© K. Cuthbertson and D. Nitzsche Figures for Chapter 17 TECHNICAL TRADING RULES (Investments : Spot and Derivatives Markets)

© K. Cuthbertson and D. Nitzsche Figure 17.1 : Head and shoulders Asset Price Time C D B C

© K. Cuthbertson and D. Nitzsche Figure 17.2 : Symmetric triangle Price, S Time A

© K. Cuthbertson and D. Nitzsche Figure 17.3 : Resistance and support levels Day-1 Day-2 Overnight SSSS RRRR A B Buy Close out Sell Close out

© K. Cuthbertson and D. Nitzsche Figure 17.4 : Candle patterns (A.) Major Yin (Strongly Bearish) Sell (B.) Major Yang (Strongly Bullish) Buy (C.) Yang with Upper Shadow (Moderately Bullish) Buy (D.) Jujisei (cross) (Reversal) O = opening price, C = closing price C O O C C O CO

© K. Cuthbertson and D. Nitzsche Figure 17.5 : Filter rule, x = 2% Time Asset Price A B C Buy Close Out/ Go Short Close Out/ Go Long

© K. Cuthbertson and D. Nitzsche Figure 17.6 : Cross-over strategy Time Asset price Buy Close out and go short Short Moving Average Long Moving Average B A

© K. Cuthbertson and D. Nitzsche Figure 17.7 : Neural network (No hidden layers) Y Neurons X1X1 X2X2 X3X3 Input Layers Output Layers Input X i w1w1 w3w3 w2w2

© K. Cuthbertson and D. Nitzsche Figure 17.8 : Sigmoid transfer function 0 Y = 1/(1+e -Y )

© K. Cuthbertson and D. Nitzsche Figure 17.9 : ANN and overfitting XiXi Asset price Y A B C D E F = data points Testing set Forecast using ANN   C’ Forecast using linear equation linear equation  = forecast

© K. Cuthbertson and D. Nitzsche Figure : ANN (One hidden layer) Y Hidden Layer (two neurons) X1X1 X2X2 X3X3 Input Layers Output Layer 0 = neurons