Technical  Analysis  Workshop  Series    

Moving  Average  &  Bollinger  Bands      

Session  Six    

6.15PM  

NUS  Students’  Investment  Society  

Workshops  Syllabus  –  Sem  1  

LT18,  6:15  -­‐  7:15PM  Week   Lesson  Topic  

Week  4   Introduc.on  to  FA  &  TA  

Week  5   Japanese  Candles.cks  &  Charts  

Week  6   Annual  Reports  

Week  7     NIL  (Mid-­‐terms  Week)  

Week  8     Con.nua.on  &  Reversal  PaIerns  

Week  9   Valua.on  Methodologies  

Week  10     Moving  Averages  &  Bollinger  Bands  

Week  11  Exams  Prepara.on  

Week  12  

Profile  

q Year  3  Electrical  Engineering  q 5-­‐6  years  inves.ng  experience  q Mid  to  Long-­‐Term  Investor  

q Open  to  Queries  

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Outline  

Ø Purpose  Ø Characteris.cs    Ø Limita.ons  Ø U.liza.on  Ø Examples    Ø Summary    

Purpose  

•  Smoothens  price  ac.on  

•  Tracks  the  progress  of  the  current  trend  

 

   

CharacterisTcs    

•  Trend-­‐following  indicator    

•  Lagging  Indicator    

•  Reac.ve  to  price  ac.on  

LimitaTons  

•  Yield  poor  results  in  sideway  markets    

•  Results  in  Whipsaws/  Outliers  

•  Filter  Design  required    

•  Design  based  on  individual  experimenta.on    

Filter  Design  •  Time    •  Price  Extent  

•  Volume    

•  Adjust  Moving  Average  Dura.on  

•  Dura.on  affects  its  accuracy  

•  Shorter  Day  MA    Ø     Sensi.ve    to  minor  price  changes  Ø     Prone  to  whipsaws  

•  Longer  Day  MA  Ø     More  reliable    Ø     Less    responsive  to  price  changes    

Moving  Average  DuraTon  

Popular  Moving  Averages    

•  Short-­‐term    {5,  10,  15,  20  Day}  

•  Intermediate    {40,  50,  100  Day}  

•  Long-­‐term    {150,  200,  400  Day}  

UTlizaTon    

•  Cross-­‐Over  Method  

•  Resistance  and  Support    

•  Price  Targets  

•  Slope  of  Moving  Average  

Cross-­‐Over  (1  MA)    

•  Buy  Signal:  Price  crosses  above  Moving  Average    

 •  Sell  Signal:  Price  crosses  below  Moving  Average  

Cross-­‐Over  (2  MA)    

•  More  reliable    

•  Buy  Signal:    Shorter  Day  MA  crosses  above  Longer  Day  MA  

 •  Sell  Signal:  Shorter  Day  MA  crosses  below  Longer  Day  MA  

Resistance  &  Support  

•  Resistance  found  during  downtrend  

•  Support  found  during  uptrend  

•  Where  to  find?  Ø  Major  Moving  Averages  Ø  Gaps  Ø  Fibonacci  Levels    Ø  Trend  lines    

   

Price  Targets  

•  Major  Moving  Averages    •  Locate  candles.ck  buy  or  sell  signals  

•  U.lize  in  conjunc.on  with  Oscillators    

 

•  Uptrend  Case    •  Steeper  Slope    

Ø   Increased  in  buying  intensity  Ø   Likelihood  of  further  strength  

•   Gradual  Slope  Ø   Reduc.on  in  buying  interest  Ø   likelihood  of  further  weakness  

Slope  of  Moving  Average  

Slope  of  Moving  Average  

•  Downtrend  Case    •  Steeper  Slope    

Ø   Increased  in  selling  pressure  Ø   Likelihood  of  further  weakness  

•   Gradual  Slope  Ø   Reduc.on  in  selling  pressure  Ø   likelihood  of  reversal  

Examples  

•  Apply  Cross-­‐Over    

•  Iden.fy  Resistance  &  Support  

•  Iden.fy  Price  Targets  

•  Observe  the  Slope  of  Moving  Average  

Point  Of  Interest  

Ø Exponen.al,  Weighted  &  Adap.ve  MA  Ø 3  MA  Cross-­‐Over  Ø Moving  Average  Envelope  Ø Guppy  Moving  Average    Ø Incorporate  MA  with  Indicators  (E.g.  MACD)