Technical AnalysisTechnical Analysis
Technical Analysis
• Basics
• Analysis - Trading
• Alternative methods
• Examples
• Discussion
Basics
• The market discounts everything
• Chart types
• Simple tools
The market discounts everything
TA is...
• a research approach, using only historical prices.
• the study of prices, with charts being the primary tool.
• a self fulfilling prophecy.
The market discounts everything
TA assumes that…
• every information is in the market.• we cannot predict the future, but react on the
market.• we don’t ask for the ‚WHY‘, but for the
‚WHEN‘ and ‚WHERE‘.• we don’t want to understand the market, we
just want to make money with it.
The market discounts everything
TA has one target:
Discipline
Function of valueValue
ProfitLoss
1
-1x
~2x
Implications:
Effect of disposition
open positionLOSS PROFIT
-100
-2010
20
0
Risk-seeking -> HOLD Risk-aversion -> GET OUT
Chart types
• Line charts
• Bar charts
• Candlestick charts
Simple tools
• trend channels
• support - resistance
• retracements
• others
Support - Resistance
Simple tools
Retracements
Using the Fibonacci - numbers:0, 0.382, 0.618, 1
often also used: 1/3, 1/2, 2/3
Analysis
• Indicators
• Oscillators
• Volatility
Indicators
Moving Averages
• simple MA
• weighted MA
• exponential MA
Indicators
MACD
• MACD-line: EMAshort-term – EMAlong-term
• Trigger-line:EMA (MACD-Line)
Oscillators
• Momentum
• Stochastics
• many more (RSI, ROC, …)
Trading
• Noise Trading
• Technical Trading
• System Trading
Pre-ECB sideways market
High: 107,23
Low: 107,62
Systems
• defined entry-signals
• winning trades - defined exit-signals
• loosing trades - defined exit-signals
• money management
Combined techniques
Combined techniques
Alternative Methods
• Fibonacci
• Elliott Wave Theory
• Japanese Candlesticks
Fibonacci numbers
• n 1 2 3 4 5 6 7 8 9 10 11 12 13
• F(n) 1 1 2 3 5 8 13 21 34 55 89 144 233
• F(n) = F(n-1) + F(n-2)
• for n: F(n-1) / F(n) = phi = 0.61803…
Fibonacci Retracements
Elliott Wave Theory
• 5 waves in direction of main trend
• 3 corrective waves
• The underlying 5-3 pattern remains constant, though the time span of each may vary.
Elliott Wave Theory
Elliott Wave Theory
Japanese Candlesticks
Real-time example
Conclusio
Information is pretty thin stuff, unless
mixed with experience.