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Academy #8
Technical Analysis
Speakers: Charles & Daniel
Get connected to B&R Beurs @

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Charles-Antoine Bory
◦ Board member + chairman Audacity
◦ Swiss: good with other people’s money
◦ Many years of investment experience
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Daniel Göttmann
◦ Chairman STCM
◦ German: paying the bill in a few years
◦ Many years of investment experience

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Introduction
Volatility
Charts
Basic patterns
Trend indicators
Momentum indicators
Advanced chart patterns
Links
Conclusion

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Graphical analysis
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“In finance, technical analysis is a security analysis discipline used for forecasting the direction of prices through the study of past market data, primarily price and volume.”
Wikipedia
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Technical analysis is more concerned with finding cues about the market micro structure!
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Belief that the historical performance of stocks and markets are indications of future performance.

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Never forget your fundamental analysis!
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Use technical analysis as complement
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Combination is the key!

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Identifying securities to buy/sell
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Timing of buy and sell orders
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Drawing in your professional life

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Volatility is a measure for the variation of the price of a financial instrument over time
◦ Standard deviation
◦ A higher volatility implies a riskier asset
◦ Volatility varies over time
◦ Volatility typically high in bear markets

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Negatively correlated with price

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Stocks: volatility goes up, as prices go down
Implication for options?
Want to trade volatility? Use the VIX

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Price level at which demand is thought to be strong enough to prevent the price from declining further

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Price level at which selling it thought to be strong enough to prevent the price from rising further

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Resistance becomes support (and vice-versa)

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Buy signal at (3)

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Sell signal at (3)

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Golden Cross: fast moving average crosses slow moving average from below
◦ Buy signal!
◦ Typically comes with high trading volumes

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Dead Cross: fast moving average crosses slow moving average from top
◦ Sell signal!
\\

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1 moving average (e.g. 20 days) +/- 1 standard deviation
Bands as support/resistance
Adjusts to market conditions
Contains ~88% of price movements

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Moving Average Convergence Divergence
MACD=12d EMA – 26d EMA, 9d EMA (signal line)
Trend + momentum
Crossover

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Relative Strength Index
0<RSI<100
RSI>70 => overbought (=> sell)
RSI<30 => oversold (=> buy)

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Similar to RSI
Used to forsee reversal
20<STO<80

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Rate of Change (ROC)
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Commodity Channel Index (CCI)
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StochRSI
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TIX
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Ulitmate Oscillator (ULT)
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Aroon
[…]

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Most reliable trend-reversal pattern
◦ Detectable by volume peaks
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Rises to a peak and subsequently declines.
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The price rises above the former peak and again declines.
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Price rises again, but not to the second peak, and declines once more.

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Ascending
Descending
Use a price range

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The more volume the better
◦ Lower transaction costs (bid-ask spread)

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Investopedia.com
◦ To lookup easy definitions
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Bloomberg.com
◦ Click on “Index Chart” -> “Overlay” / “Indicators”
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Stockcharts.com
◦ Perform technical analysis easily
◦ Explanation for each indicator
◦ All indicators available
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Chartgame.com
◦ Test your knowledge and predictions!

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Always combine many indicators at the same time
◦ Avoid multicollinearity
◦ E.g. Candle sticks + Volatility + Volume + SMA +
MACD + RSI
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Focus on liquid stocks
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Always use it as a complementary tool to fundamental analysis
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Now, impress your investment group!

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Next B&R Beurs events:
◦ 13/12 at 9pm: Social drink @ Sus&Co
◦ 15/12: Deadline ABN Amro Turbo Assignment
◦ 10/01: New Year’s drink (Champagne!!)