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Basic Terms & Definitions Charting Basics & Essentials Tools & Software
• My
definitions
• How
TA
can
help
you
• What
it
won’t
do
for
you
What
it
is
and
isn’t
The
“official”
definition:
Technical
Analysis
-‐ financial
analysis
that
uses
patterns
in
market
data
to
identify
trends
and
make
predictions
My
definition:
The
use
of
past
price
info
to
identify
trends
and
areas
of
supply
&
demand.
A
picture of
market
psychology.
$1,500
$1,600
$1,300
$2,000
What
it
is
and
isn’t
Technical
Analysis
is
part
Science and
part
Art.
Science Art
On
one
side
you
have
Fear
&
Greed
Statistics Estimates
Averages Probability
Ratios Flexibility
logarithmic
charts News
percentages Changes
WHAT DO YOU SEE?
• What is the general trend?
• Where is the most recent top or bottom?
• Where are we relative to that?
• Are we forming a new trend?
• Where are the support & resistance zones?
• Do you see a pattern or base?
• Crosscheck w/ other indicators
Line OHLC
Bar
Candlestick
Graph
Area
Price Axis
Volume
Indicators
Time
Axis
Highest
Traded
Price
Opening
Price
Closing
Price
$5.00
$5.00
Opening
Price
Closing
Price
$5.00 $5.00
Resistance
Support
Support
Diagonal
trends
also
create
support
and
resistance
lines
that
once
broken,
can
signal
a
change
in
trend.
Resistance
Support
Beyond
trends,
there
are
some
very
common
patterns
you’ll
see
in
charts.
We’ll
take
a
deeper
look
at
the
following:
overbought
oversold
Divergence
• RSI
charts
create
support
&
resistance
zones
• In
bull
trends,
the
RSI
rarely
falls
below
40
• In
bear
trends,
the
RSI
struggles
to
get
above
60
• Key
ratios
work
for
retracements
to
the
downside
as
well
as
bounces.
• 23.6%,
38.2%,
50%,
61.8%
and
78.6%
• The
most
popular
Fibonacci
Retracements
are
61.8%
and
38.2%.
• These
levels
alert
us
to
a
potential
trend
reversal
or
identify
possible
resistance
&
support
areas.
24
38
100 50
62
78
Section 1: Technical Analysis Basics
What it is & isn’t Charting Basics Tools & Software