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Using Technical Analysis in Securities

Trading

Ivaylo Penev, CFA

Portfolio Manager, ELANA Fund Management

www.elana.net www.elana.net

What is Technical Analysis?

Method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume.

Market action is defined by:

Price actionVolumeOpen Interest


What is Technical Analysis?

Price action – price dynamics during a period

Volume – the amount of shares/contracts traded for a period

Open Interest – the number of options/futures contracts that are not closed or delivered on a particular day


Premises of Technical Analysis

Price movements represent all the information available

Prices move in trends

History repeats itself or as Mart Twain said – History does not repeat itself, but it often rhymes


Chart Types

Line charts

Bar charts

Candlestick charts

Dot charts

Point and figure charts


Chart Types - Line


Chart Types - Bar


Chart Types - Candle


Candlesticks


Technical Analysis in Practice

Trend lines

Support and resistance level

Chart patterns – continuation and reversal

Indicators

Other tools


Trend lines - upward


Trend lines - downward


Support and Resistance levels - Definition

Support level – in a down move support is the level where price tends to stop it’s fall at least temporary

Resistance level – the opposite of support, in an up move this is the level where price tends to stop it’s rise at least temporary

Once broken support levels turn to resistance levels and vice versa


Support and resistance levels


Reversal Patterns - Doji


Reversal Patterns – Head and Shoulders


Reversal Patterns – Double Tops


Reversal Patterns –Double Bottoms


Indicators – Moving Average


Indicators – Bollinger Bands


Fibonacci Retracements


Final Words

Technical vs. Fundamental Analysis orTechnical + Fundamental Analysis

Combinations of Indicators

The Trend is Your Friend

A triple top or bottom is a failed double top or bottom

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ЕLANA Fund ManagementSopharma Business Towers5, Lachezar Stanchev str., tower B, Sofia 1756tel.: +359 2 81 000 40, fax: +359 2 95 815 [email protected]

www.elana.net using technical analysis in securities trading ivaylo penev, cfa portfolio manager,...

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