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Tech Analysis Tutorial Flashcards

1
Q

Uptrend

A

Each successive peak and trough is higher

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2
Q

Downtrend

A

Each successive peak and trough is lower

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3
Q

Major trend

A

> 1 year

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4
Q

Intermediate trend

A

1-3 months

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5
Q

Near term trend

A

<1 month

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6
Q

Long term trend

A

Several intermediate trends which often move against the major trend

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7
Q

Channel

A

Two parallel trend lines that act as support and resistance

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8
Q

Round numbers

A

Important levels of support and resistance — trader psychology

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9
Q

Role reversal

A

When price breaks through it, resistance will often become support and support will often become resistance

Note: breaks through s & r can be trend accelerating OR reversing

Note: avoid trading around s & r’s — lots of volatility

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10
Q

Why is volume important?

A

High volume = stronger, more relevant move

Volume not moving with trend is sign of trend weakening

Low volume in chart pattern = weaker signal

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11
Q

Divergence

A

Contradiction between two indicators — e.g clear uptrend on declining volume

Signals direction of price trend is weakening

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12
Q

Linear vs. Logarithmic Scale

A

Linear (arithmetic) scale = set distance between points (e.g $10)

Logarithmic = set distance in terms of percentage change (e.g 10% increase)

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13
Q

Line Chart

A

Closing prices over set period of time

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14
Q

Bar chart

A

Vertical lines = high and low for each period

Horizontal dash left = open price
Horizontal dash right = close price

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15
Q

Candlestick chart

A

Vertical line = high and low for trading period

Wide bar (candle) = dif between open and close

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16
Q

Point and figure chart

A 
X’s = upward price trend
O’s = downward price trend

Reversal criteria — how far price moves to turn x’s to o’s and vice versus

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17
Q

Reversal & continuation patterns

A

Reversal = trend will reverse upon pattern completion

Continuation = trend will continue

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18
Q

Head & Shoudlers

A

Weakening in trend, deterioration in successive highs and lows. Security is likely to move against previous trend

Inverse head and shoulders = reversal of downtrend

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19
Q

Cup & Handle

A

Bullish continuation pattern

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20
Q

Double tops & bottoms

A

Come after sustained trend, signal trend is about to reverse.

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21
Q

Symmetrical triangle

A

Two trendlines converge.

Breakout to either upside or downside

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22
Q

Ascending triangle

A

Generally bullish, upside breakout

A couple weeks to several months

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23
Q

Descending triangle

A

Generally bearish, downside breakout

A couple weeks to several months

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24
Q

Flag or pennant

A

Sharp move followed by sideways move w/ converging (pennant) or parallel but slanted (flag) trendlines, ends in sharp move in same direction as beginning

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25
Wedge
Either continuation or reversal Symmetrical triangle that slants in up or down direction Falling wedge = bullish Rising wedge = bearish
26
Types of gaps
Breakaway gap = start of trend Runaway gap = middle of trend Exhaustion gap = end of trend
27
Tripe tops & bottoms
Signals reversal
28
Rounding bottom
Long term reversal from down to uptrend.
29
Simple moving average (SMA)
Sum of all past closing prices divided by number of prices Increasing number of prices (length of period) makes it less responsive One of best ways to gauge long term trend strength
30
Linear weighted average
??
31
Exponential moving average (EMA)
Places higher weight on more recent date points Regarded as much more efficient than linear weighted average
32
Major uses of moving averages
Identify trends and reversals Set up support and resistance levels
33
Moving average upward with price above it
Uptrend
34
Moving average downward with price below it
Downtrend
35
Short term average above long term average
Uptrend
36
Long term average above short term average
Downtrend
37
One moving average crossing through another
Reversal Short term if short term moving averages are used, long term reversal of longer moving averages used
38
Leading & lagging indicators
Leading = precedes price movement. Strongest during sideway or non-trending ranges. Lagging = confirms price movement
39
Oscillators
Indicators bound within a range, e.g 1-100 with 100 = overbought and 1 = oversold
40
Accumulation/distribution line
= ((close - low) - (high - close)) / (high - low) * period’s volume Attempts to measure ratio of buying to selling If price and A/D are moving in opposite directions, it signals reversal in direction of A/D line
41
Average directional index (ADX)
Measures trend strength Calculated using current and previous highs and lows and previous closes for at least 14 periods ADX is smoothed combination of +DI line and -DI line
42
Aroon indicator
Concept is that security will regularly reach new highs in uptrend and new lows in downtrend. Measures strength of up or down trends, whether new trend is beginning Up line = amount of time since last highest price during a period Down line = time since last lowest
43
Aroon oscillator
Plots difference between up and down lines. Range of -100 to 100 Higher value = upward strength Lower value = downward pressure
44
Moving average convergence divergence (MACD)
MACD = shorter term EMA - longer term EMA Difference between two exponential moving averages plotted against “signal line” (EMA of MACD, usually 9-day) Note: Shorter EMA signal line used for more volatile securities, longer for less volatile
45
MACD histogram
Histogram is difference between MACD and signal line Higher bars = more momentum
46
MACD crosses below signal line
Sell signal
47
MACD crosses above signal line
Buy signal
48
RSI
Relative strength index Momentum indicator calculated using average percentage gain or loss at close during a certain period. Indicates wether security is oversold or overbought.
49
RSI overbought
>70
50
RSI oversold
<30
51
On-balance volume (OBV)
Plots wether volume is up (+) or down (-)
52
Stochastic oscillator
Momentum indicator calculated using most recent closing price, highest and lowest closing price within a certain period to indicate wether a security is oversold or overbought. Concept is price should be closing near highs in uptrend and near lows in downtrend Uses %K and %D (SMA of %K) lines
53
Stochastic oscillator overbought
>80
54
Stochastic oscillator oversold
<20
55
Cup & handle duration
Several months to over a year
56
Double tops & bottoms duration
Signal intermediate and long term trend reversals
57
Triangles duration
A couple weeks to several months
58
Flag and pennant duration
Short term continuation pattern — 1-3 weeks
59
Wedge duration
3-6 months
60
Rounding bottom duration
Several months to several years
61
Upward and downward accumulation/distribution line
Line trending upward = more buying than selling Line trending downward = more selling than buying
62
ADX absent or weak trend
<20
63
ADX strong trend
>40
64
Aroon oscillator and price trend moving in opposite directions
Reversal warning
65
Aroon oscillator crosses 0 (center line)
Reversal
66
+MACD
Short term EMA above long term, upward momentum
67
-MACD
Long term EMA above short, downward momentum
68
Does a break beyond support or resistance signal a trend reversal?
Not always. Can be acceleration.
69
Should you place orders near support or resistance levels?
No. Too much volatility and price often only flirts with these levels. Place it a few points above support.
70
Positive Aroon Oscillator value
Upward strength
71
Negative Aroon oscillator value
Downward strength
72
%K and %D
The two lines on the stochastic oscillator %K is the raw measure %D is a moving average of %K and the more important line

Technical Analysis (1 decks)

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