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Jita Trade and Research Institute R ef: 44240 Jita Trade and Research Institute Ferrogel 03/04/2010 - 30/09/2010 05/09/2010 Page 1 R ef: 44240 Jita Trade and Research Institute Analysis Disclaimer Risk warning Jita Trade and Research Institute shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Jita Trade and Research Institute that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially investments such as moon minerals and investment in commodities, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Sources of information Jita Trade and Research utilizes financial information providers and information from such providers may form the basis for an analysis. Jita Trade and Research Institute accepts no responsibility for the accuracy or completeness of any information herein contained. Basis of valuation or methodology used to evaluate financial instruments or issuers Any recommendations and other comments in Jita Trade and Research Institute’s analysis derive from objective fundamental macro economic and corporation specific calculations, statistical and technical analysis, and subjective general market assessment. Recommendation types If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendations should be seen as Jita Trade and Research Institute’s opinion that the specific item will respectively outperform the relevant market or underperform compared to the market. Jita Trade and Research Institute’s recommendations should statistically correspond to an even distribution between buy and sell recommendations. Conflict of interest In order to prevent conflicts of interest, Jita Trade and Research Institute has established appropriate business procedures, including procedures applicable to research and analysis to ensure objective research reports. Jita Trade and Research Institute reports have not been discussed with the parties, e.g. producers of commodities, mentioned in the analysis. Jita Trade and Research Institute, its employees and related legal persons may have, establish, change or cease to have positions in commodities, index exchange or other financial instruments covered by a recommendation. 05/09/2010 Page 2 R ef: 44240 Jita Trade and Research Institute Contents Technical Analysis Page Concepts Fibonacci Retracements 5 Pivot Points 6 Volatility Average True Range 7 Bollinger Bands 8 Trend Moving Average Convergence/Divergence 9 Mass Index 11 Parabolic SAR (Stop and Reverse) 12 Trix 13 Ichimoku Kinkô Hyô 14 Momentum Relative Strength Indicator 15 Stochastic Flow Indictor 16 Volume Money Flow Index 17 On-Balance Volume 18 Price and Volume Trend 19 Force Index 20 Negative Volume Index 21 Ease of Movement 22 Accumulation/Distribution Index 23 Other Ultimate Oscillator 24 Coppock Curve 25 Keitner Channel 26 Ulcer Index 27 Candlesticks Basic Candlesticks 28 Heikin-Ashi candlesticks 30 JTRI Custom Indicators JTRI Indicator A 31 JTRI Indicator B 32 Glossary 33 Acknowledgements 34 Jita Trade and Research Institute Closing Statement 36 05/09/2010 Page 3 R ef: 44240 Jita Trade and Research Institute Technical Analysis In Eve, technical analysis is a commodity trading discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Technical analysts also extensively use indicators, which are typically mathematical transformations of price or volume. These indicators are used to help determine whether an asset is trending, and if it is, its price direction. This analysis uses various methods and tools, these methods or tools may or may not have been modified for their application to Eve. The Jita Trade and Research Institute has chosen to omit from this analysis certain methods or tools. Non-comprehensively, these omissions are Average Directional Index, Factor price/Market Price, Advance/Decline Line, Williams’s %R, Commodity Channel Index, McClellan Oscillator, Point and figure chart 05/09/2010 Page 4 R ef: 44240 Jita Trade and Research Institute Concept > Fibonacci Retracements Fibonacci retracement is a very popular tool used by many technical traders to help identify strategic places for transactions to be placed, target prices or stop losses. These levels are created by drawing a trend line between two extreme points and then dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. The Fibonacci sequence is a based on the idea that markets will retrace a large part of their original move after which they will continue to move in their prior direction. Fibonacci Retracements 16000 14000 12000 FNL 0.24 10000 FNL 0.38 FNL 0.50 8000 FNL 0.62 6000 FNL 0.76 Price 4000 2000 0 1 15 29 43 57 71 85 99 113 127 141 155 169 Fibonacci retracements occur at distinct levels of the original move. Each Fibonacci level is considered to be an area where the market will likely find levels of support or resistance. 05/09/2010 Page 5 R ef: 44240 Jita Trade and Research Institute Concept > Pivot Points A pivot point is a price level of significance in technical analysis of a market that is used by traders as a predictive indicator of market movement. A pivot point is calculated as an average of significant prices (high, low, close) from the performance of a market in the prior trading period. Pivot Points 16000 14000 12000 R1 10000 S1 R2 8000 S2 R3 6000 S3 Price 4000 2000 0 1 13 25 37 49 61 73 85 97 109 121 133 145 157 169 The pivot point itself represents a level of highest resistance or support, depending on the overall market condition. Trading above or below the pivot point indicates the overall market sentiment. It is a leading indicator providing advanced signaling of potentially new market highs or lows within a given time frame. 05/09/2010 Page 6 R ef: 44240 Jita Trade and Research Institute Volatility > Average True Range Average True Range ( ATR ) is a technical analysis volatility indicator developed by J. Welles Wilder, As such; the indicator does not provide an indication of price trend, simply the degree of price volatility. Price Price 14000.00 12000.00 10000.00 8000.00 6000.00 4000.00 2000.00 0.00 1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 Av erage True Range Av erage True Range 1600.00 1400.00 1200.00 1000.00 800.00 600.00 400.00 200.00 0.00 1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 The idea of ranges is that they show the commitment or enthusiasm of traders. Large or increasing ranges suggest traders prepared to continue to bid up or sell down a commodity through the course of the day. Decreasing range suggests waning interest. 05/09/2010 Page 7 R ef: 44240 Jita Trade and Research Institute Volatility > Bollinger Bands Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. Having evolved from the concept of trading bands, Bollinger Bands can be used to measure the highness or lowness of the price relative to previous trades. Bollinger Bands 14,000.00 12,000.00 10,000.00 Middle Band 8,000.00 Upper Band Lower Band 6,000.00 Price 4,000.00 2,000.00 0.00 1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 The use of Bollinger Bands varies widely among traders. Some traders buy when price touches the lower Bollinger Band and exit when price touches the moving average in the center of the bands. Other traders buy when price breaks above the upper Bollinger Band or sell when price falls below the lower Bollinger Band 05/09/2010 Page 8 R ef: 44240 Jita Trade and Research Institute Trend> Moving Average Convergence/Divergence MACD stands for Moving Average Convergence / Divergence, a technical analysis indicator created by Gerald Appel in the late 1970s. It is used to spot changes in the strength, direction, momentum, and duration of a trend in a price. Moving Average Convergence/Divergence 300 200 100 0 1 11 21 31 41 51 61 71 81 91 101111121131141 MACD line -100 Signal -200 -300 -400 -500 Exponential moving averages highlight recent changes in a commodity price. By comparing EMAs of different lengths, the MACD line gauges changes in the trend of a commodity. By then comparing differences in the change of that line to an average, an analyst can identify subtle shifts in the strength and direction of a trend. 05/09/2010 Page 9 R ef: 44240 Jita Trade and Research Institute MACD Histogram 150 100 50 0 1 11 21 31 41 51 61 71 81 91 101111121131141 -50 -100 -150 Traders recognize three meaningful signals generated by the MACD indicator. When: • the MACD line crosses the signal line • the MACD line crosses zero • there is a divergence between the MACD line and the price or between the histogram and the price • False signals Like any indicator, the MACD can generate false signals. A false positive, for example, would be a bullish crossover followed by a sudden decline in a commodity. A false negative would be a situation where there was no bullish crossover, yet the commodity accelerated suddenly upwards. Analysts use a variety of approaches to filter out false signals and confirm true ones. As a lagging indicator, the MACD is often paired with a leading indicator, like the Relative Strength Index (RSI).
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