Technical analysis


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Technical analysis

  1. 1. TECHNICAL ANALYSIS“MOMENTUM”<br />Presented By:<br />BSE 12<br />
  2. 2. Momentum<br />Momentum is a simple technical analysis indicators showing the difference between current price & earlier price.<br />When the Momentum indicator crosses above the zero line, it is a bullish signal.<br />When the Momentum indicator crosses below the zero line, it is a bearish signal.<br />
  3. 3. Bullish Signal<br />Bearish <br /> Signal<br />
  4. 4. Momentum Indicators <br />Moving Average<br />Moving Average Convergence Divergence (MACD)<br />Rate of Change (ROC)<br />Relative Strength Index (RSI) <br />Stochastic oscillators<br />Williams %R<br />
  5. 5. Moving Average<br />The two most popular types of moving averages are:<br />The Simple Moving Average (SMA) - the average (mean) price of a security over a specified number of periods;<br />The Exponential Moving Average (EMA)applies to weighing factors to reduce the lag in simple moving averages.<br />
  6. 6. Bullish<br />Bearish<br />
  7. 7. Bullish <br />Bearish<br />Double bottoms<br />
  8. 8. Moving Average Convergence & Divergence (MACD)<br />MACD was developed by Gerald Appel as a way to keep track of a moving average crossover system.<br />MACD is the difference between a 12-day and 26-day moving average. A 9-day moving average of this difference is used to generate signals.<br />When this signal line goes from negative to positive, a buy signal is generated.<br />When the signal line goes from positive to negative, a sell signal is generated.<br />
  9. 9.
  10. 10. Buy Signal<br />Sell Signal<br />
  11. 11. Rate of Change (ROC)<br />The Rate of Change (ROC) is a simple technical indicator that shows the percentage difference between the current price and the price n periods ago.<br />Rate of Change (ROC) = Current Price - Earlier Price ──────────────── X100<br /> Earlier Price<br />The higher ROC is considered a more overbought security and the lower ROC is a more oversold security.<br />
  12. 12.
  13. 13. Handle<br />Cup<br />Overbought<br />Oversold<br />
  14. 14. Relative Strength Index (RSI)<br />RSI was developed by Welles Wilder as an oscillator to gauge overbought/oversold levels.<br />It compares the stock's gains over its losses over a specific period of time, usually 14 trading days<br />To calculate<br />Sum the negative changes and positive changes and divide each by 14 to create (D) down average and (U) up average<br />RSI=U/(U+D) * 100<br />If RSI > 70<br />Market is thought to be over bought, &<br />If RSI < 30<br />Market is thought to be over sold<br />
  15. 15. Oversold<br />
  16. 16. Bullish<br />Bearish<br />Overbought<br />Oversold<br />
  17. 17. Stochastic Oscillator<br />The Stochastic Oscillator was developed by George Lane in the 1950s. <br />The Stochastic Oscillator is based upon the theory that prices move in waves, moving back and forth between an overbought level and an oversold level (even within strong trends). <br />The Stochastic Oscillator is usually displayed as a stochastic line, and a signal line which is a moving average of the stochastic line.<br />Stochastic Oscillator (%K) = Close Price - Lowest Low ─────────────── x 100 Highest High - Lowest Low<br />
  18. 18. Handle<br />Cups<br />
  19. 19. Williams %R<br />Williams %R was developed by Larry Williams to indicate overbought and oversold levels. <br />The indicator is very similar to Stochastic %K.<br />%R varies from 0 to -100, while %K varies from 0 to 100<br />Values between (0 and -20) are considered to indicate an overbought condition, whereas readings in the (-80 and -100) range indicate an oversold condition<br />Williams %R = Highest High – Close Price ──────────────── x 100 Highest High – Lowest Low<br />
  20. 20.
  21. 21. Oversold<br />Overbought<br />
  22. 22. Triple Exponential Average Indicator (TRIX)<br />TRIX was developed by Jack Huton.<br />The TRIX is a momentum indicator, that is displayed as an oscillator above and below a zero line. <br />A positive TRIX value indicates an overbought condition, whereas a negative value indicates an oversold market. <br />A positive value would suggest that momentum is increasing while a negative value would suggest that momentum is decreasing.<br />
  23. 23. Overbought<br />Oversold<br />
  24. 24. Head<br />Left shoulder<br />Right shoulder<br />Neckline<br />Overbought<br />Oversold<br />