Presented by Dr. Arshad Hassan
Presented by Dr. Arshad Hassan
Presented by Dr. Arshad Hassan
1. Accumulation phase
2. Public participation phase
3. Distribution phase
Stock market discounts all news
Stock market averages must confirm each
other
Trends are confirmed by volume
Trends exist until definitive signals prove that
they have ended
Analysts use various tools and
techniques to identify trends and patterns
which can aid in predictions of future
market movements
Data can be depicted in different ways through
the use of various chart styles, each presenting
a unique view of the same information. These
include:
Line Charts
Bar Charts
Candlestick Charts
Support is a floor price
Bear/Downward
Bull/Upward
Consolidation (no trend)
Uptrends are characterized by
rising bottoms on the stock
chart and can be described as
periods of optimism
Downtrends are characterized by falling
tops or bottoms on the price chart, and can
be described as periods of pessimism
Price Movement
Volatility
Momentum
Volume
Others
Moving Average - Simple
- Exponential
- Weighted
ADI
This Chart uses 14
(red), 30 (green), and
200 (purple) day MAs*
Standard Deviation
A band plotted 2 standard deviations away from a
simple moving average.
When the markets become more volatile, the
bands widen and during less volatile periods, the
bands contract
The tightening of the bands is often used as an
early indication that the volatility is about to
increase sharply
The closer the prices move to the upper band, the
more overbought the market, and the closer the
prices move to the lower band, the more oversold
the market
Uptrend; staying
within Upper Band
Upper Band
Downtrend;
staying within
Lower Band
Lower Band
MACD
RelativeStrength Index – RSI
Stochastic
Shows the relationship between two moving
averages of prices
There are three common methods used to
interpret the MACD:
1. Crossovers
2. Divergence
3. Dramatic Rise
SEL
L
BU BU
Y Y
compares the magnitude of recent gains to
recent losses in an attempt to determine
overbought and oversold conditions of an asset
The RSI ranges from 0 to 100
Above 70; overvalued
Under 30; undervalued
RSI = 100 – [100/1 +RS]
Right
Left
Shoulder
Shoulder
Flags result from price fluctuations within a narrow
range and mark a consolidation before the previous
move continuous on
Pennant formations are often treated like flag
formations because they are very similar in
appearance
The key difference is merely that flags have a
parallelogram-like shape, and pennants are more
triangular
Rectangular,
indicating a flag
pattern
Trend is Friend.
Usage of multiple tools can increase your
chances of success
Combining Bollinger Bands with MACD, for
example, can be one traders strategy while
another trades purely off of pattern formations
Play around and see what you find to be most
effective in your particular market
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