Beginner's Guide to Technical Analysis

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Technical Analysis

Matt Kanterman


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Support and Resistance

Support and resistance levels are price levels

on the price graph where the increase or

decrease in price slows down or stalls all-

together.

Support and resistance levels can be used to

identify the short-term direction and potential

price action of a security.


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Support Level


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Resistance Level


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Support Can Equal Resistance


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Trading Range


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Trend Lines

Trend lines are lines that are drawn to show

the general direction of a market or a security.

Trend lines are more valid the more data

points they encompass.

Therefore, the longer term the trend, the more

valid it is.


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Trend Lines


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Trend Lines

Trend lines may ignore certain data points.

A best-fit line, ignoring a small collection of

data in a longer term chart, can still be valid

even though it does not fit all data points.


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Trend Lines


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Common Chart Patterns

Head and Shoulders

Outside Reversal

Double Top/Bottom Wedge

Flag/Pennant

Triangle


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Head and Shoulders Top


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Head and Shoulders Bottom


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Outside Reversal

Outside reversals occur when the price makes a new high and then

closes at the lows. A close near the lows usually signals a similar bearish

pattern.


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Double Top


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Double Bottom


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Falling Wedge


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Rising Wedge


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Flag


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Symmetrical Triangle


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Ascending Triangle


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Descending Triangle


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Patterns

Aside from the recognizable and named

patterns, there can be others.

Examples include:

Cycles

Fibonacci metrics


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Perfect Cycle


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Cycles

Cycles sometimes are more apparent when

you change the scale.

Switching from an arithmetic (normal

counting scale) to a semi-logarithmic or

logarithmic scale can make cycles more

apparent.


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Cycles


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Cycles


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Cycles

Cycles can also become more apparent by

smoothing out price actions using moving

averages.

The cycles thus show themselves, as the

market can in the very short-term become

destabilized and re-stabilize in a few trading

days.


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Cycles


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Cycles

There are other types of cycles too!!!

Calendar

Random cycles such as the election cycle

If you are interested, look up the Dow theory


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Cycles


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Cycles

Sell in May and go away!!


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Fibonacci Retracements

The Fibonacci Series is 0, 1, 1, 2, 3, 5, 8, 13, 21,34, 55, 89, 144, 233, 377, 610...

If you divide one number by the next, the

quotients converge to .618 or 61.8% If you divide one number by the second one after

it, the quotients converge to .382, or 38.2% (or 1-.618, which is weird and explained by chaos

theory) If you divide one number by three after it, the

quotients converge to .236 or 23.6%


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Fibonacci Retracements


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Fibonacci Arcs


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Fibonacci Fans


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Fibonacci Time Zones


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Sources

http://stockcharts.com/school/doku.php?id=c

hart_school:chart_analysis

Documents

Beginner's Guide to Technical Analysis