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Academy #8 Technical Analysis Speakers: Charles & Daniel Get connected to B&R Beurs @ 1
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Charles-Antoine Bory ◦ Board member + chairman Audacity ◦ Swiss: good with other people’s money ◦ Many years of investment experience Daniel Göttmann ◦ Chairman STCM ◦ German: paying the bill in a few years ◦ Many years of investment experience
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Introduction Volatility Charts Basic patterns Trend indicators Momentum indicators Advanced chart patterns Links Conclusion
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Graphical analysis “In finance, technical analysis is a security analysis discipline used for forecasting the direction of prices through the study of past market data, primarily price and volume.” Wikipedia Technical analysis is more concerned with finding cues about the market micro structure! Belief that the historical performance of stocks and markets are indications of future performance.
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Never forget your fundamental analysis! Use technical analysis as complement Combination is the key!
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Identifying securities to buy/sell Timing of buy and sell orders Drawing in your professional life
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Volatility is a measure for the variation of the price of a financial instrument over time ◦ Standard deviation ◦ A higher volatility implies a riskier asset ◦ Volatility varies over time ◦ Volatility typically high in bear markets
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Negatively correlated with price
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Stocks: volatility goes up, as prices go down Implication for options? Want to trade volatility? Use the VIX
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Price level at which demand is thought to be strong enough to prevent the price from declining further
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Price level at which selling it thought to be strong enough to prevent the price from rising further
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Resistance becomes support (and vice-versa)
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Buy signal at (3)
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Sell signal at (3)
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Golden Cross: fast moving average crosses slow moving average from below ◦ Buy signal! ◦ Typically comes with high trading volumes
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Dead Cross: fast moving average crosses slow moving average from top ◦ Sell signal! \\
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1 moving average (e.g. 20 days) +/- 1 standard deviation Bands as support/resistance Adjusts to market conditions Contains ~88% of price movements
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Moving Average Convergence Divergence MACD=12d EMA – 26d EMA, 9d EMA (signal line) Trend + momentum Crossover
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Relative Strength Index 0<RSI<100 RSI>70 => overbought (=> sell) RSI oversold (=> buy)
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Similar to RSI Used to forsee reversal 20<STO<80
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Rate of Change (ROC) Commodity Channel Index (CCI) StochRSI TIX Ulitmate Oscillator (ULT) Aroon […]
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Most reliable trend-reversal pattern ◦ Detectable by volume peaks 1.Rises to a peak and subsequently declines. 2.The price rises above the former peak and again declines. 3.Price rises again, but not to the second peak, and declines once more.
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Ascending Descending Use a price range
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The more volume the better ◦ Lower transaction costs (bid-ask spread)
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Investopedia.com ◦ To lookup easy definitions Bloomberg.com ◦ Click on “Index Chart” -> “Overlay” / “Indicators” Stockcharts.com ◦ Perform technical analysis easily ◦ Explanation for each indicator ◦ All indicators available Chartgame.com ◦ Test your knowledge and predictions!
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Always combine many indicators at the same time ◦ Avoid multicollinearity ◦ E.g. Candle sticks + Volatility + Volume + SMA + MACD + RSI Focus on liquid stocks Always use it as a complementary tool to fundamental analysis Now, impress your investment group!
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Next B&R Beurs events: ◦ 13/12 at 9pm: Social drink @ Sus&Co ◦ 15/12: Deadline ABN Amro Turbo Assignment ◦ 10/01: New Year’s drink (Champagne!!)
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