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Outline

Outline. Intro Candlestick Charting Support/Resistance, Trends, Retracements Famous Patterns Cup and Handle Head and Shoulders Moving Averages SMA, EMA Bollinger Bands MACD Current Outlook. What is Technical Analysis?.

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Outline

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  1. Outline • Intro • Candlestick Charting • Support/Resistance, Trends, Retracements • Famous Patterns • Cup and Handle • Head and Shoulders • Moving Averages • SMA, EMA • Bollinger Bands • MACD • Current Outlook

  2. What is Technical Analysis? “The study of market action, primarily through the use of charts, for the purpose of forecasting future price trends” - John J. Murphy “market witchcraft” “self-fulfilling prophecy” Technical Analysis vs Fundamental Analysis

  3. Chart Types Line Charts Bar Charts OHLC (American Candlestick) Japanese Candlestick

  4. Candlesticks

  5. Candlestick Types

  6. Candlestick Patterns Dark Cloud Cover - Bearish Piercing Line - Bullish

  7. Candlestick Example

  8. Support and Resistance Resistance Support Resistance Support • Once a support or resistance level is broken, its role reverses. • Support and resistance levels become more significant the longer they are traded at and when the volume is high during the period that the level is traded at.

  9. Support and ResistanceExample

  10. Trendlines 8 6 4 9 2 7 5 3 1 Note: Once a trendline is broken it will assume the opposite role (support or resistance) of that which it had before.

  11. Trendlines Example

  12. Fibonacci RetracementsExample 38.2% 50% 61.8%

  13. Head and Shoulders Head Right Shoulder Left Shoulder Neckline

  14. Head and Shoulders Example

  15. Cup and Handle Example

  16. Moving Averages The two most popular Forms of moving averages Are the Simple and Exponential varieties (SMA and EMA). An SMA sums the closing prices of a given amount of periods (such as 50 days in this graph) and divides by that number of periods. Resistance Support An EMA smoothes the curve, giving greater weight to the most recent data points. The most used MAs are:SMA(10) SMA(50) SMA(100)SMA(200) EMA(20)

  17. Bollinger Bands Bollinger Bands are made by taking a MA (the 20 SMA is recommended by John Bollinger and the most popular) and placing lines 2 standard deviations above and below the MA. Whenever a band is touched, it serves as an indicator that the security is overextended and will reverse.

  18. MACD Indicator The Moving Average Convergence/Divergence indicator uses two MAs for a security, typically the 12 and 26 period EMAs like in this chart. The difference found from subtracting the 26 EMA from the 12 EMA is used to form the MACD line (Red). The trigger line (Blue) is a 9 period EMA of the previously calculated MACD line. When the MACD line crosses above the trigger line from below, it generates a buy signal. When the MACD line crosses below the trigger line from above, it generates a sell signal. A histogram is often including on MACD plots to make it easier to see by how much the two lines are diverging and when convergence takes place.

  19. Current Outlook

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