INTRODUCTION TO TECHNICAL ANALYSIS APRIL 15 th ,2014 BY: Jake Walker
Nov 16, 2014
INTRODUCTION TO TECHNICAL ANALYSIS
APRIL 15th ,2014BY: Jake Walker
Summary
• Why Should I Care?• What Is Technical Analysis?• Technical V.S. Fundamental Analysis• Market Cycle Model (Types of Trends)• Support/Resistance• Order Types (Market, Limit, Stop)• Example• Resources
Why Should I Care?• Supplements Fundamental
Analysis• Offers Different Perspective• Many Traders use Technical
Analysis in the Short Term• It Can Make Money!
What is Technical Analysis?• A method of evaluating securities
by analyzing statistics generated by market activity, such as past prices and volume.
• Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
• http://www.investopedia.com/video/play/fundamental-versus-technical-analysis/
Technical V.S. Fundamental Analysis
Technical V.S. Fundamental Analysis
Market Cycle Model
Trend (Short Term) Example
Support/Resistance
• Support- buying (actual or potential) sufficient in volume to halt a downtrend in prices for an appreciable period
• Resistance- selling (actual or potential) sufficient in volume to satisfy all bids and hence stop prices from going higher for a time
Support/Resistance• A previous high or low is a
potential resistance/support zone
• Support reverses its role to resistance on the way up
• Resistance reverses its role to support on the way down
• Significant at round numbers
Market Orders
• Use a market order to guarantee a fill.
• A market order is the fastest and most reliable way to get in out of a trade.
• A market order is appropriate if getting filled is more important than getting a certain price.
Stop Orders• Use a stop order to
trigger a market or limit order once a specified price has been reached.
• A stop order is appropriate when it is important to confirm the direction of the market before entering a trade.
Limit Orders
• Use a limit order to guarantee a price.
• A limit order allows precise order entry.
• A limit order is appropriate if getting a specific price is more important than getting filled.
Support/Resistance Example
May Comex Silver (Monday April 14th)
May Comex Silver (Tuesday April 15th)
What Should Have Been Done?
• What is the trend?– Primary, Intermediate,
Short-Term?• Where is Support?• Where is Resistance? • What Type of Order
Should be Executed?
Additional Resources
• Barchart.com• Technical Analysis Explained (Pring 5th Edition)
References
• http://samuraitradingacademy.com/fundamental-analysis-vs-technical-analysis/
• Investopedia.com• Technical Analysis Explained (Pring 5th Edition)