Basic TA Slides

StockBangladesh
L i m i t e d
Center For Financial Analysis
www.stockbangladesh.com
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 01
Types of Trading Analysis

Fundamental Analysis
Technical Analysis
Fundamental analysis
Fundamental analysis is a way of looking at the market
through economic, social and political forces that
affect supply and demand.
Fundamental analysis involves analyzing the
characteristics of a company in order to estimate its
value.
Technical Analysis
Technicians are only interested in the price movements in
the market.
Technical analysis just studies supply and demand in a
market in an attempt to determine what direction, or trend,
will continue in the future.
Principles of Technical Analysis.

1. Price Discounts Everything
2. Price Moves In Trends
3. Price Movements Are Historically Repetitive
Bull market
A bull market tends to be associated with
increasing investor confidence, motivating
investors to buy in anticipation of future price
increases and future capital gains.
Bear market
A bear market is a steady drop in the stock
market over a period of time.
TA=Charts
Types of Charts
1.
2.
3.
4.
5.
Line Chart
Bar Chart
Volume Bar Chart
Equi-Volume Chart
Candlestick Chart
Line Chart
Bar Chart
Bar Chart
Zero-Based Volume Bar Chart
Relative Adjusted Volume Bar Chart
Equi-Volume Chart
Equi-Volume Chart
Candle Volume Chart
Candle Volume Chart
Point and Figure Charts
Japanese Candlestick
Candlestick Patterns
Bullish Patterns
Bearish Patterns
Reversal Pattern
Bullish Patterns
1.
2.
3.
4.
5.
6.
Long white /green line

Hammer
Piercing line
Bullish engulfing lines
Morning star
Bullish doji star
Long white/Green line
Hammer
Piercing line
Morning star
Bullish doji star
Bearish Patterns
1.
2.
3.
4.
5.
6.
7.
Long black /red line

Hanging Man
Dark Cloud Cover
Bearish Engulfing Lines
Evening Star
Doji Star
Shooting Star
Long black/red line
Hanging Man
Dark Cloud Cover
Evening Star
Doji Star
Shooting Star
Reversal Pattern
1.
2.
3.
4.
5.
Long-Legged Doji
Dragon-Fly Doji
Gravestone Doji
Star
Doji Star
Long-Legged Doji
Dragon-Fly Doji
Gravestone Doji
Star
Doji Star
Neutral Patterns
1.
2.
3.
4.
Spinning Tops
Doji
Harami
Harami Cross
Spinning Tops
Doji
Harami
Harami Cross
Reversal Pattern
Reversal Pattern
Relation between Price and Volume
Why Volume is Important ?

Volume Precedes Price .
Thank you
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 02
Support & Resistance

Support defines that level where buyers
are strong enough to keep price from
falling further.
Resistance defines that level where
sellers are too strong to allow price to
rise further

Support and resistance are created because
price has memory.
When price pushes above resistance, it
becomes a new support level.
Support and resistance come in all varieties and
strengths.
Support and resistance exist in all time frames
Role Reversal
Trends
Bullish
Bearish
Neutral
Trend Direction
Trend
Bullish Trend lines
Bearish Trend
Trend Timeline
Hourly
Daily
Weekly
Monthly
Yearly
Technical Analysis Tools for Trends

Trendline
Moving Avg.
Drawing Trend line

Connect Highs to Highs, Lows to Lows
Draw through congestion areas
Ignore tails or spikes
Drawing Trend lines
Strength of a trend
Trends are stronger..
The longer the trendline
The more contacts between prices and the
trendline
When volume expands in the direction of the
trend
Strength of a trend
Strength of a trend
Trading Rule
Protective Stop
1. Once you are long the market place a stop
loss order just below the trend line
2. Move your stop up as trend progresses
Protective Stop
Break In Trend line

Steep trendlines (over 45 degrees) precede
sharp breaks
A pullback to the trendline after a break is
often a good shorting opportunity
Break in Trend
Trade on Trend Breaks
Channel
A line running parallel to a trend line
Drawn through tops of rallies and bottoms of
declines
Channel
Channel
Marks maximum power of bulls & bears
The wider the channel the stronger the trend
Types of Channel
Trading Rule for Channel

Go long in lower quarter of channel
Take profits in upper quarter
Trading Rules
Moving Avg.
Simple
Weighted
Exponential
SMA
Linear or Weighted Moving Avg.

WMA/LMA
SMA gives equal weight to each price point

WMA gives more emphasis to the latest data
EMA
An exponential moving average multiplies a

percentage of the most recent price by the
previous period's average price
EMA
Moving average trend reversals are formed

in two main ways:
when the price moves through a moving average
and
when it moves through moving average crossovers.
moving averages are used to identify

support and resistance levels
When To Use
Works well in trending market
Loses money in whipsaw market
Whipsaw Market
Thank you
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 03, 04
Bollinger Bands
Bollinger bands are used to measure a markets
volatility .
When a stock is making major price movements
, Bollinger bands will be farther away (expand)
from the stocks price chart.
When a stock is moving steadily with minor
price movements, the Bollinger bands will be
closer to (contract upon) the stocks price chart
Bollinger Bands
A simple moving average in the middle.

An upper band (SMA plus 2 standard
deviations)
A lower band (SMA minus 2 standard
deviations)
Simple moving average in the middle
Upper band
Lower band
Bollinger Bands
Bollinger Bounce
Bollinger Bounce
Bollinger Bounce
Bollinger Squeeze
Bollinger Squeeze
Bollinger Squeeze
Bollinger Squeeze
Bollinger Squeeze
Double Bottom Buy
Use
Bollinger Bands can help generate buy and sell
signals, they are not designed to determine
the future direction of a security
Use
To identify periods of high and low volatility.
To identify periods when prices are at
extreme, and possibly unsustainable, levels.
Moving Average Convergence Divergence (MACD)
Moving Average
Convergence
Divergence
MACD
MACD =
shorter term moving average
longer term moving average
MACD
Faster moving average

Slower moving average
Histogram
MACD (12, 26, 9)

The first number (commonly 12)
represents the number of days used to
calculate the faster moving average or
EMA(12).
MACD (12, 26, 9)

The second number (commonly 26)
calculate the slower moving average or
EMA(26).
MACD (12, 26, 9)

The third number (commonly 9)
calculate the trigger line using EMA(9).
EMA(12) - EMA(26)
A green line is calculated with the EMA using
the first number of the MACD (commonly 12)
minus the EMA using the second number
(commonly 26).
EMA(12) - EMA(26).
EMA(12) - EMA(26)
EMA(9)
The red line (the MACD Signal Line or Trigger
Line) is calculated using the EMA using the
third number (commonly 9).
EMA(9)
EMA(9)
Histogram
Difference between the fast and slow
moving average.
Histogram
Divergence
Convergence
MACD Crossover
MACD Centerline Crossover
MACD Crossover
Stochastics
Stochastics plots the current close in relation to
the price range over the length set for this
indicator and gives this a percentage value.
Stochastics is an oscillator that measures
overbought and oversold conditions in the
market.
Stochastics are scaled from 0 to 100.
Types of Stochastic Oscillators

Fast
Slow
Full
Slow Stochastics
%K(slow)
%D(slow)
Slow Stochastics
Use
Readings below 20 are considered
oversold
Readings above 80 are considered
overbought
Use
Use
Buy and sell signals can also be given

when %K crosses above or below %D
Use
Use
Use
Requires a double dip below 80 and the
second dip results in the sell signal .
For a buy signal, wait for a positive
divergence to develop after the indicator
moves below 20
Use
Use
Relative Strength Index (RSI)
Identifies overbought and oversold

conditions in the market.
Scaled from 0 to 100.
Readings below 30 indicate oversold
Readings over 70 indicate overbought.
Calculation
Overbought/Oversold
Centerline Crossover
Use
Ultimate Oscillator
The Ultimate Oscillator combines a stock's
price action during three different time frames
into one bounded oscillator.
Values range from 0 to 100 with 50 as the
center line.
Oversold territory exists below 30 and
overbought territory extends from 70 to 100.
Ultimate Oscillator
Three time frames can be specified by the
user.
Typically values of 7-periods, 14-periods and
28-periods are used.
Calculation
True Low (TL)
TL = the lower of today's low or yesterday's close.
Buying Pressure (BP)

BP = Today's close - Today's TL.
True Range (TR)
Calculation
Calculate BPSum1, BPSum2, and BPSum3 by
adding up all of the BPs for each of the three
specified time frames.
Calculate TRSum1, TRSum2, and TRSum3 by
adding up all of the TR's for each of the three
specified time frames.
Calculation
The Raw Ultimate Oscillator (RawUO) is equal to:
4 * (BPSum1 / TRSum1) + 2 * (BPSum2 / TRSum2) +
(BPSum3 / TRSum3)
The Final Ultimate Oscillator is equal to:
( RawUO / (4 + 2 + 1) ) * 100
Signal
A bearish divergence appeared well before the
top and persisted until the stock reversed.
Extreme values are rare for the Ultimate
Oscillator.
Crosses above and below the center line (50)
are relatively common.
Money Flow Index (MFI)

Money flow in technical analysis
is price multiplied by volume technical
analysis.
Indicates the rate at which money is invested
into a security and then withdrawn from it.
Calculation
The typical price for each day is the average of
high, low and close,
Calculation
Money flow is the product of typical price and
the volume on that day .
Calculation
Positive money flow is the total for those days
where the typical price is higher than the
previous day's typical price .
Negative money flow where below .
Calculation
money flow index ranging from 0 to 100
Calculation
Use
Readings above 80 on the scale are considered
overbought (bearish).
Readings below 20 on the scale are considered
oversold (bullish).
A divergence between price and MFI often
signals an imminent reversal of the trend.
Divergence
Less Overbought & Oversold Signal
On Balance Volume (OBV)

This was one of the first and most popular
indicators to measure positive and negative
volume flow .
OBV is based on a cumulative total volume.
Calculation
OBV is calculated by adding the day's volume
to a running cumulative total when the
security's price closes up, and subtracts the
volume when it closes down.
Calculation
If today the closing price is greater than
yesterday's closing price, then the new :
OBV = Yesterday's OBV + Today's Volume
Calculation
If today the closing price is less than
yesterday's closing price, then the new:
OBV = Yesterday's OBV - Today's Volume
Calculation
If today the closing price is equal to
yesterday's closing price, then the new:
OBV = Yesterday's OBV
Calculation
Divergence
If the price is likewise rising, then the OBV can
serve as a confirmation of the price uptrend.
In such a case, the rising price is the result of
an increased demand for the security, which is
a requirement of a healthy uptrend.
Divergence
If prices are moving higher while the volume
line is dropping, a negative divergence is
present. This divergence suggests that the
uptrend is not healthy and should be taken as
a warning signal that the trend will not persist.
Example
Example
Example
Accumulation/Distribution Line
Assess the cumulative flow of money into and
out of a security.
Focus on the price action for a given period
(day, week, month).
Accumulation/Distribution Line Vs OBV

OBV uses the change in closing price from one
period to the next to value the volume as
positive or negative.
Focused on the price action for a given period
(day, week, month)
Close Location Value

Looks at the location of the close and compares it to the range
for a given period (one day, week or month). The CLV will
have a value from +1 to -1:
A value of zero would mean that the price closed

halfway between the high and low of the range.
A value of +1 means the close is equal to the high of
the range.
A value of -1 means the close is equal to the low of the
range.
Accumulation/Distribution Line
The CLV is then multiplied by the
corresponding period's volume, and the
total will form the A/D line
Signals
Signals
Bullish Signals
Bearish Signals
StochRSI
StochRSI is an oscillator that measures the
level of RSI relative to its range, over a set
period of time.
The indicator uses RSI as the foundation and
applies to it the formula behind Stochastics.
The result is an oscillator that fluctuates
between 0 and 1.
Calculation
Calculation
Calculation
Signals
Overbought and Oversold Crossovers
Centerline Crossovers
Positive and Negative Divergences
Example
Williams Percent
Williams Percent Range Technical Indicator
(%R) is a dynamic technical indicator, which
determines whether the market is
overbought/oversold. Williams %R is very
similar to the Stochastic Oscillator.
Calculation
%R = (HIGH(i-n)-CLOSE)/(HIGH(i-n)-LOW(in))*100
Where:
CLOSE is todays closing price;
HIGH(i-n) is the highest high over a number (n) of previous
periods;
LOW(i-n) is the lowest low over a number (n) of previous
periods.
Signal
Indicator values ranging between 80 and
100% indicate that the market is oversold.
Indicator values ranging between 0 and 20%
indicate that the market is overbought.
Example
Thank you
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 05
Leading v Lagging Indicators

A leading indicator gives a buy signal before the new
trend or reversal occurs.
A lagging indicator gives a signal after the trend has
started and basically informs you about the onset of
a trend
2 categories of Indicators
Oscillators are leading indicators.
Trend indicators are lagging indicators.
Oscilltors
RSI
Stochastics
Ultimate Oscillator
Etc..
Oscillator.
They signal trend change.
Usually when an oscillator remains in the overbought or
oversold levels for a long period of time, that means there is
a strong trend occurring
Oscillator.
Conflicting indication
Lagging Indicators
Trend Following indicators
MACD
SMA
EMA
etc.....
Momentum
Lagging and leading indicator
Classical Charting
Trend Lines
Support/Resistance
Channel
Continuation Patterns
Reversal Patterns
Gaps & Spikes
Moving Averages
Chart Patterns
Head & Shoulder
Cup & Handle
Double Tops & Bottoms
Triangles
Flag & Pennant
Wedge
Rounding Bottom
To profit from ascending & descending triangle
Watch For:
An ascending or descending pattern forming over three to four weeks.
SET Target Price:
Entry price plus the patterns height for an upward breakout.
Entry price minus the patterns height for a downward breakout.
To Profit from Symmetrical Triangles

Watch:
Sideways movement, a period of rest, before the breakout.
Price of the asset traveling between two converging trendlines.
Breakout of the way to the apex.
Target Price:
Entry price plus the patterns height for an upward breakout.
Entry price minus the patterns height for a downward breakout.
Head & Shoulder
To Profit.
Sell as soon as the price moves below the
neckline after the descent from the right shoulder
Buy as soon as the price moves above the
neckline after the ascent from the right shoulder
To Profit from the Double Bottom Pattern
Purchase When:
The price exceeds the middle-peak price.
Watch For:
A price increase of 10% to 20% from the first trough to the middle peak.
Two equal lows, not to differ by more than 3% or 4%.
To Profit from the Double Top
Sell when - The price drops below the middle-trough price

Watch:
A price decrease of 10% to 20% from the first peak to the middle
trough.
Two equal highs, not to differ by more than 3% or 4%
Profit from 3 bottom
Purchase When:
The price exceeds the resistance established by the prior peaks.
Watch For:
A series of three identical troughs at the end of a prolonged downtrend.
Target Price:
Entry price plus the patterns height
Profit from 3 Tops
Purchase When:
The price falls below the support that formed from the prior troughs.
Watch For:
A series of three peaks at relatively the same level.
Target Price:
Entry price minus the patterns height .
Fibonacci Studies
Fibonacci Numbers
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 610, etc.
4 popular Fibonacci studies:

Fibonacci Arcs
Fibonacci Fans
Fibonacci Retracements
Fibonacci Time zone
Interpretation
Anticipating changes in trends as prices
near the lines created by the Fibonacci
studies
Fibonacci Arcs
Interpretation of Fibonacci Arc
anticipating support and resistance as

Prices approach the arcs
Fibonacci Fan Lines

displayed by drawing a trend line between two extreme points
Calculation
Price will retrace a large portion of an original move
and
Find support or resistance at the key Fibonacci levels
before it continues in the original direction
Fibonacci Retracement - levels
Typical Retracements
GAPS
Gaps
Gaps
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 06
Pivot points
Pivot point (P) = (H + L + C) / 3

First resistance level (R1) = (2 * P) - L
First support level (S1) = (2 * P) - H
Second resistance level (R2) = P + (R1 - S1)
Second support level (S2) = P - (R1 - S1)
Pivot points
Andrews Pitchfork
uses 3 parallel trendlines to identify possible
levels of support and resistance.
The trendlines are created by placing three
points at the end of identified trends. e.g.
usually placing the points in three consecutive
peaks or troughs.
Once the points have been placed, a straight
line is drawn from the first point that
intersects the midpoint of the other two.
Andrews Pitchfork
Also known as median line studies
Pitchfork
Pitchfork
Pitchfork
Elliott Wave
Five wave pattern (dominant trend)

Impulse Pattern
Dominant trend can be in either direction
Three types of dominant trend
Elliott Wave
counter-trend waves will usually retrace against
the trending waves by 38.2, 50 and 61.8 percent
Three wave pattern (corrective trend)

Corrective Pattern
Wave 1
Rarely obvious at its inception
Fundamental news is almost universally negative
Sentiment surveys are decidedly bearish
Volume might increase a bit as prices rise, but not by enough to
alert many technical analysts
Wave 2
Wave two corrects wave one

Bearish sentiment quickly builds
Volume isn't lower during wave 2 than during wave 1
Can never extend beyond the starting point of wave one

Prices usually do not retrace more than 61.8% of the wave 1 gains
Wave 3
usually the largest and most powerful wave in a trend
fundamental analysts start to raise earnings estimates

prices rise quickly, corrections are short-lived and shallow
as wave3 starts, the news is probably still bearish, and most market players remain
negative
by wave 3's midpoint, the crowd will often join the new bullish trend
wave three often extends wave one by a ratio of 1.618:1
Wave 4
typically clearly corrective
prices may meander sideways for an extended period

wave 4 typically retraces less than 38.2% of wave 3
volume is well below than that of wave 3
a good place to buy a pull back
the most distinguishing feature of fourth waves is that they often prove very difficult
to count
Wave 5
the final leg in the direction of the dominant trend

everyone is bullish
this is when many average investors finally buy in
volume is lower than that of wave 3
many momentum indicators start to show divergences
Alteration Rule
If Wave 2 is a simple correction,
expect Wave 4 to be a complex correction

If Wave 2 is a complex correction,
expect Wave 4 to be a simple correction
Wave A
typically harder to identify

the fundamental news is usually still positive
increased volume
rising volatility
Wave B
Prices reverse higher, which many see as a resumption of the now longgone bull market
the peak may be seen as the right shoulder of a head and shoulders reversal
pattern
volume during wave B < volume during wave A
fundamentals are probably no longer improving
Wave C
typically at least as large as wave A

often extends to 1.618 times wave A or beyond
volume picks up
Fibonacci Expansion
Fibonacci Rally
Fibonacci 2nd High/Low
Fib Time Zone
Market Psychology
Contrarian View of Trading
Loss Aversion
Loss v gain
Market Psychology
Contrarian View of Trading
Negative Vol Index
Mutual Fund Cash Position
Brokerage firm Credit Balance
MFR = Mu Fund Cash / Total Asset
MFR < 5% => Market Bullish, firms investing cash
MFR>13% => Mkt Bearish, firms holding cash
Loss Aversion
Psychologically losses are 2times more
powerful than similar amount of gain
Sentiment Indicator
Put-Call Ratio
Commercial Activities
Media
Mutual Fund Cash position
Debit Balance of Brokerage Houses
Trading System
Basic Components
1. Market and timeframe
2. Entry: trigger that initiates your buy or sell signal.
3. Stop Loss: level at which you will cut your losses in the event
of the trade going against you.
4. Profit Target: level at which you will exit the trade to take
profits.
Trading System
Basic Components
Market:
ForEx Market
Stock Market- DSE/CSE, Insurance/Bank,
Bond Market
Options Market
Futures Market
Timeframe: Daily, Weekly, Monthly, Quarterly, Annual
Trading System
Basic Components
Entry i.e. Trigger:

Trigger from Indicators
Trigger from Chart Analysis
Trigger from Candlestick
Trading System
Basic Components
Stop Loss:
= Trigger Price +/- n% of Trigger Price
If trigger is buy@100 Tk.
Stop Loss = 100 5 = 95 Tk.
If trigger is sell@100 Tk.
Stop Loss = 100 + 5 = 105 Tk.
Trading System
Basic Components
Profit Target:
= Trigger Price +/- n% of Trigger Price
If trigger is buy@100 Tk.
Profit Target = 100 + 25 = 125 Tk.
If trigger is sell@100 Tk.
Profit Target = 100 - 25 = 105 Tk.
Technical Tasks
Analyzing following 4:
1. Price
2. Volume
3. Time
4. Sentiment
Technical Toolbox
Areas of Technical Analysis:
4 areas:
Price Analysis
Vol. Analysis
Time/period Analysis
Sentiment Analysis
Price Analysis
Trend Identification
Trendlines , channels
Smoothing, Moving averages
Patterns
Triangles , flags , gaps
Candlesticks
Momentum
Single line oscillators (RSI, Momentum)
Multiple line oscillators (Stochastics)
Directional Movement, Parabolics
Bollinger Bands , Percent Bands
Relative levels
Benchmarking
Log scaling
Spreads and Ratios
Volume Analysis
Analysis of
Liquidity
Participation
Breadth
Volume Analysis
Participation: OBV, Cumulative Volume
Liquidity: No. Shares Issued, Turnover
Breadth: Sector Analysis, Adv.-Decline
Time Analysis
Cycles
Timeframe
Extent
Time Analysis
Cycles
Seasonal, Economic, Political
Timeframe
Short, Medium, Long
Cyclical vs. Secular
Extent
Length of trend
Trend Correction
Sentiment Analysis
Speculation
Consensus
Anecdotal
Sentiment Analysis
Speculation
IPO
Margin Level
Mutual Fund Cash Level
Apparent effects of good & bad news
Consensus
Anecdotal
Sentiment Analysis
Speculation
Consensus
% of bullish newsletter, % of bearish
Apparent Public Opinion
Anecdotal
Superbowl, Magazine Covers
Combination Tools
Indicators that covers more than one area,
such as:
time & price, price & volume, price &
sentiment etc.
Combination Tools
Time & Price:
Market Profile (shows time spent at each price during the day,
forms a value area on the chart)
MESA (maximum entropy spectral analysis, finds cycles in the
data and projects them forward)
Combination Tools
Price & Volume:
Money Flow
price times volume summed per trade
used as a supply/demand indicator

Equivolume bars
have width in proportion to volume
used to allocate significance to price bars
Combination Tools
Price & Sentiment:
Elliott Wave
wave structure follows public emotions, can identify
ebb and flow of trading activity
Developing a Trading system

Be Objective
Why am I in this trade?
Why do Iike/dislike my position?
How to remain objective?

Know what you are going to do before you do
it.
Write down your trading rules/system.
Ignore absolute return, concentrate on
Reward/Risk.
Know your risk tolerance.
Risk management
Whats Risk?
Its DEFINABLE PROBABILITY OF FAILURE
Risk management
Risk Tolerance 90% trader dont know it
Risk to Reward Ratio
Risk mgmt
Risk tolerance
Depends on your capital
Risk mgmt
Proper Stop Loss
Dont use popular %
Risk Mgmt
Risk-Reward Ratio
Most famous measure is Sharpe Ratio.
Sharpe Ratio
= (Stocks Return Risk Free Rate)/Std Div of Stocks Return
Risk Mgmt
Absolute return shouldnt be used while
ranking stocks
Stocks should be ranked in terms of riskreward ratio
Money Management
Select a risk-reward ratio for yourself
Determine the risk & reward of your decision
to buy, sell or hold a stock
Compare the previous two risk-reward to
make a final decision
Money Management
Select a time period
Select desired number of technical indicators
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 07
Amibroker
How to install amibroker ?
Setting up database for amibroker.
Importing data into amibroker .
How to install amibroker
Setting up database
Setting up database
Setting up database
Setting the wizard
Setting the wizard
Setting the wizard
Setting the wizard
Setting the wizard
Setting the wizard
Setting the wizard
Setting the wizard
Updating Data Daily

Go To
http://www.stockbangladesh.com/download_
stock_data.php (Download section) daily after
4 PM.
Click on Download last trading day data all
together in a file. It will open
http://www.stockbangladesh.com/download_
last_day_data.php page.
Using Amibroker
Using Amibroker
Using Amibroker
Using Amibroker
Working with chart sheets and Templates
Using Amibroker
Creating your own indicators

There are two ways to create your own indicators:
1) Using drag-and-drop interface.
2) By writing own formula.
How to insert a new indicator?
How to remove the indicator plot from

the pane.
Writing your own formula
Bar Replay
Bar Replay
Fibonacci Trading
1, 2, 3, 5, 8, 13, 21, 34, 55

1+2=3
2+3=5
3+5=8
5+8=13
Fibonacci Retracements Pattern

Fibonacci retracements often occur at three
levels 38.2%, 50%, and 61.8%.
Fibonacci Retracements Pattern
Stock Bangladesh portfolio
Thank you
StockBangladesh
L i m i t e d
Basic Course on
Technical Analysis
Lecture 08
Technical Analysis
Technicians are only interested in the price movements in the
market.
Technical analysis just studies supply and demand in a market in
an attempt to determine what direction, or trend, will continue in
the future.
Principles of Technical Analysis.

1. Price Discounts Everything
2. Price Moves In Trends
3. Price Movements Are Historically Repetitive
Tools of Technical Analysis

- Volume
Japanese Candlesticks
Indicators
Bands (Risk Measurement)
Chart Pattern
Volume
Volume
Volume has two major premises:
When prices rise or fall, an increase in
volume is strong confirmation that the rise or
fall in price is real and that the price movement
had strength.
When prices rise or fall and there is a
decrease in volume, then this is interpreted as
being a weak price move, because the price
move had very little strength and interest from
traders.
Volume Spikes
Candlestick Patterns
Bullish Patterns
Bearish Patterns
Reversal Pattern
Bullish Patterns
1.
2.
3.
4.
5.
6.
Long white (empty) line

Hammer
Piercing line
Morning star
Bullish doji star
Long white (empty) line
Hammer
Piercing line
Morning star
Bullish doji star
Bearish Patterns
1.
2.
3.
4.
5.
6.
7.
Long black (filled-in) line

Hanging Man
Dark Cloud Cover
Evening Star
Doji Star
Shooting Star
Long black (filled-in) line
Hanging Man
Dark Cloud Cover
Evening Star
Doji Star
Shooting Star
Reversal Pattern
1.
2.
3.
4.
5.
Long-Legged Doji
Dragon-Fly Doji
Gravestone Doji
Star
Doji Star
Long-Legged Doji
Dragon-Fly Doji
Gravestone Doji
Star
Doji Star
Neutral Patterns
1.
2.
3.
4.
Spinning Tops
Doji
Harami
Harami Cross
Spinning Tops
Harami
Harami Cross
Reversal Pattern
Reversal Pattern
Indicators
A leading indicator gives a buy signal before the new

trend or reversal occurs.
A lagging indicator gives a signal after the trend has

started and basically informs you about the onset
of a trend
Oscillators are leading indicators.

Trend indicators are lagging indicators.
RSI
Money Flow Index
Williams % R
Accumulation Distribution Line
Trend Following indicators

SMA
EMA
MACD
RSI
The Relative Strength Index (RSI) is
an oscillator that measures current
price strength in relation to
previous prices
RSI
- Generate buy and sell signals
- Show overbought and oversold
conditions
- Confirm price movement
RSI Buy Signal
Buy when the RSI crosses above the

oversold line (30).
RSI Sell Signal
Sell when the RSI crosses below the

overbought line (70).
Money Flow Index (MFI)

The Money Flow Index (MFI) uses price
and volume and the concept of
accumulation Distribution to create an
overbought and oversold indicator that
is helpful in confirming trends in
prices and warning of potential
reversals in prices.
Interpreting the MFl
Below 20 is considered oversold;

look for buying opportunities.
Above 80 is in overbought
territory; look for sell signals.
Money Flow Index Divergences

If price is rising, and the volume on up
days is greater than the volume on down
days, then this is confirming of the price
rise.
Likewise, if price is falling and the
volume on down days is greater than the
volume on up days, then the recent
downward trend in stock prices is
confirmed.

In contrast, if prices rise, yet the
volume on the up days is less than the
volume transacted on down days, then
money is secretly pouring out of the
stock; this is a bearish divergence.
And similarly, when prices fall, but the
volume on the down days is less than
the volume on up days, then money is
flowing back into the stock, a bullish
divergence
Williams %R
Williams %R is an overbought and

oversold technical indicator that
can give easy to interpret buy and
sell signals.
Williams %R
Williams %R Buy Signal
When the Williams %R indicator is below the
oversold line (20) and it rises to cross over the 20
line, then buy.
Williams %R Sell Signal
Sell when the Williams %R indicator is above the
overbought line (80) and then falls below the 80
line.
Williams %R
Accumulation Distribution
Accumulation Distribution uses volume to
confirm price trends or warn of weak
movements that could result in a price
reversal.
Accumulation: Volume is considered to be

accumulated when the day's close is higher
than the previous day's closing price. Thus the
term "accumulation day"
Distribution: Volume is distributed when the
day's close is lower than the previous day's
closing price. Many traders use the term
"distribution day"
Simple Moving Average
The Simple Moving Average (SMA) is used

mainly to identify trend direction, but is
commonly used to generate buy and sell
signals. The SMA is an average, or in
statistical speak - the mean.
Exponential Moving Average

The Exponential Moving Average (EMA)
weighs current prices more heavily than
past prices. This gives the Exponential
Moving Average the advantage of being
quicker to respond to price
fluctuations than a Simple Moving
Average. However, that can also be
viewed as a disadvantage because the
EMA is more prone to whipsaws
MACD
The MACD indicator is one of the most popular
technical analysis tools.
MACD: The 12-period Exponential Moving
Average (EMA) minus the 26-period EMA.
MACD Signal Line: A 9-period EMA of the MACD.
MACD Histogram:
The MACD minus the MACD Signal Line.
MACD Moving
Average Crossovers
MACD Buy Signal
A buy signal is generated when the MACD
(blue line) crosses above the MACD Signal
Line (red line).
MACD Sell Signal
Similarly, when the MACD crosses below the
MACD Signal Line a sell signal is generated
Risk Measurement
Bollinger Bands
Bollinger bands are used to measure a markets
volatility .
When a stock is making major price movements ,
Bollinger bands will be farther away (expand)
from the stocks price chart.
When a stock is moving steadily with minor price
movements, the Bollinger bands will be closer to
(contract upon) the stocks price chart .
Bollinger Bands
A simple moving average in the middle.
An upper band (SMA plus 2 standard
deviations)
A lower band (SMA minus 2 standard
deviations)
Bollinger Bands
Bollinger Squeeze
Bollinger Squeeze
Charting
Chart Pattern
Elliot Wave
Fibonacci Studies
Regression Channel
Support/Resistance
Elliott Wave
Elliott Wave theory states that prices move in
waves. These waves occur in a repeating
pattern of a (1) move up, (2) then a partial
retracement down, (3) another move up, (4) a
retracement, (5) then finally a last move up.
Then, there is a (A) full retracement, followed by
a (B) partial retracement upward, then (C) a full
move downward. This repeats on a macro and
micro time frame.
Fibonacci
Fibonacci tools utilize special ratios that naturally
occur in nature to help predict points of support
or resistance. Fibonacci numbers are 1, 1, 2, 3, 5,
8, 13, 21, 34, 55, 89, etc. The sequence occurs by
adding the previous two numbers (i.e. 1+1=2,
2+3=5) The main ratio used is .618, this is found by
dividing one Fibonacci number into the next in
sequence Fibonacci number (55/89=0.618). The logic
most often used by Fibonacci based traders is that
since Fibonacci numbers occur in nature and the
stock, futures, and currency markets are creations of
nature - humans. Therefore, the Fibonacci sequence
should apply to the financial markets.
Fibonacci
Fibonacci Arcs
Fibonacci Fans
Fibonacci Time Extensions
Linear Regression Channel
Linear Regression Line: A line that best fits all the data
points of interest.
Upper Channel Line: A line that runs parallel to the Linear
Regression Line and is usually one to two standard
deviations above the Linear Regression Line.
Lower Channel Line: This line runs parallel to the Linear
Regression Line and is usually one to two standard
deviations below the Linear Regression Line.
Support Level
&
Resistance Level
THANK YOU

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StockBangladesh

Center For Financial Analysis

Center For Financial Analysis

Types of Trading Analysis

Principles of Technical Analysis.

Zero-Based Volume Bar Chart

Relative Adjusted Volume Bar Chart

Candle Volume Chart

Candle Volume Chart

Point and Figure Charts

Long white /green line

Long white/Green line

Bullish engulfing lines

Bullish doji star

Long black /red line

Long black/red line

Dark Cloud Cover

Bearish Engulfing Lines

Relation between Price and Volume

Why Volume is Important ?

Center For Financial Analysis

Support & Resistance

Support & Resistance

Support & Resistance

Support & Resistance

Bullish Trend lines

Technical Analysis Tools for Trends

Drawing Trend line

Drawing Trend lines

Break In Trend line

Trade on Trend Breaks

Trading Rule for Channel

Linear or Weighted Moving Avg.

SMA gives equal weight to each price point

An exponential moving average multiplies a

Moving average trend reversals are formed

moving averages are used to identify

Center For Financial Analysis

A simple moving average in the middle.

Simple moving average in the middle

Double Bottom Buy

Moving Average Convergence Divergence (MACD)

Faster moving average

MACD (12, 26, 9)

MACD (12, 26, 9)

MACD (12, 26, 9)

MACD Centerline Crossover

Types of Stochastic Oscillators

Buy and sell signals can also be given

Relative Strength Index (RSI)

Identifies overbought and oversold

Buying Pressure (BP)

The Final Ultimate Oscillator is equal to:

Money Flow Index (MFI)

Less Overbought & Oversold Signal

On Balance Volume (OBV)

Accumulation/Distribution Line Vs OBV

Close Location Value

A value of zero would mean that the price closed

Center For Financial Analysis

Leading v Lagging Indicators

Head & Shoulder

Cup & Handle

Double Tops & Bottoms