Technical Analysis Flashcards
(115 cards)
1
Q
Comeback King Pattern
A
Stock that swings from overbought to oversold repeatedly (at least 3 times)
2
Q
Comeback Queen Pattern
A
Stock that goes from under fair value (under the 50 RSI) to overbought repeatedly (at least 3 times)
3
Q
Price momentum loss
A
Smaller and smaller candles as they approach a level of support.
4
Q
Possible trend change
A
Candles changing colors at support or resistance
5
Q
Bollinger Bands
A
2 Bands above and below a moving average 2 standard devitations away.
6
Q
How many % of the price data is between the bollinger bands?
A
95% of the price data.
7
Q
If the price is on the upper end of the bollinger bands…
A
…the market is maybe overextended and we expect a selloff (and a move to the lower end) (overbought) (sell)
8
Q
If the price is on the lower end of the bollinger bands…
A
…people may be looking for the market to roll back up and test the other end. (Oversold) (buy)
9
Q
If volatility drops, the bollinger bands will…
A
…get tighter
10
Q
If volatility increases, the bollinger bands will…
A
…widen
11
Q
The default time period of bollinger bands is…
A
…20 days
12
Q
Good entry point to buy or sell with bollinger bands is…
A
…when the bands start to widen and volatility increases.
13
Q
Bearish divergence
A
Price reaches new high
Indicator makes a lower high.
Price likely to go down.
14
Q
Bullish divergence
A
Price reaches a new low.
Indicator makes a higher low.
Price likely to go up.
15
Q
Fibonnaci Retracements
A
Lines on the price chart on the 23.6%, the 38.2%, 50%, and 61.8% mark to give you levels when to buy or sell.
16
Q
VWAP
A
Volume Weighted Average Price. It gives the average price a security has traded at throughout the day.
17
Q
Price above the VWAP
A
Bullish sentiment
18
Q
Price below the VWAP
A
Bearish sentiment
19
Q
VWAP calculation
A
Sum of prices x Volume / Total volume
20
Q
Buy call option
A
Gives us the right to buy 100 stocks at a certain price (the strike price) (betting on long position, price rising)
21
Q
Break even point (call option)
A
The Strike price + the premium cost. Everything above the strike price is profit.
22
Q
IV Crush
A
Implied Volatility is high, and options are expensive (often before earnings reports)
23
Q
When to buy call options
A
Before earnings
24
Q
Uptrend
A
Market makes successive higher highs and higher lows.
25
Downtrend
Market makes successive lower highs and lower lows.
26
Trendline for an Uptrend
Connect major throughs (the lows) (At least 2 throughs and a 3rd one for confirmation)
27
Trendline for a Downtrend
Connect major peaks (the highs) (At least 2 peaks and a 3rd one for confirmation)
28
Trendlines can act as...
...support or resistance. If the price breaks through the trendline the trend might be over.
29
MACD
Moving Average Convergence Divergence
30
When the stock begins to rise, the faster MA is...
...above the slower one. That is because the more recent prices are getting stronger than prices in the past. Possible uptrend.
31
When the stock price begins to become weaker, the faster MA is...
...below the slower one. That means that the more recent prices are getting weaker than the prices in the past. Possible downtrend.
32
The 2 lines in the MACD indicator are...
...the MACD line itself, and the signal line.
33
The MACD line is...
...the difference between the fast and the slow moving average (both are EMAs)
34
When the faster MA is below the slower one, the MACD is...
...negative.
35
When the faster MA is above the slower one, the MACD is...
...positive.
36
The signal line is...
...a moving average of the MACD line (usually a nine period EMA of the MACD line).
37
When the MACD goes above its average price (the signal line)...
...it could mean that prices are getting stronger with a possible uptrend. (Early entry on a buy signal)
38
When the MACD line goes from below zero to above zero...
...there is a possible uptrend. (Buy signal)
39
When the MACD line goes from above zero to below zero...
...there is a possible downtrend. (Sell signal, or going short).
40
Negative Divergence
MACD moves inversely to a rising stock, and could signal a potential reversal.
41
Positive Divergence
MACD moves inversely to a falling stock, and could signal a potential reversal.
42
Pip
Smallest amount of movement in a currency pair (relevant to us). 4th place away from the decimal
Example: EUR/USD drops from 1.0787 to 1.0786, it dropped 1 Pip.
43
Pip for Yen currency pairs
It´s the 2nd decimal place. For example: 110.90, the 0 after the 9 is a Pip.
44
Equilibrium Point
The central line of the Pivot Points. This is where the next day´s trading is expected to occur.
45
Pivot Points
Equilibrium Point (center), 3 resistance levels (R1, R2, R3 above the EP), and 3 support levels (S1, S2, S3, below the EP).
46
A break UP through any pivot level could signal...
...a possible buying opportunity.
47
A fall THROUGH any pivot level could signal...
...an opportunity to short the stock.
48
You can also use pivot points as...
...targets for when to enter or exit a trade.
49
Pivot Points can help you manage your risk by...
...indicating where to set appropriate stop losses.
50
Volume
The quantity of a security that trades between buyers and sellers. It is measured on a trade by trade basis and totaled over a given time period.
51
Share
Partial ownership of a company.
52
Average Daily Volume
The average daily volume for a given time period (usually 20-30 days).
53
Some investors believe that moves in price on higher than average volume...
...are more valid than moves on lower than average volume. Possible price move upwards.
54
Increased volume on the rally suggests...
...that institutions are buying the stock.
55
Increased volume on a downward chart suggests...
...that institutions are selling the stock.
56
Downtrends are...
...commonly faster than uptrends. (Stocks taking the stairs going up, and the window going down).
57
OBV indicator
On-balance volume. It helps spot volume strenght with the trend. It measures the volume on up and down days to see where the strenght is.
58
When volume is confirming an uptrend, the OBV line...
...will uptrend at a greater rate than the stock price.
59
When volume is confirming a downtrend, the obv line will...
... downtrend at a greater rate than the price.
60
Stochastic Oscillator
Momentum oscillator (like the RSI). Gives indications of overbought and oversold. Compares current prices to prices in the past (factures in highest high and lowest low).
61
2 lines of the stochastic oscillator
%k and %D (the signal line)
62
%D
Average %k over d (3) periods (smoother than %k)
63
usages of the Stochastic Oscillator
1. Overbought and oversold (like RSI)
2. Crossovers of %k and %D
3. Divergences between price and oscillator
64
If you have %k crossing BELOW %D...
...then you sell.
65
If you have %k crossing ABOVE %D
...then you buy.
66
Divergence: Price goes up and stochastic oscillator dips
potential price reversal.
67
Fast stochastic is...
...more sensitive than slow.
68
Slow stochastic...
...smooths out the %k line by averaging over d periods.
69
SWAPS
Switching between two parties. For example switching a floating variable loan rate for a fixed loan rate.
70
Hedging
A kind of insurance for your holdings. This is done by adding investments into our portfolio, that move in the opposite direction of what we´re trying to manage.
71
Hedging will ensure that if our holdings lose value...
...the new asset will appreciate thus offsetting the decline and providing some protection. (for example shorting the position of a stock he holds, or by derivatives.)
72
Derivatives
A contract whereby you enter a bet or an agreement with another investor. It derives its value from the underlying asset, like stocks, commodities, or currencies)
73
Derivative examples
Options, Futures
74
You can use a buy put option...
...as a hedging instrument, so you can sell your stocks for a specified price, even if the stock crashes.
75
Heikin Ashi
Japanese technique based on the candlestick theory, mainly used for trend determination. (The average pace of prices). It acts like an indicator.
76
Heikin
=Average
77
Ashi
=Pace
78
Heikin Ashi Candlesticks
Each candlestick is calculated and plotted using some information from the previous candlestick.
79
Heikin Ashi Open Price
The average of the open and close price of the previous canldestick.
80
Heikin Ashi Close Price
The average of the open, close, high and low prices of the previous candlestick.
81
Heikin Ashi High Price
One of the high, open and close price of the previous candlestick (which has the highest value)
82
Heikin Ashi Low Price
One of the low, open and close price of the previous candlestic (which has the lowest value).
83
Up Heikin Ashi Candlestick
The closing price must be ABOVE the midpoint of prior candle.
84
Down Heikin Ashi Candlestick
The closing price must be BELOW the midpoint of prior candle.
85
Heikin Ashi candlestick charts work like a...
...moving average.
86
When the market is bullish, Heikin Ashi candlesticks have...
...big (green) bodies, long upper shadows, and no lower shadow.
87
When the market is bearish, Heikin Ashi candlesticks have...
...big (red) bodies, long lower shadows, and no upper shadow
88
Reversal candlesticks in the Heikin Ashi charts look like...
...regular Doji candlesticks. (no, or small bodies, and long upper and lower shadows.) Price action is stalling.
89
Heikin Ashi charts work well with the...
4 hour or daily charts.
90
SMA
Simple Moving Average. It shows price trends by smoothing out price fluctuations.
91
Simple Moving Average assigns...
...equal weight to all previous data.
92
EMA
Exponential Moving Average
93
Exponential Moving Average assigns...
...more importance to the most recent data values.
94
MACD histogram...
...is comprised of the differences between the signal and MACD line.
95
The MACD line helps...
...determine upward or downward momentum.
96
Convergent
when the (MACD) lines convert to one another.
97
DIvergent
when the (MACD) lines move apart.
98
To calculate today´s 20 day SMA number...
...you add each of the past 20 day´s prices together, then divide them by 20.
99
When price goes above an upwardly sloping MA...
...it is a buy signal.
100
Support bounce
When the security´s MA line acts as a support level for the price, which bounces off the MA.
101
When the price rises up to the MA line and bounces...
...it is a sell signal.
102
Whipsaws
When the stock crosses upwards over a MA, giving one signal, and then reverses quickly downwards over the MA, giving the opposite signal.
103
EMA is helpful for...
...active traders, who want to place short term trades. They reacty quickly to the security´s price changes.
104
Doji candle (Common Doji)
A candle where the open and close price are the same, or nearly the same.
105
Doji meaning...
...market indecision. Lack of control by the bulls and the bears.
106
Another Doji meaning...
...possible reversal (change of direction).
107
Doji candles can offer decent entry points...
...when they form at support or resistance levels, pivot points or Fibonnaci Retracements.
108
Gravestone Doji...
...open and close are at the low, with a long, upward wig. (Bearish Pattern) Only trade this pattern near strong support and resistance levels.
109
Dragonfly Doji...
...Open and close price are at the high, and it has a long, lower wig. (Bullish pattern). Trade it near strong support and resistance levels.
110
Long legged Doji...
...long upper and lower wigs. (Market indecision). Should only be traded on higher timeframes.
111
Rare Doji...
...when the open, close, high and low are all the same. (When the market is very illiquid, complete uncertainty of the market direction)
112
Trade Dojis around...
...resistance and support levels.
113
The next 3 candles after a doji forms must...
...close above the high of that doji.
114
Conditional change after the 3 candles after a doji...
...a higher closing high above the doji´s high, but it must occur near a pivot point level. (For a long entry)
115
Doji Stop Loss
Use a stop loss below the low of the Doji.
