Commodity Marketing Chapter #3 Technical Analysis

Bar Charts n Important market information: Price: high, low, close for the day Volume: number of contracts traded Open Interest: number of contracts that haven’t been offset n Analyst records past history, but can use this information to help predict

Charting Prices

Bar Charts

n Volume: measure urgency behind price moves n Open Interest: number of contracts at the end of each day that are not offset -rises: new money flowing in -falls: money is leaving the market n Prices & Open interest rise: trend will probably continue n Prices rise & Open Int. falls, uptrend is ending n Prices, Open Int., & Volume fall, trend is about to change

Market Nicknames n Bull = one who expects prices to rise -a rising market n Bear = one who expects prices to fall -a falling market n PricesVolumeOpen IntMarket RisingRisingRisingBullish RisingFallingFallingBearish FallingRisingRisingBearish FallingFallingFallingBullish

Price Trends n General direction which prices are moving n Prices move: up, down or sideways n Sideways Trend: called a trading range -Resistance line (upper level) prices turn down -Support line (lower level) prices turn up

Sideways Trend

Trends n Uptrend: higher highs, higher lows n Draw a line under rising bottoms n Downtrend: lower highs, lower lows n Draw a line under falling tops n Takes two to define a trend, three to confirm it

Uptrend

Downtrend