Ch 6 - Technical Analysis Flashcards

1
Q

Technical analysis is based on three assumptions:

A

1- all known market influences are fully reflected in market prices.
2- Prices move in trends that tend to persist for relatively long periods of time
3- The future can be found in the past.

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2
Q

Technical analysis incorporates four types of Analysis:

A
  • Chart analysis
  • Statistical analysis
  • Sentiment analysis
  • Intermarket analysis
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3
Q

Getting whipsawed means

A

taking a position in anticipation of the market moving in a certain direction, only to have it reverse and go in the opposite direction.

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4
Q

What is an oscillator?

A

an indicator that fluctuates between two values

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5
Q

momentum oscillator can be used in three ways:

A

1- to generate buy and sell signals
2- to indicate overbought and oversold levels
3- divergence analysis

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6
Q

what is divergence analysis?

A

if the oscillator differs from the price action.

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7
Q

What is the moving average convergence-divergence (MACD

A

The difference between a short-term and longer-term exponential moving average (EMA).

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8
Q

The Relative Strength Index (RSI

A

measures momentum by comparing the relative strength of price gains on days when a stock closes up to the strength of price declines on days when a stock closes down

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9
Q

The Public Short Ratio (PSR)

A

divides the total number of public short sales by the total number of short sales. When the ratio is high, it indicates that public investors are more pessimistic about future market gains relative to member firms. Good contrarian indicator

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10
Q

3 ways Technical analysis tools can be used

A

1- to improve market timing
2- to forecast price movements
3- to indicate turning points before they occur

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