TECHNICAL ANALYSIS FOR BEGINNERS

Good Morning fellow forumites!

Today, I want to start a series on educating beginners to Technical Analysis (TA). This will only be summary, but I urge individual interested to do personal study & ask further questions for clarifications.

What is TA?
Technical analysis is the framework in which traders study price movement. The theory is that a person can look at historical price movements and determine the current trading conditions and potential price movement. The main reason for using TA is that, theoretically, all current market information is reflected in price. If price reflects all the information that is out there, then price action is all one would really need to make a trade.

Technical analysts look for similar patterns that have formed in the past, and will form trade ideas believing that price will act the same way that it did before. Technical Analysts use chart to study historical data in order to forecast the price direction into the future.

Now let's talk about chart...

Types of Charts
There are 3 commonly used charts. These are:

1. Line chart
2. Bar chart
3. Candlestick chart

Line Charts
A line chart is a line which connects one closing price to the next closing price and when strung together, it shows the general price movement over a period of time.

Chart 1 below is the line chart of UCAP stock price from late December 2015 till date. The horizontal axis consist of date while the vertical axis is the price of the stock. So as at the close of market yesterday, 16/03/2017, the closing price of UCAP is 2.90NGN

Bar chart
A bar chart shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that time period, while the top of the bar indicates the highest price. The vertical bar itself indicates the trading range as a whole. The horizontal little line on the left side of the bar is the opening price, and the right-side horizontal little line is the closing price. Chart 2 shows a typical bar chart for a period, which can be a day/week etc. When you combine series of the bar charts together shows the price movt. Chart 3 is the chart bar of UCAP stock as shown in the line chart.

Chart 3 comprises red and green bars. Colour configuration was used to easily show Chartist the relationship between the OPEN and CLOSE prices on the bar. If the open price is lower than the close price; it means price is going up, so coloured green, red is vice versa.

Bar chart is more complex, and can be used to determine human behavioural pattern to the market at a particular period.


NOTE: The 'D' that appears on the chart only indicates dividend paid & date. It has nothing to do with TA, but for info purpose.

FOR MORE LEARNING VISIT: http://stockcharts.com/school/doku.php?id=chart_school


...to continue next week. Have a successful trading day

IMPORTANT QUOTE
"In investing, what is comfortable is rarely profitable." - Robert Arnott

At times, you will have to step out of your comfort zone to realize significant gains. Know the boundaries of your comfort zone and practice stepping out of it in small doses. As much as you need to know the market, you need to know yourself too. Can you handle staying in when everyone else is jumping ship? Or getting out during the biggest rally of the century? There's no room for pride in this kind of self-analysis. The best investment strategy can turn into the worst if you don't have the stomach to see it through.

Weaknesses of Fundamental Analysis

Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily time-consuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on NSE. When this happens, the analyst basically claims that the whole market has got it wrong or manipulative. This is not to say that there are not such things out there, but it is quite brash to imply that the market price, and hence NSE, is wrong.

Weaknesses of Technical Analysis

Analyst Bias
Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis. It is important to be aware of these biases when analyzing a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have a bearish tilt.

BullBearMkt:
Weaknesses of Fundamental Analysis

Time Constraints
Fundamental analysis may offer excellent insights, but it can be extraordinarily time-consuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on NSE. When this happens, the analyst basically claims that the whole market has got it wrong or manipulative. This is not to say that there are not such things out there, but it is quite brash to imply that the market price, and hence NSE, is wrong.

Mr market no send d opinion of anyone !

Nice one

- I think for people who like the BUY & HOLD strategy, should consider a very long term Trend ff strategy
- This may help reduce the months / years of weak performance.

Example: BUY and Stay in the market when SP > 200dma, SELL & stay our of d market when SP < 200dma.
- This keeps your portfolio in d market direction.
- The moving average is not bias and has no opinions lol
- Helps put a structure to d long term investor style
- Gives you a simple trading plan and system to operate with in d market
- Helps you to avoid personal bias & opinions of the market
- Helps to weed out losers from your portfolio esp ''fundamental'' stocks wh are stuck in a bearish season wh can last for months or longer
- You can other conditions such as minimum mkt cap of companies you wud consider
- if you try this method , very few stocks would meet the condition today.

Dis: please 200 is an example ohhh. Due more DD.

a lot of results yet to be released ! Wont be surprised if some are released out after market closes today !

GTB
- will be breaking N26 today !

UBA
- very strong posture on d daily and weekly
- last time SP touched N6 was in April 2015 and got rejected
- another test loading loading
- but still needs a close above yesterday close today
- if opening price is > 5.40 #Godwin

fxuser:
UBA
- very strong posture on d daily and weekly
- last time SP touched N6 was in April 2015 and got rejected
- another test loading loading
- but still needs a close above yesterday close today
- if opening price is > 5.40 #Godwin

What if it opens above 5.4 and later loses and close 5‰ below 5.4

stokfrick:


What if it opens above 5.4 and later loses and close 5‰ below 5.4

#Godwin Always

stokfrick:


What if it opens above 5.4 and later loses and close 5‰ below 5.4

that's a minor rejection , better than opening lower and closing lower ! thats a full rejection

diamond
- 4 big candle sticks back to back on vol !
- swing traders lov this set up

stokfrick:


What if it opens above 5.4 and later loses and close 5‰ below 5.4

- opened lower at 5.21 !
- we wait till to see how it will close

fxuser:
GTB
- will be breaking N26 today !

Amen!

fxuser:


- ehn ehn
- we closed above that yeye 1.20 resistance ( well on below avg vol sha)
- this is the first higher close than prev day close in weeks !
- Houston we have lift off

FCMB
- OPened Higher at 1.25
- more bids coming in early
- houston , we have clearance

fxuser:


FCMB
- OPened Higher at 1.25
- more bids coming in early
- houston , we have clearance

Loco, your dream is near.

[quote author=fxuser post=54648516]

N1.20 wh was a recent resistance has now turned to support

SWIFT Networks is having a laugh this morning

fxuser:
SWIFT Networks is having a laugh this morning

Why

OBAGADAFFI:

Why

its going off and on , on dis end !
seems steady now

Fidelity
- overhead supply a big resistance

fxuser:


its going off and on , on dis end !
seems steady now

Their Problem started since monday, i had to get NTEL as backup internet.

OBAGADAFFI:


Their Problem started since monday, i had to get NTEL as backup internet.

Heard Ntel is not bad ! Will chk it out
Hav Smile and IPNX for back up, but wont recommend IPNX

Sir loco just viewing the thread n disappearing. Pls say somtin to ur fcmb faithfuls

I swear to GOD zenith is a one chance bank.
Did godlyguy recommend zenith as well?

Just take a look at GTB going higher...

Tritri:
I swear to GOD zenith is a one chance bank.
Did godlyguy recommend zenith as well?

Just take a look at GTB going higher...

Maybe he is having a vision about it for now.
His mere thoughts on an equity gives that equity laser fever...
Had he recommended it, it would have been at N9.97 BY NOW and on DOUBLY-FULL OFFER....

DeRuggedProf:


Maybe he is having a vision about it for now.
His mere thoughts on an equity gives that equity laser fever...
Had he recommended it, it would have been at N9.97 BY NOW and on DOUBLY-FULL OFFER....

Tritri:
I swear to GOD zenith is a one chance bank.
Did godlyguy recommend zenith as well?

Just take a look at GTB going higher...

People love GTB'S business model.
They have made it clear that they will not have money to be borrowing out anyhow IN 2017 even if it offends CBN/GOVT.
They are also LUCKY....(If godlyguy keeps avoiding recommending it... )

I dreamt seeing godlyguy in a joint with LOCO on his knees begging the guy to stay away from FCMB cos his LIFE SAVINGS are there INTACT/NON INSURED...

[quote author=fxuser post=54672231][/quote]

touching 1.26

DeRuggedProf:


People love GTB'S business model.
They have made it clear that they will not have money to be borrowing out anyhow IN 2017 even if it offends CBN/GOVT.
They are also LUCKY....(If godlyguy keeps avoiding recommending it... )

Mr Segun Agbaje is dollar long and fixed income long ! the man can't shout . NO LOANS till 2019 loll

fxuser:


- opened lower at 5.21 !
- we wait till to see how it will close

the buyers have taken out the doubters and now stretching leg further