Technical Analysis
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The Four Most Reliable Technical Indicators
The Four Most Reliable Technical Indicators By Alan Bush ADM Investor Services New Historical Highs Indicate Follow Through Strength There is a rule of thumb that anytime a market makes new historical highs, there will probably be follow through to the upside. In some cases, the additional strength can be substantial. The best and most recent example of this is the record highs in stock index futures. The logic behind this is that, if the fundamentals are powerful enough to propel a market to new historical highs, they are probably strong enough to persist for a while longer and push prices even higher. Therefore, the probabilities of financial success are much greater when trading from the long side, when new historical highs have been registered, than by trading from the short side in an attempt to guess when a bull market of this magnitude may eventually top out. Looking at Double and Triple Bottoms and Tops in a Different Way First let’s start with the basics. The double bottom and double top patterns are common and easily recognizable chart patterns, which occur in all timeframes. The double bottom appears as two consecutive lows at approximately the same price and the double top pattern is formed when two consecutive peaks are registered at approximately the same level. Triple bottom and triple top formations are less common, although the rules for double bottoms and tops and triple bottoms and tops are the same. Double Bottom Double Top Triple Bottom Triple Top Traditional charting techniques tell us that it is a good idea to buy on a retest of multiple bottoms and sell on a retest of an area of multiple tops. -
Identifying Chart Patterns with Technical Analysis
746652745 A Fidelity Investments Webinar Series Identifying chart patterns with technical analysis BROKERAGE: TECHNICAL ANALYSIS BROKERAGE: TECHNICAL ANALYSIS Important Information Any screenshots, charts, or company trading symbols mentioned are provided for illustrative purposes only and should not be considered an offer to sell, a solicitation of an offer to buy, or a recommendation for the security. Investing involves risk, including risk of loss. Past performance is no guarantee of future results Stop loss orders do not guarantee the execution price you will receive and have additional risks that may be compounded in pe riods of market volatility. Stop loss orders could be triggered by price swings and could result in an execution well below your trigg er price. Trailing stop orders may have increased risks due to their reliance on trigger pricing, which may be compounded in periods of market volatility, as well as market data and other internal and external system factors. Trailing stop orders are held on a separat e, internal order file, place on a "not held" basis and only monitored between 9:30 AM and 4:00 PM Eastern. Technical analysis focuses on market action – specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results. -
Trade Clustering and Power Laws in Financial Markets
Theoretical Economics 15 (2020), 1365–1398 1555-7561/20201365 Trade clustering and power laws in financial markets Makoto Nirei Graduate School of Economics, University of Tokyo John Stachurski Research School of Economics, Australian National University Tsutomu Watanabe Graduate School of Economics, University of Tokyo This study provides an explanation for the emergence of power laws in asset trad- ing volume and returns. We consider a two-state model with binary actions, where traders infer other traders’ private signals regarding the value of an asset from their actions and adjust their own behavior accordingly. We prove that this leads to power laws for equilibrium volume and returns whenever the number of traders is large and the signals for asset value are sufficiently noisy. We also provide nu- merical results showing that the model reproduces observed distributions of daily stock volume and returns. Keywords. Herd behavior, trading volume, stock returns, fat tail, power law. JEL classification. G14. 1. Introduction Recently, the literature on empirical finance has converged on a broad consensus: Daily returns on equities, foreign exchange, and commodities obey a power law. This striking property of high-frequency returns has been found across both space and time through a variety of statistical procedures, from conditional likelihood methods and nonpara- metric tail decay estimation to straightforward log-log regression.1 A power law has also been found for trading volume by Gopikrishnan et al. (2000)andPlerou et al. (2001). Makoto Nirei: [email protected] John Stachurski: [email protected] Tsutomu Watanabe: [email protected] We have benefited from comments by the anonymous referees, Daisuke Oyama, and especially Koichiro Takaoka. -
On-Line Manual for Successful Trading
On-Line Manual For Successful Trading CONTENTS Chapter 1. Introduction 7 1.1. Foreign Exchange as a Financial Market 7 1.2. Foreign Exchange in a Historical Perspective 8 1.3. Main Stages of Recent Foreign Exchange Development 9 The Bretton Woods Accord 9 The International Monetary Fund 9 Free-Floating of Currencies 10 The European Monetary Union 11 The European Monetary Cooperation Fund 12 The Euro 12 1.4. Factors Caused Foreign Exchange Volume Growth 13 Interest Rate Volatility 13 Business Internationalization 13 Increasing of Corporate Interest 13 Increasing of Traders Sophistication 13 Developments in Telecommunications 14 Computer and Programming Development 14 FOREX. On-line Manual For Successful Trading ii Chapter 2. Kinds Of Major Currencies and Exchange Systems 15 2.1. Major Currencies 15 The U.S. Dollar 15 The Euro 15 The Japanese Yen 16 The British Pound 16 The Swiss Franc 16 2.2. Kinds of Exchange Systems 17 Trading with Brokers 17 Direct Dealing 18 Dealing Systems 18 Matching Systems 18 2.3. The Federal Reserve System of the USA and Central Banks of the Other G-7 Countries 20 The Federal Reserve System of the USA 20 The Central Banks of the Other G-7 Countries 21 Chapter 3. Kinds of Foreign Exchange Market 23 3.1. Spot Market 23 3.2. Forward Market 26 3.3. Futures Market 27 3.4. Currency Options 28 Delta 30 Gamma 30 Vega 30 Theta 31 FOREX. On-line Manual For Successful Trading iii Chapter 4. Fundamental Analysis 32 4.1. Economic Fundamentals 32 Theories of Exchange Rate Determination 32 Purchasing Power Parity 32 The PPP Relative Version 33 Theory of Elasticities 33 Modern Monetary Theories on Short-term Exchange Rate Volatility 33 The Portfolio-Balance Approach 34 Synthesis of Traditional and Modern Monetary Views 34 4.2. -
Everything You Wanted to Know About Candlestick Charts Is an Unregulated Product Published by Thames Publishing Ltd
EEvveerryytthhiinngg yyoouu wwaanntteedd ttoo kknnooww aabboouutt ccaannddlleessttiicckk cchhaarrttss by Mark Rose • Read candlestick charts accurately • Spot patterns quickly and easily • Use that information to make profitable trading decisions Contents Chapter 1. What is a candlestick chart? 3 Chapter 2. Candlestick shapes: 6 Anatomy of a candle 6 Doji 7 Marubozo 8 Chapter 3. Candlestick Patterns 9 Harami (bullish / bearish) 9 Hammer / Hanging Man 11 Inverted Hammer / Shooting Star 13 Engulfing (bullish/ bearish) 14 Morning Star / Evening Star 15 Three White Soldiers / Three Black Crows 16 Piercing Line / Dark Cloud Cover 17 Chapter 4. The history of candlestick charts 18 Conclusion 20 Candlestick Cheat Sheet 22 2 Chapter 1. What is a candlestick chart? Before I start to talk about candlestick patterns, I’d like to get right back to basics on candles: what they are, what they look like, and why we use them … Drawing lines When you look at a chart of market prices, you can usually choose from line charts or candlestick charts. A line chart will take its price levels from the opening or closing prices according to the timeframe you have selected. So, if you’re looking at a one-minute line chart of closing prices, it will plot the closing price for each one-minute period – something like this … Line charts can be useful for looking at the “bigger picture” and finding long-term trends, but they simply cannot offer up the kind of information contained in a candlestick chart. Here is a one-minute candlestick chart for the same period … 3 At first glance, it might look a little confusing, but I can assure you that once you’re used to candlestick charts – you won’t look back. -
1 Candlestick Patterns Version 30 Description
Candlestick Patterns Version 30 Description: The Candlestick Pattern ShowMe analysis technique for RadarScreen®, Chart Analysis, and the Scanner shows when certain candlestick patterns occur for stocks, ETFs, Forex, etc. The indicator can be used to search for the following candlestick patterns: doji, bullish engulfing, bearish engulfing, hammer, dark cloud, piercing pattern, morning star, evening star, inverse hammer, bullish harami, bearish harami, bullish kicker, bearish kicker, shooting star, bullish railroad tracks, bearish railroad tracks, tweezer bottom, tweezer top, island reversal bottom, island reversal top, bullish marubozu and bearish marubozu, rally-base-rally, drop-base-drop, rally-base and drop-base, inside bar, three crows, three soldiers. You can have the indicator look for all the patterns or just the ones you are interesting in analyzing. This indicator will work on any time frame as well as tick charts. Alerts, if enable, will be generated for all enabled candlestick patterns. Inputs: doji_enabled = enables(true) or disables(false) the indicator to look for the doji candlestick pattern. The default is “true”. doji_text = Allows you to customize the display text. The default is “D”. doji_color = Allows you to customize the display text’s color. The default is yellow. doji_body_percent = Allows you to customize the body size of the doji with respect to the total candlestick size from high to low. The default is “5” for 5%. bull_engulf_enabled = enables(true) or disables(false) the indicator to look for the bullish engulfing candlestick pattern. The default is “true”. bull_engulf _text = Allows you to customize the display text. The default is “E”. bull_engulf _color = Allows you to customize the display text’s color. -
Rising Wedge, Falling Wedge (PDF)
RISING WEDGE, FALLING WEDGE Rewarding patterns…provided you stay disciplined! Introduction The wedge is a very usual chartist pattern which is made of two converging trendlines that go in the same direction, both upwards or both downwards. As such, it can be immediately distinguished from a triangle. This pattern can be found on every timeframe, from the monthly charts to intraday price action. There are two sorts of wedges that have opposite consequences: Falling wedges, mostly completed following a sharp slump and which have a bullish implication, Rising wedges, which foreshadow a violent, downwards reversal phase. Their bearish bias is all the more pronounced since they are completed after a long period of time, and following a clear uptrend. But regarding most wedges as reversal patterns are just an opinion on our own. Many authors, however, consider that following the examples of triangles, pennants and flags, wedges are essentially continuation patterns, sloped against the trend. True, you can find falling wedges just in the middle of a bullish trend, or rising wedges within a bearish trend. A perfect example of continuation rising wedge made on the Japanese Topix index in 2007 is shown on the chart below. 1 Setting up precise figures on the continuation or reversal nature of wedges is hard and useless, we think. What is of more interest is that continuation wedges tend to complete in a generally shorter lapse of time than reversal wedges. Furthermore, the debate over the reversal/continuation nature of wedges is of minor importance as these patterns are overwhelmingly broken in the "natural" sense: downwards for a rising wedge, upwards for a falling wedge. -
Technical Analysis Explained by Martin J
Contents Contents ........................................................................................................................................................ 1 Introduction .................................................................................................................................................. 3 Chapter I ........................................................................................................................................................ 4 What is Technical Analysis?....................................................................................................................... 4 1.1 Definition of Technical Analysis ...................................................................................................... 4 1.2. Philosophy of Technical Analysis .................................................................................................... 4 1.3. Technical Analysis vs. Fundamental Analysis ................................................................................. 5 1.4. Technician or Chartist? Is There Any Difference? .......................................................................... 6 1.5. Different Theories on Technical Analysis ....................................................................................... 6 Chapter II ....................................................................................................................................................... 8 Trend In Terms of Technical Analysis ....................................................................................................... -
Copyrighted Material
JWBK100-IND.qxd 2/21/08 9:07 AM Page 253 epg WILEY:JOBS:Wiley_PT:Logan:JWBK100_QXD%:Printer File:JW Index Advanced Micro Devices (AMD), 147 Bear market, 133 Advent Software Inc. (ADVS), Bears, 9 101, 102 Berry Petroleum Co. (BRY), 177, 178 Amateur hour, 14 Beta, 110 AMB Property Corp. (AMB), 186 Biolase Technology Inc. (BLTI), 168 American Stock Exchange (AMEX), Biomarin Pharmaceuticals (BMRN), 201 59 Area gap, 153 Blow-off top, 49 Arithmetic scale, 111, 113 Body gap, 162 Autozone Inc. (AZO), 33 Bollinger, John, 103, 109 Average, 116–117 Bollinger Bands, 109 Average daily volume, 101–102 Bollinger on Bollinger Bands (Bollinger), 103 Bar, 8 Bollinger squeeze, 109 Bar chart, 5, 8 Bolt Technology Corp. (BTJ), 57–58 Bar graph, 102–103 Bottom, 118–119. See also peaks and Basing action, 136 bottoms Bearish (black) candle, 12 Box range, 136 Bearish engulfing pattern, 56–58, 60, Breakaway gap, 153, 154 236 Breakdown, 175 Bearish harami, 62–63, 236 Break of resistance, 176 Bearish harami cross, 62, 236 Break of support, 175 Bearish reversal patterns, quick Breakout, 176 reference, 235–236 Broad market environment, 83 bearish engulfing,COPYRIGHTED 236 Bulkowski, MATERIAL Thomas, 107 bearish harami, 236 Bullish (white) candle, 12 dark cloud cover, 236 Bullish engulfing pattern, 58–59, 237 doji (northern), 235–236 Bullish harami, 63–64, 237 evening star, 236 Bullish harami cross, 63 hanging man, 235 Bullish reversal patterns, quick shooting star, 235 reference, 237–238 Bearish shadows, 91, 92 bullish engulfing, 237 Bearish star, 18, 66, 67 bullish harami, 238 253 JWBK100-IND.qxd 2/21/08 9:07 AM Page 254 epg WILEY:JOBS:Wiley_PT:Logan:JWBK100_QXD%:Printer File:JW 254 INDEX doji (southern), 237 psychology of, 86–89 hammer, 237 trading opportunities and, 201–207 inverted hammer, 237 Candlesticks, 8 morning star, 238 Capitulation, 17 piercing pattern, 237 Catching air, 136 Bullish shadows, 91–92 Chart analysis practice sets, 220–231 Bullish star, 66–67 Chart patterns, 8 Bull market, 133 Checkpoint Systems Inc. -
Classic Chart Patterns Chart Pattern Recognition a Quick Reference Guide for Traders Tools Provided by Recognia
StreetSmart Edge features Classic Chart Patterns Chart Pattern Recognition A quick reference guide for traders tools provided by Recognia. www.schwab.com/ssedge Triple Bottoms Double Bottoms Triangles Diamonds Megaphones Bullish: The Triple Bottom starts with prices Bullish: This pattern marks the reversal of a Bullish: Two converging trendlines as prices Bullish or Bearish: These patterns usually Bullish: The rare Megaphone Bottom—a.k.a. moving downward, followed by three sharp prior downtrend. The price forms two distinct reach lower/stable highs and higher lows. form over several months and volume will Broadening Pattern—can be recognized by its lows, all at about the same price level. Volume lows at roughly the same price level. Volume Volume diminishes and price swings between remain high during formation. Prices create successively higher highs and lower lows, which diminishes at each successive low and finally reflects weakening of downward pressure, an increasingly narrow range. Before the triangle higher highs and lower lows in a broadening form after a downward move. The bullish pattern bursts as the price rises above the highest high, tending to diminish as it forms, with some reaches its apex, the price breaks out above pattern, then the trading range narrows after is confirmed when, usually on the third upswing, confirming as a sign of bullish price reversal. pickup at each low and less on the second low. the upper trendline with a noticeable increase peaking highs and uptrending lows trend. The prices break above the prior high but fail to fall Bearish Counterpart: Triple Top. Finally the price breaks out above the highest in volume, confirming the bullish continuation breakout direction signals the resolution to below this level again. -
Option-Implied Term Structures
Federal Reserve Bank of New York Staff Reports Option-Implied Term Structures Erik Vogt Staff Report No. 706 December 2014 Revised January 2016 This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in this paper are those of the author and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author. Option-Implied Term Structures Erik Vogt Federal Reserve Bank of New York Staff Reports, no. 706 December 2014; revised January 2016 JEL classification: G12, G17, C58 Abstract This paper proposes a nonparametric sieve regression framework for pricing the term structure of option spanning portfolios. The framework delivers closed-form, nonparametric option pricing and hedging formulas through basis function expansions that grow with the sample size. Novel confidence intervals quantify term structure estimation uncertainty. The framework is applied to estimating the term structure of variance risk premia and finds that a short-run component dominates market excess return predictability. This finding is inconsistent with existing asset pricing models that seek to explain the variance risk premium’s predictive content. Key words: variance risk premium, term structures, options, return predictability, nonparametric regression. _________________ Vogt: Federal Reserve Bank of New York (e-mail: [email protected]). The author is especially thankful to his dissertation chair, George Tauchen, and his dissertation committee members, Tim Bollerslev, Federico Bugni, Jia Li, and Andrew Patton, for their guidance and encouragement. -
JNK [High Yield Bond ETF] Weekly Chart – 14-Period RSI Relative
JNK [High Yield Bond ETF] Weekly Chart – 14-Period RSI Relative Strength Index Signals Bullish Divergence Forming in High Yield Market Prices have defined a downtrend throughout calendar 2018, reaching the lowest level to begin Q3 (not pictured) Momentum on the other hand may be signaling support for a near-term advance, as the RSI held a higher low, remaining above the 40 level for the past three weeks as of this writing. However, gains will likely be limited by resistance at the MA Line, currently running parallel to a long-term downtrend line at the 36.40 level. If prices manage to break above resistance, with a concurrent rise above 50 RSI, that would be a signal to remain long. Alternatively, lower RSI readings indicating weak momentum would further establish that level of resistance. Longer-term, it appears a symmetrical triangle pattern may be forming on the weekly chart, implying a continuation of the recent downtrend. The downside price target for a breakaway from this pattern is $33.70 representing a 5.5% drop from current levels, coincidentally equal to the annual yield of this market. JNK [High Yield Bond ETF] Weekly Chart – 50 Week Moving Average Moving Average Line Overlays Long-term Falling Resistance Throughout Calendar 2018 Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/29/2021 [High Yield Bond ETF] Daily Chart – Trading Volume w/ 50-Day MA Prices Test 2018 Lows in July, Reverse Closing Higher by End of Holiday Week High Yield Corporate Bond prices rose throughout July (not pictured) meeting resistance for a second time in as many months at the 36 level.