Professional Documents
Culture Documents
Technical Analysis
Technical Analysis
Technical Analysis
Charting Stocks
Bar Charts and Japanese Candlestick Charts
Point and Figure Charts
Major Chart Patterns
Price-based Indicators
Volume-based Indicators
Dow Theory
Elliot Wave
Charting the Market
Low Low
Note: You should print the Standard Japanese Standard Japanese
example charts (next two Bar Chart Candlestick Bar Chart Candlestick
Trend Lines
Moving Averages
Price Patterns
Indicators
Cycles
Trend Lines
characterized by two
small peaks on either Left Shoulder Right Shoulder
This is a reversal
H&S Bottom
pattern, meaning that Neckline
it signifies a change
in the trend. Left Shoulder
Right Shoulder
Head
Head & Shoulders Example
Sell Signal
measuring implications
as the H&S.
Double Bottom
Double Bottom Example
Triangles
Broadening Bottoms
These formations are like
reverse triangles.
These formations usually
signal a reversal of the
trend.
Broadening Tops
DJIA Oct 2000 to Oct 2001 Example
Nov to Mar
Trading range
Descending
triangles
periods.
They are used to smooth out 50
Price
periods.
45
OBV confirms
trend change
but doesn’t
lead
Bollinger Bands
Bollinger bands were created by John Bollinger
Bollinger Bands are based on a moving average of the
closing price.
They are two standard deviations above and below the
moving average.
A buy signal is given when the stock price closes below
the lower band, and a sell signal is given when the stock
price closes above the upper band.
When the bands contract, that is a signal that a big move
is coming, but it is impossible to say if it will be up or
down.
The buy signals are far more reliable than the sell
signals.
Bollinger Bands Example Chart
Sell signal
Buy signals
Primary Trend
Called “the tide” by Dow, this is the trend that
defines the long-term direction (up to several years).
Others have called this a “secular” bull or bear
market.
Secondary Trend
Called “the waves” by Dow, this is shorter-term
departures from the primary trend (weeks to months)
Day to day fluctuations
Not significant in Dow Theory
Dow Theory Trends (2)
Does Dow Theory Work?
B
A
C
3
4
1
2
The classification of a wave at any particular degree can vary, though
practitioners generally agree on the standard order of degrees
Grand super cycle: multi-century
Super cycle: multi-decade (about 40-70 years)
Cycle: one year to several years (or even several decades under an Elliott
Extension)
Primary: a few months to a couple of years
Intermediate: weeks to months
Minor: weeks
Minute: days
Minuette: hours
Subminuette: minutes
Fibonacci Numbers