Foundation Programme

LESSON 4 NOTES
TRIANGLES
• As ce ndi ng Tr i a n gles
Com bi nati o n of Dia go n a l Su p p o r t and Horizont al Resist ance.

Ascending Triangle Formation

Buy here

Break Out
stop loss option 2 : halfway point
stop loss here (best option)
Uptrend

Descending Triangle Formation

Down Trend

Break Out

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AVERAGE TRUE RANGE (ATR)
• Th i s to o l me a s u res a n avera ge Movement in Price, over a pre-defined numbe r of
tim e pe r i o ds.
• AT R i s a te c hn ica l a n a lys is vo lati lit y indicator originally developed by J. Welle s
Wi l de r, Jr. fo r co m m o d iti es .

• Th e i ndi c at o r d o es n ot p rov id e a n indicati on of price t rend, simply t he degre e

of pr i ce vo l ati lity.
• Th e ave ra ge t r u e ra n ge is a n N- d ay smoot hed moving average (SMMA) of t he
tru e ra nge va l u es .

ATRt-1 x (n-1) + TRt

ATRt =
n

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OSCILLATORS
An os c i l l ato r i s a tech n ica l a n a lys is indicator t hat varies over ti me wit hin a ba nd
(ab ove a nd be l ow a centre lin e, o r b et ween set l evel s). Oscil lators are used to
d i s cove r sho r t - ter m over b o u ght o r oversold conditi ons.
• Re l ati ve St re ngth In d ex (R SI)
• M AC D
• W i l l i a m s % Ra n ge
• Sto c ha sti c
• Com m o di t y C h a n n el In d ex

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FIBONACCI RETRACEMENT
• Fi b o na cc i Ret ra cem ents a re rati o s used to identi f y potenti al reversal levels. The se
rati o s a re fo un d in th e Fib o n a cci sequence. The most popular Fibonacci
Ret ra ce me nt s a re 61. 8% a n d 38. 2 %. Note t hat 3 8 .2 % is oft en rounded to 3 8%
an d 6 1 .8 i s rou n d ed to 62%.

• Le o na rdo Pi sa n o Bo go llo (1170-125 0 ), an It al ian mat hemati cian f rom Pisa, i s

c redi te d w i t h intro d u cin g th e Fib onacci sequence t o t he West . It is as fol lows:
• 0 , 1 , 1 , 2 , 3, 5, 8, 13, 21, 34, 55 , 8 9 , 1 4 4 , 2 3 3 , 3 7 7 , 6 1 0 ……
Th e se que nce exten d s to infin ity and cont ains many unique mat hemati cal
p ro pe r ti e s

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