technical analysis
TRANSCRIPT
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Technical Analysis
Tim Backstrom15/11-2012
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Content
1. Background
2. Basic Principles
3. Dow’s Theory (Summary)
4. Technical Indicators
5. Summary
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Introduction to Technical Analysis
— Charles H. Dow— Dow’s theory
Background
“Market never rests”
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Introduction to Technical Analysis
— An attempt to mathematically or visually explain group behaviour— Market psychology— Patterns— Trends— Resistance
Basic Principles
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Introduction to Technical Analysis
— Market has three movements— Primary movement (Bull/Bear)— The “medium swing”— The “short swing”
— Market trends have three phases— 1. Investors “in the know” actively buying/selling against market— 2. Trend followers come in— 3. Investors cash in because market is moving on speculation
— Volume confirms are price rise/drop
Dow’s Theory (Short Summary)
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Introduction to Technical Analysis
— Moving Average— Relative Strength Index— Bollinger bands— Resistance— Formations
Technical Indicators
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Introduction to Technical Analysis
— General trend— Period
— Short (10-30 days) — Medium (30-90 days)— Long (90+ days)
— Indicators— Short cuts long from below (positive)— Short cuts long from above (negative)
Moving Average
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Introduction to Technical Analysis
— Compares magnitude of recent gains to recent losses of an asset— Number of days up/number of days down
— The higher the RSI the less profitable— Overbought at 70— Oversold at 30
Relative Strength Index (RSI)
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Introduction to Technical Analysis
— Reflects volatility in market— Price break— Indicated future movement
Bollinger Bands
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Introduction to Technical Analysis
— Basic market psychology— If breaks through – BUY/SELL
Resistance
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Introduction to Technical Analysis
— Head/shoulder— Double dip— Double top
Formations
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Introduction to Technical Analysis
— Combine strategies and indicators for best result— Use as complement to fundamental analysis— Be consistent— Be patient
Summary
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