TAG Villanova Technical Analysis Group

Fibonacci Retracement

The Fibonacci Sequence  Who came up with it?  Leonardo Fibonacci (1170 – 1250)  What is the Fibonacci series?  1, 1, 2, 3, 5, 8, 13, 21, 34, 55…  Reinforced by the fact that people look for it

Fibonacci Retracement  How does it work?  How you use it?  Predict areas of support and resistance  Locate opportunities to enter/exit a position

Fibonacci Levels

Example

100% 38.2% 23.6% 0% 50% 61.8%

Hands-On Example

0% 23.6% 38.2% 50% 61.8% 100%

Hands-On Example

0% 38.2% 23.6% 50% 61.8% 100%

Hands-On Example

0% 38.2% 23.6% 50% 61.8% 100%

Hands-On Example

0% 23.6% 38.2% 50% 61.8% 100%

Applying the Concept

100% 61.8% 50% 38.2% 23.6% 0%

Applying the Concept

0% 23.6% 38.2% 50% 61.8% 100%

Patterns

Greed is Good on Charts  As you have already learned, the market moves in two ways (Up and Down)  There are bullish and bearish trends By identifying these trends and using frequently occurring chart patterns, you can analyze and predict which way the market will move Making you MONEY!!

An Assortment of Bullish Trading  There are a wealth of Bullish patterns to trade off of:  Ascending Continuation Triangle  Symmetrical Triangle Chart Pattern  Head and Shoulders Bottom  Flag (Bullish)

Symmetrical Triangle Chart Pattern  Converging trend lines of support and resistance gives the triangle pattern its distinctive shape. The trading action gets tighter and tighter until the market breaks out with great force.

Ascending Continuation Triangle  This pattern consists of two converging support and resistance lines The lower trend line rising and the upper trend line being horizontal

Volume is Important  Volume is an important factor to consider when determining whether a formation is a true triangle.  Volume is reliable  Low during narrow range of high and lows  High during price breakout

BULLISH Flags  Is considered a bullish signal, indicating that the current uptrend may continue  Follows a steep, or nearly vertical rise in price,  Consists of two parallel trend lines that form a rectangular flag shape.

Bullish Flag Graph

Head and Shoulders Bottom  Indicates a possible reversal of the current downtrend into a new uptrend.  A perfect example of the Head and Shoulders Bottom has three sharp low points created by three successive reactions in the price

Trade in Either Direction  The beauty of technical analysis is it gives you the tools to trade in every direction  Some Bearish Trend Patterns Include:  Head and Shoulders Top  Downside Breakout

Head and Shoulders Top  A Head and Shoulders Top is considered a bearish signal. It indicates a possible reversal of the current uptrend to a new downtrend.

Cup and Handle  The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout.

Use and Application  What are the Following Patterns – Look for charts like this on Think or Swim

ELLIOTT WAVE THEORY

Elliott Wave Principle  What is the Elliott Wave Principle?

Why use EWP?  EWP followers determines wave patterns to predict future market trends  Shows not only market direction, but specific points of change

Applying EWP  Waves:  Impulsive v. Corrective

Applying EWP  Impulsive  5 subwaves  Corrective  3 subwaves

“Waves within Waves” Grand Supercycle Supercycle Cycle Primary Intermediate Minor Minute Minuette Sub-Minuette

Characteristics of impulsive waves

Wave 1

Wave 2

Wave 3

Wave 4

Wave 5

Characteristics of Corrective Waves

Wave A

Wave B

Wave C

- There are three golden rules for a correct Elliott Wave “count” Key Rules of the Elliott Wave Principle

1. Wave 2 always retraces less than 100% of Wave 1 Key Rules of the Elliott Wave Principle

2. Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5 Key Rules of the Elliott Wave Principle

3. Wave 4 does not overlap with the price territory of wave 1

Application

NEXT MEETING Wednesday March 23rd, at 6:00 PM In the Finance Lab Common Oscillators LAST NEW MEMBER TRAINING SESSION