Technical Analysis. Prepared by: Mr. SOUR Ramo

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1 Technical Analysis Prepared by: Mr. SOUR Ramo 1

2 Contain 1. Introduction 2. Candle Chart 3. Trend Analysis 4. Pattern Analysis 2

3 1.Introduce 1.1 What is Technical Analysis? Technical analysis is a tool to estimate a proper security value by focusing on the historical price and trading volume. Technical analysis is often called Chart analysis. The underlying assumption is 1) the historical trend or pattern will repeat in the future, 2) the share price and trading volume graphs show the information on the supply and demand for the stocks. 3

4 1.Introduce 1.2 Technical Analysis strength and weakness Strength Weakness Share price is affected by fundamental as well as psychological factors, and the technical analysis makes up the factors that fundamental analysis does not cover. Technical analysis provides the information on the entry/exit points. When the stock price diverges from the historical trend, the technical analysis does not work. Technical analysis misses the cause of the stock price movement. 4

5 2.Candle Chart 2.1 Introduction 5

6 2.Candle Chart 2.2 Example 6

7 2.Candle Chart 2.3 Bar Chart Comparing with candle chart, bar chart does not have body. Instead, the opening (closing) price is shown as a tic to the left (right) of the vertical bar. 7

8 2.Candle Chart 2.3 Line Chart Line chart produces a solid line by connecting the successive closing prices. This does not show opening, high, and low prices. 8

9 2.Candle Chart 2.4 Application Long Body: Strong up (down) trend, but Continue? Long Upper Shadow: Change to Downturn Long Lower Shadow: Change to Upturn 9

10 2.Candle Chart 2. 5 Simple Patterns ( here Green is bullish and red is bearish) Big Red Candle Big Red Candle Doji Dragonfly Gravestone 10

11 2.Candle Chart 2. 6 Complex Patterns ( here Green is bullish and red is bearish) Bullish Harami Bearish Haramiconsists Bullish Engulfing Bearish Engulfing 11

12 2.Candle Chart 2. 6 Complex Patterns ( here Green is bullish and red is bearish) Morning Star Evening Star Three Green bodies Three Red bodies 12

13 2.Candle Chart 2. 7 Some examples of the patterns above mentioned. Engulfing Pattern 13

14 2.Candle Chart 2. 7 Some examples of the patterns above mentioned. Morning (Evening) Star Pattern 14

15 3.Trend Analysis 3.1 Introduction The underlying assumption is that the historical trend will continue in the future. Like other technical analysis, the success in the past does not always guarantee the success in the future. 15

16 3.Trend Analysis 3.2 Support and Resistance Support 16

17 3.Trend Analysis 3.2 Support and Resistance Resistance 17

18 3.Trend Analysis 3.2 Support and Resistance 18

19 3.Trend Analysis 3.3 Exercise What do you think? 19

20 3.Trend Analysis 3.3 Exercise(1) What do you think? 20

21 3.Trend Analysis 3.3 Exercise(2) What do you think? 21

22 3.Trend Analysis 3.3 Exercise(3) What do you think? 22

23 3.Trend Analysis 3.3 Exercise(4) What do you think? 23

24 3.Trend Analysis 3.3 Exercise(5) What do you think? 24

25 3.Trend Analysis 3.3 Exercise(6) What do you think? 25

26 3.Trend Analysis 3.3 Exercise(7) What do you think? 26

27 3.Trend Analysis 3.4 Moving Average 27

28 3.Trend Analysis 3.5 Exercises What do you think? 28

29 3.Trend Analysis 3.5 Exercises(1) What do you think? D F A B C E G 29

30 3.Trend Analysis 3.5 Exercises(2) What do you think? 30

31 31 3.Trend Analysis 3.5 Exercises(3) What do you think?

32 32 3.Trend Analysis 3.5 Exercises(4) What do you think?

33 33 3.Trend Analysis 3.5 Exercises(5) What do you think?

34 34 3.Trend Analysis 3.5 Exercises(6) What do you think?

35 4.Pattern Analysis 4.1 Introduction Patterns are classified into two groups 1. Direction change: 1.1Three bodies 1.2 Head and shoulder (tops/bottoms) formation 1.3 Rounding ( top/bottom) formation 1.4 Double top (double bottom) 2. Continuation: 2.1 Flag formation 2.2 Rectangle formation Others: triangle formation, wedge formation 35

36 4.Pattern Analysis 4.2 Three Bodies Three White Soldiers Three Black Crows 36

37 4.Pattern Analysis 4.3 Head and Shoulder Formation Head and shoulder tops formation 37

38 4.Pattern Analysis 4.3 Head and Shoulder Formation Head and shoulder bottoms formation 38

39 4.Pattern Analysis 4.4 Rounding Formation Rounding Top Formation 39

40 4.Pattern Analysis 4.4 Rounding Formation Rounding Bottom Formation 40

41 4.Pattern Analysis 4.5 Double Formation Double Top Formation 41

42 4.Pattern Analysis 4.5 Double Formation Double Bottom Formation 42

43 4.Pattern Analysis 4.6 Flag Formation Bull flag formation 43

44 4.Pattern Analysis 4.6 Flag Formation Bear flag formation 44

45 4.Pattern Analysis 4.7 Rectangle Formation Rectangle formation usually takes 1~3 months to be formed. After the share price rally 45

46 4.Pattern Analysis 4.7 Rectangle Formation Rectangle formation usually takes 1~3 months to be formed. After the share price down 46

47 4.Pattern Analysis 4.8 Triangle Formation Symmetrical triangle formation 47

48 4.Pattern Analysis 4.8 Triangle Formation Ascending triangle formation 48

49 4.Pattern Analysis 4.8 Triangle Formation Descending triangle formation 49

50 4.Pattern Analysis 4.9 Wedge Formation Rising Wedge formation 50

51 4.Pattern Analysis 4.9 Wedge Formation Falling Wedge formation 51

52 4.Pattern Analysis 4.10 Exercises What do you see? 52

53 4.Pattern Analysis 4.10 Exercises What do you see? 53

54 4.Pattern Analysis 4.10 Exercises What do you see? 54

55 4.Pattern Analysis 4.10 Exercises What do you see? 55

56 4.Pattern Analysis 4.10 Exercises What do you see? 56

57 4.Pattern Analysis 4.10 Exercises What do you see? 57

58 Thank You!!! 58

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