Elementary - Technical Analysis Flashcards
What is a Resistance Level
In an upward trend - When price moves up, and then pulls back, then the highest price reached is the resistance level. At resistance level you will find the most amount of sellers.
What is a Support Level
In an upward trend - The lowest point reached, once price pulled back from a resistance level, becomes a support level. At support level you will find the most amount of buyers.
What is a False Breakout
A False breakout is when price breaks through a resistance level, only to return in the opposite direction.
What is an Uptrend
Line drawn over the support levels in an uptrend. Ascending Trend Line
What is a Downtrend
Line drawn over the resistance levels in a downtrend. Descending Trend Line
What is a Sidewaystrend
Lines drawn over the support and resistance lines, the overall trend is horizontal
What makes trend lines stronger
More data points - instances where the line is confirmed by price
What are trend channels
Channels are the support and resistance lines, both lines drawn in a trend - both support and resistance lines in a uptrend = bullish, both support and resistance lines in a down channel = bearish. Sideway channels is support and resistance running horizontal
What is a Spinning Top Candle
Long upper shadow, Long lower shadow, small body. A Spinning Top in an upward trend means there might not be many buyers left, possible reversal. A Spinning Top in a downward trend means there might not be many sellers left and possible reversal
What is a Marubozu Candle
The candles does not have any shadows. Only Full Body. If Bullish candle, then buyers in control, if Bearish candle, then sellers are in control.
- If a Bullish Marubozu forms at end of Uptrend - means continuation.
- If a Bullish Marubozu forms at the end of a Downtrend - means a reversal might be coming
- If a Bearish Marubozu forms at the end of a Downtrend - then indicates a continuation
- If a Bearish Marubozu forms at the end of an Uptrend then it indicates a reversal might follow
What is a Doji
Doji Candles are Open and close at nearly same level - very small body. Doji indicates indecision.
What can Doji Indicate
Doji following a Bullish series of candles can indicate the buyers are exhausted.
Doji following a Bearish series of candles can indicate the sellers are exhausted
What are Hammer and Hanging Man candles
Hammer and Hanging man candles - long lower shadows, very short upper shadows and relatively tiny bodies. Hammer forms in a downward trend and Hanging man forms in a upward-trend.
Indicates change in direction - Hammer in a downward trend - bullish reversal pattern, Hanging man in a upward trend is bearish reversal pattern
What are inverted Hammer and Shooting Star candles
The inverted hammer and shooting star candles - long upper shadows, relatively tiny bodies and nearly no lower shadows.
Inverted hammer is at the bottom of a downward trend, indicating reversal.
Shooting star is at the top of a upward trend - indicating reversal
What is a Bullish Engulfing Pattern
The Bullish Engulfing pattern is a two candlestick reversal pattern that signals a strong up move may be coming.
It happens when a bearish candle is immediately followed by a larger bullish candle.
This second candle “engulfs” the bearish candle. This means buyers are flexing their muscles and that there could be a strong up move after a recent downtrend or a period of consolidation.
What is a Bearish Engulfing Pattern
the Bearish Engulfing pattern is the opposite of the bullish pattern.
This type of candlestick pattern occurs when the bullish candle is immediately followed by a bearish candle that completely “engulfs” it.
This means that sellers overpowered the buyers and that a strong move down could happen.
What are Tweezer Bottom/Tops
This type of candlestick pattern is usually be spotted after an extended uptrend or downtrend, indicating that a reversal will soon occur.
There are two types of Tweezer patterns: the Tweezer Bottom and the Tweezer Top
The first candlestick is the same as the overall trend. If price is moving up, then the first candle should be bullish.
The second candlestick is opposite the overall trend. If the price is moving up, then the second candle should be bearish.
The shadows of the candlesticks should be of equal length.
Tweezer Tops should have the same highs, while Tweezer Bottoms should have the same lows
What is the background to Fibonacci
Leonardo Fibonacci was a famous Italian mathematician
He had an “Aha!” moment when he discovered a simple series of numbers that created ratios describing the natural proportions of things in the universe.
The ratios arise from the following number series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…
This series of numbers is derived by starting with 0 followed by 1 and then adding 0 + 1 to get 1, the third number.
Then, adding the second and third numbers (1 + 1) to get 2, the fourth number, and so on.
After the first few numbers in the sequence, if you measure the ratio of any number to the succeeding higher number, you get .618.
For example, 34 divided by 55 equals .618.
If you measure the ratio between alternate numbers you get .382.
For example, 34 divided by 89 = 0.382 .
Fibonacci have two levels which are?
Fibonacci Retracement Levels
0.236, 0.382, 0.618, 0.764
Fibonacci Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618
