Technical Analysis: is about... FORECASTINGprice movement, ...using:1. Price Trends2. Price Patterns3. Price & Volume
What is thePrice TrendPureGold grocery storesCEBU Pacific airline1. Price Trends
BUY2. Price Patterns
Prices..UPTrading Volume … down ?Price TrendsPrice PatternsPrice & Volume IndicatorsPrices
PriceVolumeThe trend, willbe sustained.Continue to BUYVolumeBut IF:The uptrend,will weaken.Stop Buying.IF:And IF:
WeatherforecastTrafficforecast
100120160Stocks8040Stock FUNDSAlso:Next MonthOr, Next WeekYou buy at …Whatshould youdo, thisthis case?OK! …Now, whendo i s...
50 - 5080%90%70%60%Professionals canmake decisionsinvolving millions, onhunches, backed upby intuition andscience.An amate...
“Fundamental” Vs. “Technical”9Fundamental AnalysisFinancials & EconomicsTechnical Analysis• Trends (to continue?)• Turning...
* At this price, the “STOP order” becomes a “Market Order”“Emergency exit”1.612“Successful Exit”ENTRY PRICE:BUY Stock at2 ...
Stop Order*From TWO PESOS in July 2010 to 12 pesos in APRIL 2011.TRADE = buy low, sell highLeisure & Resorts World (LR) 2...
12Parts of a price chartLook at price,Time periodAnd volume.PriceTime PeriodVolume
PriceTime PeriodAdd: 20-periodMovingAverage + 50-period Moving Average
Volume
OpenHighCloseLowHighLowOpenCloseHighLowOpenCloseIntraday Price Chart O H L C Candlestick“BAR” Japanese
HighLowOpenCloseHighLowOpenCloseHighLowOpenCloseIntraday Price Chart O H L C CandlestickFree Tutorial on INVESTOPEDIA.COM
23Candlestick versus O-H-L-COpen-High-Low-Close
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
Resistance = CEILINGSupport = FLOOR25
Resistance = CEILINGSupport = FLOOR26Sellers SellersNomoreSellersBuyers Buyers
Resistance = CEILINGSupport = FLOOR27
BUYSELLBUYSELLBUYBUY urgentlyPrice Patterns
BUYSELLBUYSELLBUYBUY urgentlyStrong“Escape”
Sell at the Resistance Level?Buy at the Support Level?How shouldwe TRADEthis chart?
How shouldwe TRADEthis chart?Sell at the Resistance Level?Buy at theSupportLevel?
Analysis: AGI continued its sharp rally, closing 4.2% higher at PHP26.00yesterdayTrading Plan: Trend followers who bought ...
Analysis: MPI continues to move higher and is now challenging thePHP6.00 resistance. However, MPI may be losing momentum a...
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
35Trends and TrendlinesDowntrendUptrendSideways
“Look for the trend, & follow it.”Chances are, it will continue36The price pattern suggests the overall trendhistoryMakeyo...
Connect thelowsWhen line isbreached,the trendreverses.SELL uponthe reversalof anUptrendMaintainsThe UP-Trend
Jan2008Jan2009Jan2010Jan2011Jan20121 EURO =1.27 Dollars1 EURO =1.55 DollarsMoving towards1 = 1, aWeaker EUROUPahead:BadNew...
pesos / dolla4302052
Splash CorporationTREND anddirection:Predicts withhigh probability
• Gold GreatrewardGold Price: UP somemore, or DOWN?Notice the strongUPWARDS trend.Bet on theMAJOR Trend.Ignore theMINORTrend
TrendChannels“Draw Two Lines...”To tame the wild swings
ONE stock:Usechannelsandtrendlines
Samestock:Usechannelsandtrendlines
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
“The trend is your friend”49Generally, UPSafeto “BUY”SELL orAVOIDWait till itTURNS.
Do you see a clearTREND and direction?Wait for aREVERSALCebu Pacific
CompleteREVERSALDownTrend“TurningPoint”
Confirma ReversalGo FoR IT52? Goodiesfor thosewho WAIT.Do yousee aclearREVERSAL?
AyalaCorp
SM Investments Corp 994
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
1Average of 20 days’stock pricesMove slightly to the right...
2Average of 20 days’stock prices1Move slightly to the right...
3Average of 20 days’stock prices1 2The DOTS form the line ofthe 20-period movingaverage.
Price ( in green)Moving Averageis red
1Each GREEN DOT:ONE DAY OF TRADINGRed DOTAverage of 20 green dotsPrice (green dots)
21Red DOTAverage of next20 green dotsEach GREEN DOT:ONE DAY OF TRADING
31Red DOTAverage of next20 green dots2Each GREEN DOT:ONE DAY OF TRADING
The RED Line: 20-period MOVINGAverage1,100200
1Blue DOTAverage of 50 green dotsEach GREEN DOT:ONE DAY OF TRADINGPrice (green dots)
21BLUE DOTAverage of next50 green dotsEach GREEN DOT:ONE DAY OF TRADING
31BLUE DOTAverage of next50 green dots2Each GREEN DOT:ONE DAY OF TRADING
When to BUYMark the areas:Bounce off LinesPenetrate Lines?
The Price often “seems touse” the moving averageas a SUPPORT level.minormajor
The BLUE Line: 50-period MOVINGAverageif the red line (20-period) is abovethe blue line (50-period), continueto buy the st...
…Gettingwider?GAPKeep on Buying.? Uhh, I think, it’sexpensive na.Never mind,what you thinkRED LINEAbove?
Are you bearish?Are you bullish?You decide, what the outlook isMake your owndecisionsDon’t follow, whatother people do.Oth...
The moving average,shows the long-termtrend.A “Trend Channel”shows the turningpointsSELLBUY
Draw Two Lines, above and below.Connect the Peaks and Valleys.A “Trend Channel”shows the turningpoints
Sell at the tops,buy at the bottoms.Trend Channel = turning pointsSELLSELLSELLBUYBUYBUY
FREE DOWNLOAD… AMIBROKER.COMFOR PHILIPPINE PRICES: “PSEGET.EXE”Tradingplan
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
81Symmetrical Triangle(Ayala Corp) Chart PatternsCould go, either way: UP or DOWN.
500082Usually Optimistic.Signals a long rally. 3000Where do youthink it is going.Would you BUYshares?Inverted Head and Sho...
87“Flag” (How tall)Optimistic. Points toa potential continuation
88“Falling Wedge”(Phil National Bank)A period of watching& waiting: which way?
90“Rising Wedge”(VULCAN Mining)A period of watching& waiting: which way?Which way?
91“Cup and Handle”(ORE)Usually optimistic.Signals an upswing. ImpliesPotential
“Double Top” (MEG)92Usually pessimistic.Signals a long decline.Whichway?
93Triple Top (MIC)Usually pessimistic.Signals a long decline.Going upOr DOWN?
95Triple Bottom (GREEN)Usually optimistic.Signals a long uptrend..HighMediumLow
Make a Trading PlanStockPrice Reasons“PRO” Reasons“Contra”
* At this price, the “STOP order” becomes a “Market Order”“Emergency exit”1.612“Price Target”ENTRY PRICEBUY Stock at 2peso...
CheckLong-termChartMostlyUPWARDSMostlyDOWN-WARDS
Price isbelow REDLINERed: 20 time periodsBlue: 50 time periodsPrice isABOVE theRED LINEChancesare: …
Possiblecontinuationof UPWARDCHANNELZoom into Daily Chart.Check Support & Resistance.Trendlines & Channels.Possible“break ...
Trading Plan:BUY MERALCO sharesStockPrice Reasons“PRO” 80% Reasons“Contra” 20%
Trading Plan:BUY CEBU PAC sharesStockPrice Reasons“PRO” 50% Reasons“Contra” 50%
Technical Analysis: ChartsOther sources:
After escaping above the critical Php1.80 resistance last March, MEG hassteadily moved upwards. It eventually reached its ...
Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Mov...
RSI: oscillator
Relative Strength IndexThe relative strength index (RSI) charts the current and historicalstrength or weakness of a stock ...
RSI = 100 - 100/(1 + RS*)*Where RS = Average of x days up closes / Average of x days down closes.Relative Strength IndexHo...
RSI is useful in confirming a trend.If RSI is above 50“The market must be movingupwards.”RSI below 50“The market must be m...
Relative Strength Index70%30%“Overbought” : might turn downExtreme levels ... Go back to Middle“Oversold” : might turn upw...
Like many momentum oscillators, overbought and oversold readings for RSI workbest when prices move sideways within a range...
Technical Analysis: TOOLSSpecial Cases:Seasonality
OCTNOVDECOCTNOVDECOCTNOVDECOCTNOVDECOCTNOVDECApr.MayJuneApr.MayJune Apr.MayJuneApr.MayJuneSeasonal ... Cycles... Per Year
Tune in ...Everyday onWWW.FIRSTMETROSEC.COM.PH
Tune in ...Everyday onWWW.FIRSTMETROSEC.COM.PH
Exchange-Traded Fund“EPHE” in NYSE
Trading PlanStockPriceObjectivesRisksConstantly changing…%%
127RegularIntervalsFixed amountBUY PLDT,Meralco, GTCapital, JollibeeUntil youhave ___millionworth ofstocks inyouraccount.
Investing in EquitiesInvestingversusTrading
1. How to buy stocks, like anexpert: style of “Patient, Long-term” with knowledge,research, and nerves of steel.BUY100200B...
BUYTHINKWAITWAIT2. How to buy stocks, like anexpert: style of “Patient,Long-term” withknowledge, research, andmore patienc...
3. How to buy stocks, like anexpert: style of impatient short-term “maximization”BUYBUYBUYBUYBUYBUYSELLSELLSELLSELLSELL“Tr...
Worst-Case: amateur beginner.Buy, when excited.Sell, when depressed.BUYBUYBUYBUYBUYWAITSELLSELLSELLSELL“Emotional”SELL
PRICETARGETEmergencyEXITStanding Order,“Good Till Month”
PRICETARGETEmergencyEXIT 
BUYLOWBUYLOWBUYLOWSELLHIGH255225220
BUYLOWBUYLOW.Law..BUYLOW.Dam..255
GLOBE TeL1,19273= 16xPLDT2,800212= 14xPLDT gives you more“Earnings” for its high “Price.”Price / ShareEarnings / SharePric...
38%50%68%100%Fibonacci line retracements
125115100120
125120100 115
1901001307030% + 60 = 90%30% - 60 = 90%30% + / - 60 = ___?
125120100 105
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
Basic intro to technical analysis   2013 05 02
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Basic intro to technical analysis 2013 05 02

  1. 1. Technical Analysis: is about... FORECASTINGprice movement, ...using:1. Price Trends2. Price Patterns3. Price & Volume
  2. 2. What is thePrice TrendPureGold grocery storesCEBU Pacific airline1. Price Trends
  3. 3. BUY2. Price Patterns
  4. 4. Prices..UPTrading Volume … down ?Price TrendsPrice PatternsPrice & Volume IndicatorsPrices
  5. 5. PriceVolumeThe trend, willbe sustained.Continue to BUYVolumeBut IF:The uptrend,will weaken.Stop Buying.IF:And IF:
  6. 6. WeatherforecastTrafficforecast
  7. 7. 100120160Stocks8040Stock FUNDSAlso:Next MonthOr, Next WeekYou buy at …Whatshould youdo, thisthis case?OK! …Now, whendo i sell?
  8. 8. 50 - 5080%90%70%60%Professionals canmake decisionsinvolving millions, onhunches, backed upby intuition andscience.An amateur would wait tillevidence is overwhelminglyabundant. By that time, thetrade would be, too late.Opportunity LOST !
  9. 9. “Fundamental” Vs. “Technical”9Fundamental AnalysisFinancials & EconomicsTechnical Analysis• Trends (to continue?)• Turning points (reversals)Sales– Costs= Net profitsEarningsperShareStock Price versusCompany VALUEPast pricesvs Future prices
  10. 10. * At this price, the “STOP order” becomes a “Market Order”“Emergency exit”1.612“Successful Exit”ENTRY PRICE:BUY Stock at2 pesos / sh.A trading PLAN:Cut yourLosses 20% below? 30% below?Price Target
  11. 11. Stop Order*From TWO PESOS in July 2010 to 12 pesos in APRIL 2011.TRADE = buy low, sell highLeisure & Resorts World (LR) 20% below? 30% below?ENTRY PRICEBUY Stock at 2pesosAt Your…“CUT LOSS” LEVEL12
  12. 12. 12Parts of a price chartLook at price,Time periodAnd volume.PriceTime PeriodVolume
  13. 13. PriceTime PeriodAdd: 20-periodMovingAverage + 50-period Moving Average
  14. 14. Volume
  15. 15. OpenHighCloseLowHighLowOpenCloseHighLowOpenCloseIntraday Price Chart O H L C Candlestick“BAR” Japanese
  16. 16. HighLowOpenCloseHighLowOpenCloseHighLowOpenCloseIntraday Price Chart O H L C CandlestickFree Tutorial on INVESTOPEDIA.COM
  17. 17. 23Candlestick versus O-H-L-COpen-High-Low-Close
  18. 18. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  19. 19. Resistance = CEILINGSupport = FLOOR25
  20. 20. Resistance = CEILINGSupport = FLOOR26Sellers SellersNomoreSellersBuyers Buyers
  21. 21. Resistance = CEILINGSupport = FLOOR27
  22. 22. BUYSELLBUYSELLBUYBUY urgentlyPrice Patterns
  23. 23. BUYSELLBUYSELLBUYBUY urgentlyStrong“Escape”
  24. 24. Sell at the Resistance Level?Buy at the Support Level?How shouldwe TRADEthis chart?
  25. 25. How shouldwe TRADEthis chart?Sell at the Resistance Level?Buy at theSupportLevel?
  26. 26. Analysis: AGI continued its sharp rally, closing 4.2% higher at PHP26.00yesterdayTrading Plan: Trend followers who bought on the breakout should justhold on to the stock and place trailing stops to protect gains. Buyersshould try to wait and buy close to PHP23.00-PHP24.00 as oscillators areat overbought levels. Support is at PHP23.00 while resistance is atPHP26.60
  27. 27. Analysis: MPI continues to move higher and is now challenging thePHP6.00 resistance. However, MPI may be losing momentum as it hasrecently been moving higher on declining volume. The stock is movingon steady uptrend and is now nearly 50% higher since October 29,2012.Trading Plan: Watch resistance at PHP6.00. Buy on a breakout withhuge volume. Countertrend traders, though, may want to wait to buyas close to PHP5.75 as possible. Support levels are at PHP5.75 andPHP5.4565.755.605.45October201250%
  28. 28. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  29. 29. 35Trends and TrendlinesDowntrendUptrendSideways
  30. 30. “Look for the trend, & follow it.”Chances are, it will continue36The price pattern suggests the overall trendhistoryMakeyourmove!Do you see a pattern?Draw a LINE…Technical analysis is the study of stock price action.What for = to help us FOLLOW the price trend & make a profitable trade.
  31. 31. Connect thelowsWhen line isbreached,the trendreverses.SELL uponthe reversalof anUptrendMaintainsThe UP-Trend
  32. 32. Jan2008Jan2009Jan2010Jan2011Jan20121 EURO =1.27 Dollars1 EURO =1.55 DollarsMoving towards1 = 1, aWeaker EUROUPahead:BadNewsORGoodNews?What is theTrend?
  33. 33. pesos / dolla4302052
  34. 34. Splash CorporationTREND anddirection:Predicts withhigh probability
  35. 35. • Gold GreatrewardGold Price: UP somemore, or DOWN?Notice the strongUPWARDS trend.Bet on theMAJOR Trend.Ignore theMINORTrend
  36. 36. TrendChannels“Draw Two Lines...”To tame the wild swings
  37. 37. ONE stock:Usechannelsandtrendlines
  38. 38. Samestock:Usechannelsandtrendlines
  39. 39. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  40. 40. “The trend is your friend”49Generally, UPSafeto “BUY”SELL orAVOIDWait till itTURNS.
  41. 41. Do you see a clearTREND and direction?Wait for aREVERSALCebu Pacific
  42. 42. CompleteREVERSALDownTrend“TurningPoint”
  43. 43. Confirma ReversalGo FoR IT52? Goodiesfor thosewho WAIT.Do yousee aclearREVERSAL?
  44. 44. AyalaCorp
  45. 45. SM Investments Corp 994
  46. 46. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  47. 47. 1Average of 20 days’stock pricesMove slightly to the right...
  48. 48. 2Average of 20 days’stock prices1Move slightly to the right...
  49. 49. 3Average of 20 days’stock prices1 2The DOTS form the line ofthe 20-period movingaverage.
  50. 50. Price ( in green)Moving Averageis red
  51. 51. 1Each GREEN DOT:ONE DAY OF TRADINGRed DOTAverage of 20 green dotsPrice (green dots)
  52. 52. 21Red DOTAverage of next20 green dotsEach GREEN DOT:ONE DAY OF TRADING
  53. 53. 31Red DOTAverage of next20 green dots2Each GREEN DOT:ONE DAY OF TRADING
  54. 54. The RED Line: 20-period MOVINGAverage1,100200
  55. 55. 1Blue DOTAverage of 50 green dotsEach GREEN DOT:ONE DAY OF TRADINGPrice (green dots)
  56. 56. 21BLUE DOTAverage of next50 green dotsEach GREEN DOT:ONE DAY OF TRADING
  57. 57. 31BLUE DOTAverage of next50 green dots2Each GREEN DOT:ONE DAY OF TRADING
  58. 58. When to BUYMark the areas:Bounce off LinesPenetrate Lines?
  59. 59. The Price often “seems touse” the moving averageas a SUPPORT level.minormajor
  60. 60. The BLUE Line: 50-period MOVINGAverageif the red line (20-period) is abovethe blue line (50-period), continueto buy the stock.2001,100
  61. 61. …Gettingwider?GAPKeep on Buying.? Uhh, I think, it’sexpensive na.Never mind,what you thinkRED LINEAbove?
  62. 62. Are you bearish?Are you bullish?You decide, what the outlook isMake your owndecisionsDon’t follow, whatother people do.Other people may not know, where they are going…
  63. 63. The moving average,shows the long-termtrend.A “Trend Channel”shows the turningpointsSELLBUY
  64. 64. Draw Two Lines, above and below.Connect the Peaks and Valleys.A “Trend Channel”shows the turningpoints
  65. 65. Sell at the tops,buy at the bottoms.Trend Channel = turning pointsSELLSELLSELLBUYBUYBUY
  66. 66. FREE DOWNLOAD… AMIBROKER.COMFOR PHILIPPINE PRICES: “PSEGET.EXE”Tradingplan
  67. 67. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  68. 68. 81Symmetrical Triangle(Ayala Corp) Chart PatternsCould go, either way: UP or DOWN.
  69. 69. 500082Usually Optimistic.Signals a long rally. 3000Where do youthink it is going.Would you BUYshares?Inverted Head and Shoulders(PSEI) Chart Patterns
  70. 70. 87“Flag” (How tall)Optimistic. Points toa potential continuation
  71. 71. 88“Falling Wedge”(Phil National Bank)A period of watching& waiting: which way?
  72. 72. 90“Rising Wedge”(VULCAN Mining)A period of watching& waiting: which way?Which way?
  73. 73. 91“Cup and Handle”(ORE)Usually optimistic.Signals an upswing. ImpliesPotential
  74. 74. “Double Top” (MEG)92Usually pessimistic.Signals a long decline.Whichway?
  75. 75. 93Triple Top (MIC)Usually pessimistic.Signals a long decline.Going upOr DOWN?
  76. 76. 95Triple Bottom (GREEN)Usually optimistic.Signals a long uptrend..HighMediumLow
  77. 77. Make a Trading PlanStockPrice Reasons“PRO” Reasons“Contra”
  78. 78. * At this price, the “STOP order” becomes a “Market Order”“Emergency exit”1.612“Price Target”ENTRY PRICEBUY Stock at 2pesosTRADE = buy low, sell highCut yourLosses 20% below? 30% below?Let yourprofits “run”
  79. 79. CheckLong-termChartMostlyUPWARDSMostlyDOWN-WARDS
  80. 80. Price isbelow REDLINERed: 20 time periodsBlue: 50 time periodsPrice isABOVE theRED LINEChancesare: …
  81. 81. Possiblecontinuationof UPWARDCHANNELZoom into Daily Chart.Check Support & Resistance.Trendlines & Channels.Possible“break ofdownwardchannel”Chancesare: …
  82. 82. Trading Plan:BUY MERALCO sharesStockPrice Reasons“PRO” 80% Reasons“Contra” 20%
  83. 83. Trading Plan:BUY CEBU PAC sharesStockPrice Reasons“PRO” 50% Reasons“Contra” 50%
  84. 84. Technical Analysis: ChartsOther sources:
  85. 85. After escaping above the critical Php1.80 resistance last March, MEG hassteadily moved upwards. It eventually reached its minimum upside targetat just above Php2.40 and by the looks of it, MEG may likely continuemoving higher. Its next stop may likely be its previous high at Php2.80 aslong as it continues to track its present uptrend line.
  86. 86. Technical Analysis: TOOLS1. Support & Resistance2. Trend Lines, Channels (continuation)3. Reversals: a turning point4. Moving Averages (tool)5. Special Patterns (“formations”)“Movement” : Continuation or Reversal6. Relative Strength Index
  87. 87. RSI: oscillator
  88. 88. Relative Strength IndexThe relative strength index (RSI) charts the current and historicalstrength or weakness of a stock or market based on the closingprices of a recent trading period. ... momentum oscillator,measuring the velocity and magnitude of directional pricemovements. Momentum is the rate of the rise or fall in price.70%30%“Overbought” : might turn downExtreme levels ... Go back to Middle“Oversold” : might turn upwards
  89. 89. RSI = 100 - 100/(1 + RS*)*Where RS = Average of x days up closes / Average of x days down closes.Relative Strength IndexHow strong is this trend,relative to price history?Similar to “Stochastics”
  90. 90. RSI is useful in confirming a trend.If RSI is above 50“The market must be movingupwards.”RSI below 50“The market must be movingdownwards.”
  91. 91. Relative Strength Index70%30%“Overbought” : might turn downExtreme levels ... Go back to Middle“Oversold” : might turn upwardsThe RSI computes momentum as the ratio of‘higher closes’ to ‘lower closes’: stockswhich have had ...more upward moves ...have a higher RSI than stocks which havemore downward moves.
  92. 92. Like many momentum oscillators, overbought and oversold readings for RSI workbest when prices move sideways within a range. Chart 4 shows MEMC Electronics(WFR) trading between 13.5 and 21 from April to September 2009. The stockpeaked soon after RSI reached 70 and bottomed soon after the stock reached 30.? ??70 71 29 71?
  93. 93. Technical Analysis: TOOLSSpecial Cases:Seasonality
  94. 94. OCTNOVDECOCTNOVDECOCTNOVDECOCTNOVDECOCTNOVDECApr.MayJuneApr.MayJune Apr.MayJuneApr.MayJuneSeasonal ... Cycles... Per Year
  95. 95. Tune in ...Everyday onWWW.FIRSTMETROSEC.COM.PH
  96. 96. Tune in ...Everyday onWWW.FIRSTMETROSEC.COM.PH
  97. 97. Exchange-Traded Fund“EPHE” in NYSE
  98. 98. Trading PlanStockPriceObjectivesRisksConstantly changing…%%
  99. 99. 127RegularIntervalsFixed amountBUY PLDT,Meralco, GTCapital, JollibeeUntil youhave ___millionworth ofstocks inyouraccount.
  100. 100. Investing in EquitiesInvestingversusTrading
  101. 101. 1. How to buy stocks, like anexpert: style of “Patient, Long-term” with knowledge,research, and nerves of steel.BUY100200BUYBUYBUY3,000“Investing”
  102. 102. BUYTHINKWAITWAIT2. How to buy stocks, like anexpert: style of “Patient,Long-term” withknowledge, research, andmore patience.“Investing”
  103. 103. 3. How to buy stocks, like anexpert: style of impatient short-term “maximization”BUYBUYBUYBUYBUYBUYSELLSELLSELLSELLSELL“Trading”
  104. 104. Worst-Case: amateur beginner.Buy, when excited.Sell, when depressed.BUYBUYBUYBUYBUYWAITSELLSELLSELLSELL“Emotional”SELL
  105. 105. PRICETARGETEmergencyEXITStanding Order,“Good Till Month”
  106. 106. PRICETARGETEmergencyEXIT 
  107. 107. BUYLOWBUYLOWBUYLOWSELLHIGH255225220
  108. 108. BUYLOWBUYLOW.Law..BUYLOW.Dam..255
  109. 109. GLOBE TeL1,19273= 16xPLDT2,800212= 14xPLDT gives you more“Earnings” for its high “Price.”Price / ShareEarnings / SharePrice /EarningsRatio Lower “Price / Unit”
  110. 110. 38%50%68%100%Fibonacci line retracements
  111. 111. 125115100120
  112. 112. 125120100 115
  113. 113. 1901001307030% + 60 = 90%30% - 60 = 90%30% + / - 60 = ___?
  114. 114. 125120100 105
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