Lecture 10: Point and Figure Candlesticks Indicators and Oscillators

Question 1

Point and Figure chart:

A 3-box reversal eliminates some of the columns: a new column is not started until price ? by 3 boxes.

Answer 1

Point and Figure chart:
https://images.app.goo.gl/fshAjDH5p5KyPhRA7 or slides 82-84
A 3-box reversal eliminates some of the columns: a new column is not started until price reverses by 3 boxes.

Question 2

?:

• represent the open, high, low and close graphically.
• Can be extended to show volume by candle ?.

Answer 2

Candlesticks chart:

• represent the open, high, low and close graphically.
• Can be extended to show volume by candle width.

images:

https: //images.app.goo.gl/b38HNAheBkaDmE9X9
https: //images.app.goo.gl/9GpdTMyGoRyivLvz8

Question 3

The Moving Average Convergence-Divergence (MACD).
The MACD is based on two ??? – same idea as SMA but ? (recent prices have more weight).
MACD’s subtracts a 26 day EMA from a 12-day EMA and refers to this as the ‘?’ line.
This is smoothed by taking the 9 day EMA of the fast line, which is called the ‘?’ (or signal) line.
Trading Rule - ? when fast line crosses above slow line and ? when fast line crosses below slow line.
=> MACD provides analysts with strong and earlier buy/sell signals: an advantage over Moving averages

Answer 3

The Moving Average Convergence-Divergence (MACD).
The MACD is based on two Exponential Moving Averages – same idea as SMA but weighted (recent prices have more weight).
MACD’s subtracts a 26 day EMA from a 12-day EMA and refers to this as the ‘fast’ line.
This is smoothed by taking the 9 day EMA of the fast line, which is called the ‘slow’ (or signal) line.
Trading Rule - Buy when fast line crosses above slow line and sell when fast line crosses below slow line.
=> MACD provides analysts with strong buy/sell signals: an advantage over Moving averages

Question 4

Breadth indicators represent advancing stocks vs declining stocks.
- if advancing outnumbers declining => ? signal
=> ‘???’

Answer 4

Breadth indicators represent advancing stocks vs declining stocks.
- if advancing outnumbers declining => positive signal
=> ‘market momentum indicator’

Question 5

Breadth indicators:
= No of advancing stocks ? No of declining stocks (most basic)
or = (advances ? declines) ? total no of stocks

Answer 5

Breadth indicators:
= #advancing stocks - # declining stocks (most basic)
or = (advances - declines)/total # stocks

Question 6

Trin (Traders index) statistics:
= [? declining/ ? declining] / [? advancing / ? advancing]
(high volume => move is more ?)

Answer 6

Trin (Traders index) statistics:
= [Volume declining/ number declining] / [volume advancing / number advancing]
(high volume => move is more significant)

Question 7

Trin > 1 => ? (? share prices)
Trin < 1 => ? (? share prices)
Trin = 1 => ? market

Answer 7

Trin > 1 => bearish (falling share prices)
Trin < 1 => bullish (rising share prices)
Trin = 1 => balanced market

Question 8

Stochastic oscillator:
(formula explained in investopedia.com)
stochastic < 15: ?
stochastic > 85: ?
This runs against many investors' emotions: buy when market is at their ? and ? when market seems to do really well.

Answer 8

Stochastic oscillator:
(formula explained in investopedia.com)
stochastic < 15: oversold 
stochastic > 85: overbought
This runs against many investors' emotions: buy when market is at their worst and sell when market seems to do really well.