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Technical Analysis
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Disclaimer
The information and material provided at MUTIS is for educational purposes
only and does not constitute financial product advice. The views of the
speakers are their own and not those of MUTIS. MUTIS does not represent
or warrant that the information or material is complete or accurate. You
should consider obtaining independent advice before making any financial
decisions. If you are seeking advice (including a recommendation or opinion)
about a financial product you should consult a certified financial advisor. To
the extent permitted by law, no responsibility for any loss arising in any way
(including by way of negligence) from anyone acting or refraining from acting
as a result of the information or material is accepted by MUTIS
© Copyright 2012 MUTIS. All rights reserved 2012.
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Objective
To provide the basic framework of technical analysis so
as to improve financial literacy among our members
and increase participation among the MUTIS
community.
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Why
Use of historical price action to forecast future price
movements
Value lies in forecasting/anticipation
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Contents
Types of chart
Support & resistance
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Types of charts
Line
Bar
Candlestick
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Line
Connects a single price
Uses only one of the following
Open
High
Low
Mid
Close (DEFAULT)
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Line
Pros
Gives a simplistic & overall view of price
Line studies are easy to conduct
Cons
Insufficient information
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Bar
Shows open high low close together
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Bar
Pros
Has sufficient information
Cons
Messy
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Candlestick
Has sufficient information
Highly visual
Provides sentiment analysis
Preferred chart for analysis
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Candlestick
Pros
Highly visual
Provides sentiment analysis
Cons
Increased subjectivity
More information = more analysis
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Candlestick
Unnecessary to know patterns and names
Patterns are either
Bullish
Bearish
Neutral
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Support & Resistance
Support
Psychological price level of BUYING
Resistance
Psychological price level of SELLING
Round numbers (e.g. DJIA 10000, SP 1400)
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Support & Resistance
Reminder
Value is in forecasting/anticipation
Technical analysis always looks good on hindsight
Without anticipation it has no value
Obvious only when it works out
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Support & Resistance
Resistance can turn into support and vice-versa
Traders wait for the breakout of a range and buy into
the breakout at the former resistance
Sellers are resistance miss out on opportunity
Same with support
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RESISTANCE
SUPPORT
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Contents
Trends
Trend lines
Trend channel
Range
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Trends
Uptrend
Higher High, Higher Low
Downtrend
Lower High, Lower Low
Swing points
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Trend Lines
Minimum 2 touch at swing points
Extrapolate to forecast support/resistance
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Trend Lines
Uptrend
Lines connect the swing lows
Downtrend
Lines connect the swing high
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Trend Line
Trend lines extrapolated can provide clues to future
support/resistance
Trend lines can and will always be broken in due
time
Broken trend lines indicates a weakening trend
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Trend Channels
Duplicate the trend line and connect it to the
opposite swing points
Creates a channel that contains price (support &
resistance)
Exceeding the opposite trend line is a sign of
climaxes
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Trend Channel Overshoots
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Range
Also known as SIDEWAYS TREND
It is a type of trend, NOT an uptrend or downtrend
“The market is trending sideways” or “The market is
range bound”
Remember there are 3 types of trend: Up, down,
sideways
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Range
Usually sandwiched between two price zones
Support & Resistance
Ranges provide opportunities for traders to trade
extremes
Traders also identify a range and anticipate
breakouts to trade
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Range
Resistance can turn into support and vice-versa
Traders wait for the breakout of a range and buy into
the breakout at the former resistance
Sellers are resistance miss out on opportunity
Same with support
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Thank You
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