Technical AnalysisTechnical Analysis

Technical Analysis

• Basics

• Analysis - Trading

• Alternative methods

• Examples

• Discussion

Basics

• The market discounts everything

• Chart types

• Simple tools

The market discounts everything

TA is...

• a research approach, using only historical prices.

• the study of prices, with charts being the primary tool.

• a self fulfilling prophecy.

The market discounts everything

TA assumes that…

• every information is in the market.• we cannot predict the future, but react on the

market.• we don’t ask for the ‚WHY‘, but for the

‚WHEN‘ and ‚WHERE‘.• we don’t want to understand the market, we

just want to make money with it.

The market discounts everything

TA has one target:

Discipline

Function of valueValue

ProfitLoss

1

-1x

~2x

Implications:

Effect of disposition

open positionLOSS PROFIT

-100

-2010

20

0

Risk-seeking -> HOLD Risk-aversion -> GET OUT

Chart types

• Line charts

• Bar charts

• Candlestick charts

Simple tools

• trend channels

• support - resistance

• retracements

• others

trend channels

trend channels

trend channels

trend channels

trend channels

trend channels

Support - Resistance

Simple tools

Retracements

Using the Fibonacci - numbers:0, 0.382, 0.618, 1

often also used: 1/3, 1/2, 2/3

Retracements

Analysis

• Indicators

• Oscillators

• Volatility

Indicators

Moving Averages

• simple MA

• weighted MA

• exponential MA

Moving Averages

Moving Averages

Indicators

MACD

• MACD-line: EMAshort-term – EMAlong-term

• Trigger-line:EMA (MACD-Line)

MACD

Oscillators

• Momentum

• Stochastics

• many more (RSI, ROC, …)

Momentum

Stochastics

Volatility

Trading

• Noise Trading

• Technical Trading

• System Trading

Pre-ECB sideways market

High: 107,23

Low: 107,62

Systems

• defined entry-signals

• winning trades - defined exit-signals

• loosing trades - defined exit-signals

• money management

Combined techniques

Combined techniques

Alternative Methods

• Fibonacci

• Elliott Wave Theory

• Japanese Candlesticks

Fibonacci numbers

• n 1 2 3 4 5 6 7 8 9 10 11 12 13

• F(n) 1 1 2 3 5 8 13 21 34 55 89 144 233

• F(n) = F(n-1) + F(n-2)

• for n: F(n-1) / F(n) = phi = 0.61803…

Fibonacci Retracements

Elliott Wave Theory

• 5 waves in direction of main trend

• 3 corrective waves

• The underlying 5-3 pattern remains constant, though the time span of each may vary.

Elliott Wave Theory

Elliott Wave Theory

Japanese Candlesticks

Examples

Real-time example

Conclusio

Information is pretty thin stuff, unless

mixed with experience.