Learn the basic concepts of the technical analysis

Learn the basic concepts of the technical analysis

the most beautiful technical analysis book ever

www.amo-linversione.comYour course

2 Investment - Business Brochure

Just Make It

Iknow that sometimes that study can be boring, especially if you have finished your school a long time ago. I have never loved studying when I was

young, but everything changed when everybody stopped telling me to read this or that book.

Now everything has changed. I learned that if I didn’t wanted to lose my money, I would have needed to study a lot.

Trading on the markets implies a detailed knowledge and study of market’s move to predict it. Of course none of us has the “magic

ball”, but we can reduce at most the possibility of failure. I made it!

Your Growth, My Happiness

3Investment - Business Brochure

CHAPTER 5 Support and resistance 24

CHAPTER 6 Head and shoulder 27

CHAPTER 7 Visualization of price movement 29

CHAPTER 8 Volumes 32

INTRODUCTION 04

CHAPTER 1. The 3 principles of the technical analysis 06

CHAPTER 2 Technical analysis indicators 09

CHAPTER 3 Types of thecnical indicators 11

CHAPTER 4 Trend 22

CHAPTER 9 Continuation figures considering volumes 35

CHAPTER 10 Time frame 39


Introduction

It is no hidden fact that on-line trading is trending and millions of people worldwide are making money by trading these days. Binary options is a smart way to

make money online and when a trader becomes proficient in it, it can be a means of consistent income.

Binary options give you the edge in making predictions about the future price movements concerning any particular asset. In achieving this,

the right analysis tool goes a long way in making the right decision and that’s where technical analysis comes into play.

You see, technical analysis provides a way to evaluate securities by reviewing the stats market activities generate. Such market activities include

volume and past price. It utilizes tools such as charts to spot patterns that can identify future activities.

In other words, technical analysis views the price movement and employs the data generated to carefully predict future price movements for a particular

security. As long as there are historical trading data, technical analysis can come into play.

It is no hidden fact that on-line trading is trending and millions of people worlwide are making money by trading these days


When it comes to binary options trading, there are no better alternatives than what technical analysis provides and that is the ability to generate useful and helpful data and in addition to that, effectively predict short-term price adjustments.

It focuses on price movements.

When it comes to binary options, technical analysis provides a way to understand what happened to the price of a particular asset and

effectively predict what will become of it next.

This book solely emphasizes on technical analysis and it’s usage in binary options. Dive in with us to see how technical analysis makes good of binary

options

Benefits of the Technical Analysis

Binary option is a financial aid with a known fixed cost such that the volume of the potential payout is already known even beforehand. It becomes of this fore knowledge that a tool for predictive analysis like technical analysis really comes into light

Technical analysis is without any alternative when it comes to binary options. The implementation of technical analysis on binary options poses better out comes than any other methods of analysis.

They are usually very short-term investments and it is only technical analysis that can create very valid short-term predictions in that regards. Binary options utilize short expiries that have durations of just few minutes and at most a couple of hours.

In breaking it down to simpler terms, technical analysis as regards binary options involves the study of supply and demand as regards securities (commodities) in market in other to determine the trend or direction to implement in the future. It tries to have an understanding

of emotions/changes in market by studying and observing the market. It provides a brand-new set of skills and tools that enable a trader make fast and better decisions

Require swift and rapid response; there are only limited times to act (short windows of opportunity to act). These opportunities are only available for a couple of minutes. Technical analysis gives you the advantage of creating an edge for you that will allow

you make effective decisions within limited time.


CHAPTER 1THE 3 PRINCIPLES OF

THE TECHNICAL ANALYSIS

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Technical analysis is a price movement which reflects on price movements in the market which is projected to the nearest period of time. It is simply based on price changes recorded in the past. When creating prices, various factors influence the formation, and these factors have to be taken into account Generally, it is recognized that 3 basic tenets or principles, exist when it comes to technical analysis..

The 3 principles

The first principle of technical analysis is that market shows every-thing that the trader needs to know about a particular price. This is a strong point of technical analysis as studying the market, we

can catch a good glimpse of future price movements.

The market shows everything. Irrespective of what happens to any security, the market shows it. Technical analysis usually ignores basic fundamentals, but the market does not and it still prices

those basics in and it shows everything that has the capacity to influ-ence the security.

Many factors influence the price of a security for example; political factors and corporate factors (like change in CEO, new legislation setup, changes in work practices etc.) and fundamental factors (profit margin actualization, selling volume of products) or even psychological factors (like consumer satisfaction). These

factors can be numerous and voluminous in size to analyze and some might not just be known but these factors are usually included inside the price by market actions. It becomes very easy for the technical analysts to place focus on markets alone. Looking at just the volume and price of market, we can get all the information that we need as regards various influences there streamlining the problem to a more manageable size.

Look at this way, the markets tell us about a security price, we are allowing the market to direct us on where to go rather than making guess decisions as regards sellers and buyers. While obviously there are reasons that affect prices, it is not important to know these reasons when forecasting a future movement. The market tells you where

exactly it is heading. There is no need to think one can effectively control the market in any way, there is no need to fight against the existing trend. Anticipate and move with the market flow

The market discounts everything

1


Price moves in different trends. The movement of price is considered to follow certain parameters. It is easier for traders to make trades whilst following trends, that that because most tools and strategies follow and

focus on specific patterns and trends for short and long-term basis.

See it this way; if the price of a particular commodity or security is increasing/rising, there is every chance that such price will continously rise. On the other hand, if the price is falling, there is a likelihood that it

will continuously go down.

The Market Exhibits Trends

2

In addition to that, the price can hover at the same level and remain like that (moving in a sideways projection). These projections of increase, decrease or steady of prices don’t go on forever but they are expected to last a long while. Trades are normally carried out in line to with the current trend. Price can be in downtrend! Uptrend or sideways trend

(otherwise known as ranging)

The third principle is a statement which simply says, history will always have a way of repeating itself. What has happened before, will definitely have a way of happening again.

Prices just like history have a way of showing themselves again in the future. Traders tend to react in the same way to certain changes and events and as such, it is expected that they can react in like manner to

similar situations in the future

History Repeats Itself

3

In other words, traders rely on history showing itself again with actions and patterns that have occurred in past times that would lead to similar results in the future. There is so much to learn from the past. The way traders act funny enough has not changed greatly, in fact, investors and traders still make the same decisions like they did decades

ago and this serves as an advantage to technical analysis. The belief here is the studies from history can tell us what happens to a set of securities in a certain way and then we expect the same set of actions to play out again the future.


CHAPTER 2TECHNICAL ANALYSIS INDICATORS

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But, Do you know??Indicators or technical indicators represent a more statistical approach to how technical analysis functions. These indicators act as helpful tools that allow traders to understand the market, understand the dealings of the market, make predictions about what might happen next in the market. Not just that, these indicators provide a look at money flow, momentum, volatility and trends and also provide another medium of measure price movements and assist traders in confirming chart pattern qualities and also form their personal buying and selling signals.

Some indicators work by making analysis easy for analyst to contrast and compare between various market price. This is done by drawing results directly into the price chart. Others work by displaying their results on a separate window. Binary options traders utilize technical indicators heavily. A strong connection exists between binary options and technical indicators.

These strong connections are because of the following reasons:

Technical indicators provide a simple way to analyze price action:

Price action provides the only way by which one can easily predict the happenings in the market, given the short time duration allowed in binary options. Taking a look at various price movements can prove difficult, t asking and confusing. But with the aid of technical indicators, one can easily generate the useful informa-tion and details of a price chart and also display the information in such a way everyone can understand immediately. This over simplification makes trading simpler, easier and quicker.

Trading is secured:

Indicators serve as security for your trading. When market analysis is done without any assistance, mis-takes can be encountered because of the large volume of information to process and the complexities involved. These mistakes can lead to loss of money and other bad decisions. Technical indicators provide a way to eliminate mistakes and ill decisions that may lead to loss of money. So, technical indicators eliminate these problems/mistakes and as such they assist you with making more money usually in a more convenient and easier way.

Indicators show things a trader can’t see:

Technical indicators analyze several chunks of data just within a few seconds, eliminate the irrelevant information and display the useful information the way it can be understood by traders. Without these assistance from technical indica-tors, information would be difficult to analyze as well as access. Technical analysis avails large sizes of information to traders that would have been inaccessible.


CHAPTER 3TYPES OF TECHNICAL INDICATORS

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Some types of existing indicators

Support and resistance:

These are indicators that predict (show) the support and resistance points which will likely cause a turnaround for the market. When the indicator passes through such points, it indicates that there would likely be a strong movement deviating from the price level. Examples include top and pivot points.

Trend:

These indicators assist traders to test trustworthiness and strength of trends. Some of the examples of trend indicators include moving average convergence/divergence, moving average and average directional index.

Volume:

Volume indicators implement the number of key assets bought and sold (otherwise called the trading volume) to check which investors are bearish or bullish. Examples include force index and negative volume index.

Momentum:

Indicators which assist traders to understand momentums of various movements are called momentum indicators. Relative strength index and money flow index are great examples of momentum indicator.

Volatility

These are indicators that measure the power of a movements in the market. The good thing is that such indicators assists traders in making different types of predictions (most especially binary options traders that implement target prices). Examples include bollinger bands and average true range


Market indicators

Leading indicators:

These are indicators that predict what will happen to the future of the price of an asset. They are usually important during seasons of non-trending or sideways price movements since they can identify breakdowns or breakouts. Leading indicators predict the future by preceding price movements. Ultimately leading indicators give you an idea of the direction the price of an asset is headed

Lagging indicators

This is the opposite of leading indicators. As the name implies, this indicator shows what has happened to asset prices in the past. The lagging indicators focus on past movements and still helps you to predict what happens next.

Market indicators helps traders understand if the price of an asset will either fall or rise in the future. They provide helpful, important and a simple to read tool for binary option traders. Matching the indicators and market strategy, can help to make timely investments and also assists you in to anticipate maiden movements.These indicators are of 2 types. Leading indicators and Lagging indicators

Oscillators

They are the common indicators in the market. They bounded to a particular range. Take for example, an oscillator indicator may have a high range of 100 and a low range of 0 where 100 represents over-bought assets and 0 represents over-sold assets

Non- bounded indicators:

These indicators are not so common but they help to show weakness and strengthsfof trends and also assist in forming buying and selling signals. They help with all these without implementing set range. They produce buying and selling signals via divergence or crossovers.

Crossovers occur when two averages crossover or when a price moves through the path of a moving average. It is the most popular of the two techniques. Divergence on the other hand, takes place when the direction of an indicator and price trend move in opposite (different) directions. This usually implies that the price trend is gradually weakening.


Leading indicatorsLeading indicators serve useful and important purpose. They help traders to get an understanding of whether an already existing movement will end soon or likely continue. This gives traders an edge as they can easily find good trading options and totally avoid the bad ones.

Let’s take this scenario, let’s assume a trader finds an upward movement.If the leading indicator shows that the upward movement is likely to continue, the trader knows it is the perfect time to trade a high option

If the indicator shows that the movement may likely end soon, the trader knows that the time is not right to trade a very high option. What that implies that the trader should stay completely out of the market or trade options that may likely show the end of the price movement.

You see, this type of information is priceless to traders. Leading indicators provide useful information to traders. They help to eliminate bad signals and find great trading opportunities.


Examples of leading indicators

Money Flow Index and Convergence / Divergence(MFI)

Relative Strength Index(RSI)

This type of information is priceless to traders. Leading indicators help to eliminate bad signals and find great trading opportunities

The Money Flow Index (MFI) is a popular indicator amongst other leading indicators as it assists

traders to quickly see the strength of a particular trend. As the name suggests, the money flow index compares and contrast the money flows into and out of a particular asset. To get the accurate results, it functions by multiplying the averages of the closing, low and high price of each period with the volume of the period and then divides all the sum of the periods with rising prices by the sum of all the periods with corresponding falling prices. The results are usually in the range between 0 and 100.

When the value of the MFI is 100, it means all the money is flowing into the assets. All

the periods are rising periods. When MFI is 0, it means all money is flowing out of the assets. All the periods are falling prices. When the value is 50 it implies equal number of sold ad bought assets.

Convergence/divergence occurs when a market forms an extreme in trend (take for

instance, a new low in a downtrend and a new high extreme in an uptrend). The money flow index mirrors this movement and also creates a new extreme. When the money flow index fails to mirror the market’s new low/high with its own replica low/high, it means traders are no longer affecting the trend. This can be enough to cause a new extreme and a continuing steady decline in momentum which would put an end to the trade. The money flow index can also be interpreted in the order direction.

When the range of money low index is between 70 and 30, it means there is a large

room for trading to continue in the market in its current movement. Most traders predict the movement will go on for a while and as such they invest accordingly. When the money flow index mirrors the trend, it

The Relative Strength Index (RSI) is a little bit similar to the MFI (Money flow index). Part of their

similarity lies in the fact that they are both oscillator indicators, they have a range of values from 100 to 0 and also, they are either overbought or oversold. Apart from their similarities, they still share differences. The differences between both of them is that while the money flow index considers just the volume of the periods and also puts less weight on the periods with low volume and much weight on the period with high volume, the Relative Strength Index considers price change and it treats every period as an equal entity.

Apart from the differences, RSI is more or less like MFI. The range of values still fall

between 0 and 100. When the RSI value rests between 70 and 30, it mirrors the trend is in a fine state and room or trading can still take place whereas if the RSI is below 30 or above 70 it indicates overbought and

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Learn the basic concepts of the technical analysis