Demystify Techncial Analysis Sesssion 1

8/8/2019 Demystify Techncial Analysis Sesssion 1

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Technical AnalysisTechnical Analysis

Demystify Technical Analysis

2 Technical Analysis

Agenda

Orientation Introduction to the course. Rules and Regulations. Expectation etc.

Introduction to Technical Analysis. What is Fundamental Analysis. What is Technical Analysis, Comparison between Technical and Fundamental Analysis.

Some Basic Concepts. Line Chart BarChart Candlestick Chart

Trends Up Trend Down Trend Side Ways Trend

Trend lines and Properties. What is Valid Trend lines and Properties

Trading Technique forTrend lines.


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Human Emotions


Your forecasting toolkit

Fundamental analysis

Technicalanalysis

A method of forecasting basedon basic economic, political and

environmental factors

A method of predicting pricemovements and future markettrends by studying charts of

past market action, price,volumes and open interest.


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Fundamentally Strong Company Technically Strong Company.


Fundamentally Strong Company Technically Strong Company.


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Basics

A good graphics package with gooddata behind it.

Set aside some time every day to flick through thecharts of what you trade.

Dont get fixatedon day-to-day, look at theweekly, monthly and yearly charts.

Dont get so focusedon the near-term action thatyou lose sight of the bigger picture.


Principles of Technical analysis

The current pricediscounts everything

Patterns exist

History repeats itself


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The current price discounts everything




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Strengths

Can be usedon almost anyinstrument

Can be used to analyse data over awide range of time periods

There are many charting tools andtechniques

The basic principle of charting iseasy tounderstand


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Technical Analysis would work almost on all Instruments


Weaknesses

It is subjective ie. open toindividual interpretation

The past does not necessarilyrepeat itself

It is basedon probability notcertainty

The data used must be timely andaccurate


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Trends


Basic Concepts of Trend

There are three trendsUPDOWNSIDEWAYS

There are three decisionsGO LONGGO SHORTSTAY OUT OF THE MARKET


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Dont buck the trend, because the trend is your friend


Up Trend


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Up Trend


UPTREND


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Down Trend


Down Trend


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Sideways Market


Sideways Market


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Short-term and Longer-term trends

A trend has three classificationsMAJORINTERMEDIATENEAR-TERM

Broadly three time horizonsLONGER THAN A YEARONE TO THREE MONTHSONE WEEK TO ONE MONTH


Short-term and Longer-term trends


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Three Stages of a Trend

Accumulation

Big Move

Excess

Distribution

Big Move

Despair

Bull Market Bear Market


Basic typesof charts


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Chart types

Line

Bar

Candlestick


Line charts

The line chart is the simplest form of chart joining a series of points forinstrument data on the vertical axis (Y-axis) and a timescale on thehorizontal axis (X-axis).

Line charts are not frequently used today.

Typically Bid, Ask, High, Low or Close prices are used for the vertical axisand timescales used can vary from tick (every price plotted consecutively)to hourly, daily and weekly.


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BarCharts

Open

Close

High

Low


Candlestick


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Very simple signals

Uptend Downtrend


Reversal days


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The two-day reversal


Properties of Trend Line

The greater the numberof touches the more

important the trend line becomes.

The angle of Trendline

Extension of Trend line.

Trendline with Chart patterns

Spacing of the two points


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Numberof Touches


Extension of Trendline


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Incorrect Angle


Trendline with Chart Patterns


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Spacing between 2 points


Trading Trendlines


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Trading the Trendline


End of Session 1


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Session 2

Identifying good Support and Resistance Level What is good Support ? What is good Resistance ? Properties of good Suppo rt and Resistance .

Fibonacci Numberand Ratio. Fibonacci Numbers and Ratio Retracement Extension

Identifying Chart Patterns. Double Top Double Bottom Tripple Top Tripple Bottom Head and Shoulder and Inverted Head and ShoulderPattern. Triangles (Ascending , Descending Symmetrical Triangles) Cup and Handle Pattern Wedges and Flags and Pennants

Candelstick Patterns Doji Bullish and Bearish Engulfing Hanging Man , Hammer Morning Starevening star The Dark Cloud Cover Island Reversal The Kicker

Demystify Techncial Analysis Sesssion 1

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