Basic Technical Analysis

Disclaimer

You may from time to time be provided with marketing material,

investment & financial related information and reports, including but not

limited to research reports and market or securities specific analysis.

Please note that the information is provided for you by way of

information only. All of the information, report and analysis were and

should be taken as having been prepared for the purpose of general

circulation and that none were made with regard to any specific

investment objective, financial situation or the needs of any particular

person who may receive the information, report or analysis (including

yourself). Any recommendation or advice that may be expressed in or

inferred from such information, reports or analysis therefore does not

take into account and may not be suitable for your investment

objectives, financial situation and particular needs.

2

What is Technical Analysis?

3

• Market Action Discounts Everything

• Anything that can possibly affect the market price

– fundamental, political, psychological, or otherwise

• Prices move in Trends

• Essential to technical approach

• Whole purpose of charting is to identify trends as markets do

trend

• History tends to repeat itself

• The study of Human psychology

• Key to understanding the future lies in the study of the past or

that “The future is just a repetition of the past”

Principles of Technical Analysis

4

Market Trends

5

Identification of Stock Trends

• Chart Observation

(Higher High and Higher Low or Lower High and Lower Low)

Market Trend

6

Downtrend

Lower Lows

Lower Highs

Uptrend

Higher Highs

Higher Lows

Market Trend

7

Market Trend

Uptrend has a pattern of

rising peaks and troughs

8

Market Trend

Downtrend has a pattern of

declining peaks and troughs

9

Market Trend

Sideways has a pattern of

horizontal peaks and troughs

Sideway Trending (Consolidation)

10

UptrendDowntrend

Sideway Trend

Market Trend

11

Support and Resistance

12

Support and Resistance

13

13

Concentration of Buyers

(Demand)

Support (Price / Level / Zone)

Support

Support

Support

14

Resistance (Price / Level / Zone)

Concentration of Sellers (Supply)

Resistance

Resistance

Support and Resistance

15

Support-turned-Resistance

Support-Turned-

ResistanceSupport

Support Broken

(Sign of weakness)

Support and Resistance

16

Resistance-turned-Support

Resistance-Turned-

Support

Resistance Breakout

(Sign of Strength)

Resistance

Support and Resistance

Support

Support

Support

Support

17

Resistance

Resistance

Resistance

Resistance

18

Support and Resistance

Resistance-turned-support

19

Support and Resistance

Support-turned-resistance

20

Resistance-turned-support

Support and Resistance

21

22

Moving Average

23

� Most popular trend-following indicator

� Calculated by averaging a number of past CLOSING

prices

� Most common time periods are 20, 50 and 200 days

� A longer time period equals less sensitive and smoother

average

1.10 + 1.12 + 1.16 + 1.15 + 1.18

5

Oldest Close -----------------------------------------> Latest

5-Day Moving Average =

Moving Average

Moving Average

24

Moving Average

25

Downward sloping

50-days EMA

Upward sloping

50-days EMA

Moving Average

26

Upward sloping

50-day EMA

-> Uptrend

Moving Average

27

Moving Average

Downward sloping

50-day EMA

-> Downtrend

Upward sloping

50-day EMA

-> Uptrend

Upward sloping

50-day EMA

-> Uptrend

28

Moving Average

Horizontal 50-day EMA

-> Sideway

Uptrend

29

Downtrend

UptrendSideway Trend

Moving Average

30

3 Types Of Moving Averages

1. Simple Moving Average (SMA)

2. Weighted Moving Average (WMA)

3. Exponential Moving Average (EMA)

Moving Average

31

32

3 Functions of Moving Average

1. Identify The Direction Of The Trend

• Upward, Downward or Sideway Trend (slope of MA)

2. Provide Buy Or Sell Signal

• Moving Average Crossovers

• Price Trading Above / Below Moving Average

3. Act As Moving Support Or Resistance

33

Moving Average

Price above moving

average -> uptrend

Price below moving

average -> downtrend

34

Moving Average

During uptrend, price tends

to break resistance

Resistance has now

become support

35

Moving Average

During downtrend, price

tends to break support

Support has now become

resistance

36

Moving Average

Price below moving

average -> downtrend

Price above moving

average -> uptrend

37

Moving Average

Price pullback halted at

moving average support

Momentum

38

Rally‒ Is distinguished by the way prices continue to move

upwards without any significant retreat

Momentum‒ Measures the strength of the rally

Indicator‒ MACD (Moving Average Convergence Divergence)

Momentum

39

MACD

40

Definition

Measures the convergence or divergence between

short (eg. 12 days) and long (eg. 26 days) exponential

moving averages, and analyses both price momentum

and trend

MACD

41

MACD

Zero Line

42

MACD

43

MACD

MACD above zero line

-> bullish

-> upward momentum

44

MACD

MACD above zero line

-> bullish

-> upward momentum

45

When to buy a stock when it is in an upward momentum?

46

MACD

MACD Bullish Crossover

-> Buy Signal

47

MACD

MACD Bullish Crossover

-> Buy Signal

48

MACD

MACD below zero line

-> bearish

-> downward momentum

49

MACD

MACD below zero line

-> bearish

-> downward momentum

50

When to sell a stock when it is in a downward momentum?

51

MACD

MACD Bearish Crossover

-> Sell Signal

52

Example

1. MACD > zero line -> bullish

2. Look for bullish MACD crossover for buy signal

3. Look for support & resistance for target and stop loss

Resistance

Support

MACD Bullish Crossover

53

Example

MACD Bullish Crossover

Support

Resistance

54

55

Questions and Answers

Thank you

56