of the
downtrend weakness.

5) Moving Average
“Moving Average is an instrument of technical analysis which displays the average price during a
certain period of time”. It is used to smoothen price fluctuations and determine the strength and
direction of trend. Based on the method of averaging, it’s possible to distinguish between three
types of moving averages: simple moving average (SMA), smoothed moving average (SMMA)
and exponential moving average (EMA).
Moving average and price movements: If price crosses its rising (falling) moving average curve
from below (above) a strong buy (sell) signal arises and If price crosses its falling (rising) moving
average curve from below (above) a weak buy (sell) signal arises.

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Moving average curves of different periods: If a rising (falling) lower-period curve crosses
another rising (falling) longer-period curve from below (above) a strong buy (sell) signal arises
and If a rising (falling) lower-period curve crosses another falling (rising) longer-period curve
from below (above) a weak buy (sell) signal arises.

6) Stochastic Oscillator
Stochastic Indicator Purpose Stochastic is an indicator introduced by George Lane to identify
price trend direction and possible reversal points by determining the place of the current close
price in the most recent price range, as in a sustainable uptrend close prices tend to the higher end
of the range and to the lower end in a downtrend.
The Stochastic oscillator allows identifying possible overbought and oversold areas.
Generally, if the indicator climbs above 75, the asset may be overbought and If the indicator
drops below 25, the asset may be oversold.
When the crossover happens and the blue line showing demand for a particular currency crosses
from above the red line showing supply of the currency, it is showing BUY Call and when red
line crosses blue line from left above, It is giving direction for sell call.

BUY
CALL
SELL
CALL

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ii) Live Trading

The above shown picture represents the terminal where I am trading, GBCFX is the broker and it
is operating from Malaysia and Dubai.
Meta 5 is the platform for windows.
Counters: The currencies or the commodities in which we are trading.
Spot Market is a 2-way market where an investor can buy and make money or on another side sell
and make money.
Volatility refers to a situation where price change every time i.e. seconds or minutes.
There are 3 types of trends in a market:
Bull Market is where the expectation is that the market will show a positive trend and the process
will go up. In this situation an investor should buy a commodity or currency.
Bearish Market is where the expectation of investors is that the market will show a negative trend
and the prices will come down and in this situation an investor should sell the currency and
commodities he has hold.

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Sideways Market is where an investor should not participate in the market rather, he should stay
out of the market because there is almost negligible chances of making money.
This picture represents trading in a live account, Account No. 821632, where trade is going on as
on 11th June 2019 in currencies like Euro, Great British Pounds, Japanese Yen and Commodities
like Gold and Silver.
Here, 2 indicators are being used simultaneously to take calls i.e. buy or sell: Stochastic Oscillator
and RSI.

TRADING HISTORY FROM JUNE 10th, 2019 till Date i.e. 29th August 2019

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Maximum Trades are in Gold (XAUUSD) since it increased from US$ 1350 to US$ 1540.

iii) Generating lead and Handling the Portfolios.

We were supposed to bring portfolios worth Rs.15000 i.e. $200 which means investors who can
open their live accounts with the companies’ broker, and we have to manage their accounts for the
period of 3 months continuously and the company expects 15% p.a. ROI initially. We had to use
our Marketing skills to get the clients after convincing them that they will get good returns on
their investment and surely, they will not lose their money.

Fortunately, I was lucky enough to convince one client i.e. Mr. Pulkit Agarwal, who is a resident
of Noida and have a work experience of about 3 years, I talked to him, told him about the working
of forex market and since he is already trading in Indian Stock Market, so he knows much about it
and he got convinced. So, he gave me Rs. 15000 in June 2019; this money got converted in US
Dollars worth $200 and $200 were added by the company, his account opened on June 15, 2019
with equity of $400.

As on 28th August 2019, his equity rose to $908 and his profit is $949.03, and he is very happy
with the returns that I have given to him. His Return on Equity is almost 127% {(908-
400/400)*100} which is a wonderful percentage.

The indicators which I have used are Relative Strength Index and Stochastic Oscillator. In his
Account No. 821632, I have traded mostly in GBP, EUR, XAU, XAG etc.

iv) Generating Leads and Pitching them for selling Training Courses

This company offers a 30 hours online video course on the subject of Indian Stock Market, As I
was recruited as a Finance Intern, so I was not under an obligation to do this activity, but for
increasing my scope of knowledge, I also did this work. I approached around 30-40 clients;
among those I could convert 5 of those. I generated business of Rs. 3000*5 i.e. Rs. 15000 for the
company.

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The Equity has increased from $400 to $949.03 which is 237.25% growth in 2.5 months.
The trades which are open( i.e. running currently) are as follows:
Open Positions
S
Market
Time Position Symbol Type Volume Price / T/P Swap Profit
Price
L
-
2019.07.12 16:29:44 958443 GBPUSD buy 0.01 1.25518 1.26000 1.21982 - 0.41
35.36
-
2019.08.26 09:37:14 976915 XAUUSD sell 0.01 1 531.53 1 520.00 1 542.52 0.04
10.99
2019.08.27 20:50:59 977711 XAUUSD buy 0.01 1 540.00 1 546.00 1 541.86 - 0.05 1.86

The Portfolio’s Result for 2.5 months is as follows:

Gross Profit: 587.79

Total Trades: 140

Largest profit trade: 24.85

Average profit trade: 4.39

Average consecutive wins: 19

Average consecutive losses: 1

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LEARNING OUTCOMES

After going through this 2-month internship, the horizon of my knowledge has increased. I have
learnt:

❑ Functioning of Foreign Exchange Market.

❑ Various dimensions of technical analysis.

❑ Tools of technical analysis such as Indicators and their meticulous selection and
application for taking calls while trading in Forex Market

❑ Patience is the key requirement for any investor to generate returns in this market.

❑ Importance of Effective Time Management

❑ Live Trading on Specialised Software: GBCFX

❑ Trading Strategies

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SUGGESTIONS

On the basis of what I have learnt in my Summer Internship, I would like to give the following
suggestions to the potential and current investors of Forex Exchange Market:

1. According to me, Technical Analysis provides very useful insights about trends and
patterns of historical price movements, but it doesn’t necessarily guarantee profits, It
largely depends on the trader to correctly interpret the data which requires individual’s
dedication, time, knowledge and attention. So, the investors should not solely depend on
this analysis.

2. Technical Analysis only predicts a range not an exact number, so the investors who are
new to this market should not bet their whole money based on this analysis even if
someone is promising him/her 100% returns on investment.

3. There are number of indicators under Technical Analysis like Bollinger Band, Relative
Strength Index, Fibonacci etc, but As per my experience, Any investor who is new to this
market should avoid using all the indicators at one go for doing the analysis, rather he
should focus on 1 or 2 indicators which he/she is good at, to avoid confusion.

4. The investors should avoid trading in side-ways market because he/she will not be able to
book profit in this scenario.

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CONCLUSION

My overall experience throughout this Summer Internship is really wonderful. I would really
appreciate the efforts which our Industry Mentor (Mr. Gopal Krishna) has put in for making us
learn all these things within a short span of time.

I have learnt a lot from this company whether in terms of forex market, various indicators, when
to use which indicator, Is the market following bullish or bearish trend etc or the importance of
time management because Even if I miss 1 price movement, I might lose hundreds of dollars of
my clients which will give negative image to my company and me as trader also.

After going through this internship, I am sure that I can make my career in the Financial Services
Industry and Definitely, I will be able to do justice with what my company would expect from
me. I have learnt that It is really very important to be patient while we are trading in this market,
because it takes time to understand things and we should not react impatiently or else we may lose
money.

I also agree with the fact that Technical Analysis only predicts a range not an exact number, so
the investors who are new to this market should not bet their whole money in trading solely being
dependent on this analysis even if someone is promising him/her 100% returns on investment.

In the last, I would like my heartiest gratitude to my Industry Mentor (Mr. Gopal Krishna) and my
SIP Faculty Mentor (Dr. Pratibha Wasan) for helping me a lot during the completion of the
project.

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Bibliography
The following links have been referred while preparing the report:

1. https://www.actionforex.com/free-forex-ebooks/technical-analysis-for-forex-beginners/
2. https://jmarathonadvisory.in/risk-management/
3. https://www.investopedia.com/terms/f/forex.asp
4. https://www.investopedia.com/terms/p/portfoliomanagement.asp

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