Test Your Knowledge
HOW PROFESSIONAL TRADERS UNDERSTAND ADVANCE TECHNICAL ANALYSIS
CONCEPTS, CHARTS, PATTERNS AND TYPES OF INDICATORS
CONCEPTS :
Technical analysis is a means of examining and predicting price movements in the financial markets, by using historical price charts and market statistics.
Support and resistance, Trend line, Breakout, Market trend, Dead cat bounce, Dow theory, Elliott wave principle, Fibonacci retracements and Pivot point.
CHARTS :
Chart is used to depict the trends in the price and volume of a particular stock or index over a certain period of time. It’s easier to interpret a bar chart than it is to look at massive amounts of numbers in a spreadsheet.
Scaling methods, Line charts, Bar charts (OHLC chart), Candlestick chart, Point and figure chart, Kagi chart and Importance of Volume.
PATTERNS :
Patterns are the distinctive formations created by the movements of security prices on a chart and are the foundation of technical analysis. Analyst seek to identify patterns to anticipate the future direction of a security’s price. (1) CHARTS (2) HARMONIC PATTERNS (3) CANDELSTICK.
A chart pattern is a graphical presentation of price movement by using a series of trend lines or curves.
Head and shoulders, Cup and handle, Double top and double bottom, Triple top and triple bottom, Broadening top, Price channels, Wedge pattern, Triangle, Flag and pennant, Island reversal and Gap.
When analysing harmonic patterns in price charts, a trader can make predictions about where and to what extent an asset’s price might move.
The ABCD pattern, The BAT pattern, The Gartley pattern, The butterfly pattern, The crab pattern, The deep crab pattern and The shark pattern.
Candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. It is formed by the opening, high, low, and closing prices of Stock/Index price. There are two types of candlestick patterns A) SIMPLE B) COMPLEX.
A ) SIMPLE : Big White Candle, Big Black Candle, Doji, Hammer, Hanging man, Inverted hammer, Shooting star, Long Upper Shadow, Long Lower Shadow, Marubozu, Spinning top, Shaven Head and Shaven bottom.
B ) COMPLEX : Three white soldiers, Three Black Crows, Bullish or Bearish Harami, Morning star, Evening Star, Dark Cloud Cover, Engulfing Bullish or Bearish Line, On Neckline, Tweezer Tops or Bottoms, Hikkake pattern, Piercing Line, Rising Window, Judas Candle and Darth Maul.
INDICATORS :
Technical Indicators are used for trend following, tracking price oscillation, finding support and resistance levels, volume, open interest of a security or contract and measuring volatility . Types of Indicators :(1) TREND (2) MOMENTUM (3) VOLUME (4) VOLATILITY.
Trend-following indicators are technical tools that measure the direction and strength of trends in the chosen time frame.
Average directional index (ADX), Moving average convergence/divergence (MACD), Alligator, Aroon, Arms index Short-Term Trading Index (TRIN), Know sure thing, oscillator (KST), Moving average, McClellan oscillator, Mass index, Parabolic Stop and Reverse (Parabolic SAR), Ichimoku Kinkō Hyō, Range Action Verification Index (RAVI), Supertrend, Smart money index (SMI), Swing Index, Trix, Vortex Indicator (VI) and ZigZag .
The momentum oscillator is a technical tool that issues a signal when a price move or trend is about to start. An oscillator is a technical analysis tool that constructs high and low (horizontal) bands between two extreme values, and then builds a trend indicator that fluctuates within these bounds detect correction levels within the trend. Traders use the trend indicator to discover short-term overbought or oversold conditions.
Relative strength index (RSI), Stochastic oscillator, True strength index (TSI), Price Rate of Change, Commodity channel index (CCI), Advance/decline (A/D) line, Awesome Oscillator, Chande Forecast Oscillator, Elder Force Index, Intraday Momentum Index , Market Facilitation Index, Price Momentum Indicator, Price Volume Trend (PVT), Relative Vigor Index, Ultimate Oscillator and Williams %R (%R)
Volume indicators are technical tools to evaluate a security’s bull and bear power (Which side is in control of price action).
Accumulation/Distribution index, On-balance volume (OBV), Balance of Power (BOP), Chaikin money flow indicator (CMF), Money flow index (MFI), Volume RSI, Volume–price trend (VPT), Volume-weighted average price, Force index (FI), Negative volume index (NVI), Klinger Volume Oscillator, Ease of movement, Put/call ratio (PCR) and Volume Oscillator (VO)
The volatility indicator is a technical tool that measures how far security stretches away from its mean price, higher and lower.
Average true range (ATR), Bollinger Bands (BB), Donchian channel, Choppiness Index, Historical Volatility, Ichimoku Clouds, Keltner Channel, Relative Volatility, Standard deviation (σ) and STARC Bands.