Fundamental and Technical Analysis Flashcards
is a method of assessing a security’s intrinsic value by analyzing various macroeconomic and microeconomic factors
Fundamental Analysis
The ultimate goal of Fundamental Analysis
to quantify a security’s intrinsic value.
___________ can then be compared to its ____________ to help with investment decisions.
intrinsic value, current market price
aims to determine the “_____________” (true value) of a security.
correct price
Fundamental analysis is an extremely comprehensive approach that requires a deep knowledge of ______________________
accounting, finance, and economics
Components of Fundamental Analysis
- Economic analysis
- Industry analysis
- Company analysis
This approach immediately dives into the analysis of individual stocks.
Bottom-up
This approach starts the analysis with the consideration of the health of the overall economy.
Top-down
a tool, or method, used to predict the probable future price movement of a security – such as a stock or currency pair – based on market data.
Technical Analysis
indicator of Future Performance
Past Price
2 primary variables for technical analysis
- Time Frames
- Technical Indicators
Popular time frames
- 5-minute chart
- 15-minute chart
- Hourly chart
- 4-hour chart
- Daily chart
display the high, low, open, and closing prices of a security for a specific period. It reflect the impact of investor sentiment on security prices and are used by technical analysts to determine when to enter and exit trades.
Candlestick
Candlesticks originated from ______________________ to track market prices and _______________ hundreds of years before becoming popularized in the ____________
Japanese rice merchants and traders, daily momentum, United States
2 Foundational concepts in technical analysis
Support and Resistance
occurs when a downtrend is expected to pause due to a demand concentration.
Support
occurs when an uptrend is expected to pause temporarily, due to a concentration of supply.
Resistance
Technical analysts use support and resistance levels to identify ________ on a chart where the probabilities favor a _______ or _______ of a ____________
price points, pause, reversal, prevailing trend
a simple technical analysis tool that smooths out price data by creating a constantly updated average price.
Moving Average
a technical analysis indicator, or calculations used to determine the overall trend of the market over different time frames
Pivot Point
which usually also identify several support and resistance levels in addition to the pivot point, are used by many traders to identify price levels for entering or closing out trades
Daily Pivot Point indicators
often mark significant support or resistance levels or the levels where trading is contained within a range. If trading soars (or plummets) through the daily pivot and all the associated support or resistance levels, this is interpreted by many traders as “breakout” trading that will shift market prices substantially higher or lower, in the direction of the breakout.
Pivot point levels
was a 12th-century mathematician who developed a series of ratios that is very popular with technical traders.
Fibonacci
are commonly used to pinpoint trading opportunities and both trade entry and profit targets that arise during sustained trends.
Fibonacci ratios/levels
Primary Fibonacci ratio
.24
.38
.76
.62
it can be drawn between any two significant price points, such as a high and a low. It will then create the levels between those two points.
Fibonacci Indicator
do not use percentages and are based on set fixed numbers: the high, low, and close of the prior day.
Pivot Points
These strategies involve entering long positions when a security is trending higher and placing a stop-loss below key trendline support levels.
Trendlines and chart patterns
The smartest traders are always watching for _________ that signals from their chosen indicators may be __________.
warning signs, misleading
