Technical Analysis

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Fundamental analysis and Technical analysis

Fundamental analysis
An approach by which the intrinsic
value of a stock is derived from the
firms or economic fundamentals

Technical analysis
Technical analysis is a security
analysis methodology for forecasting
the direction of prices through the
study of past prices and volume.

Economic environment forecast

Top-down
approach

Promising industries forecast

Choose promising securities

Bottom-up
approach
Investigative analysis of individual firms

Premises of technical analysis

Charts factor in all market elements
Price movements form trends
History repeats itself

Candlestick chart
Create a candlestick chart with the daily opening, high, low, and closing prices.
Opening

High

Close of
morning
trading

Start of
afternoon
trading

Closing

Change in
share price

High
Close

Open

Low

Low
12:00 13:30

9:30

When the close is higher

than the open (positive line)

Close
Open

Change in
share price

High

Candlestick
chart

15:30

When the close is lower

than the open (negative line)

When the open and low, and

close and high are the same

High

close

Open

Close = high

Open

Close

Open = low

Low

Low

Technical analysis
(Peso)
9,000

Moving averages
See the leveling of daily movement and trends in share prices.
Can calculate the average cost for market participants.

8,000

Dead cross

Golden cross
Compares short-term and long-term moving average lines and refers
to when the short-term passes up through the long-term.

7,000

Dead cross
Conversely, when the short-term passes down through the long-term.

6,000

Golden cross

Dead cross

5,000

13-week average

4,000

26-week average
3,000

Golden cross

Golden cross
2,000
1

11

11

11

Example of Company A (weekly chart)

11

(Months)

Investment information
Investing in stocks is investing in information.

(1) Analysts

Mainly conduct fundamental analysis of firms, project the results of

individual firms, and offer investment decisions (ratings).

Analyze what condition the economy is currently in and where it is

(2) Economists

heading in the future.

Develop and recommend investment strategies taking into

(3) Strategists

consideration the investment environment around what markets

are good and what markets to avoid.