Transcript Basic Technical Analysis

Introductory Technical
Analysis
“To trade successfully, think like a fundamentalist; trade like a technician.
It is imperative that we understand the fundamentals driving a trade, but
also that we understand the market’s technicals. When we do, then, and
only then, can we or should we, trade.” - Dennis Gartman
Doug Scarpelli
The study of market/stock action that utilizes charts displaying price
patterns and volume. These charts and the indicators applied offer
predictive price movements and trends.
• It attempts to explain price action based on market psychology.
•Can be applied to all time frames from 5 minute charts to monthly
charts and beyond.
•Benefits of technical analysis:
•More efficient/ lucrative for entries and exits
•When paired with solid fundamental analysis, can help identify
better opportunities
•Technical's may change before the fundamentals, and vice versa
•Get on board with the big players
•Useful for equities, commodities, currencies, etc.
•Help forecast price action for equity options
•Investopedia says: An Indicator used in technical analysis
showing the average value of a security's price over a set period.
•Measure momentum
•Define support and resistance levels
•MA crossovers
•Important MA to long-term trends:
•50, 100, 200
•Prices tend to gravitate towards their MA’s (typically)
•Simple moving average SMA
•Exponential moving average EMA
•One caution!
•A 20 SMA is not the same on a 60 minute chart as a daily
chart, or and MA or any time frame.
Weekly chart: QQQQ
•Investopedia explains support as: The price which, historically, a stock
has had difficulty falling below. It is thought of as the level which a lot of
buyers tend to enter the stock.
•Resistance: The stock or market stops rising because sellers start to
outnumber buyers.
•Applying support & resistance
•Moving averages
•Trend lines
•Channels
•Can be used with almost any indicator
•Directional support & resistance
•Advancing
•Declining
•Horizontal
FMBI- Horizontal
Channel
EUR/USD- Advancing Channel with key S/R levels
•Named after Leonardo Fibonacci , a thirteenth-century
mathematician
•The “Fibonacci numbers” a sequence of numbers where each
successive number is the sum of the previous two.
•1,1,2,3,5,8,13,21,34,55,89,144, etc.
•Each number is approximately 1.618 the previous number
•Important ratios are: 0%, 23.6%, 38.2%, 50%, 61.8%, and 100%
•The most popular studies are retracements, fans, arcs, and time
zones
•Retracements can be vary useful for
•Entries, exits
•Targets
•Stops
Will we see U.S. Steel fall?
Will we see Autozone bounce
back up?
Best Interactive Resources
•www.freestockcharts.com
•www.stockcharts.com (sharpcharts)
•www.finviz.com
•Bloomberg Terminal (Business Library)
Also Try…
•Google Finance
•Yahoo! Finance
•You can always print out a chart and
manually add studies/ trend lines, like the
old days!