A self study exam preparatory guide for financial technical analysis certifications

Written by the course director and owner of www.tradermasterclass.com, a leading source of live and online courses in trading, technical analysis, and money management, A Handbook of Technical Analysis: The Practitioner's Comprehensive Guide to Technical Analysis is the first financial technical analysis examination preparatory book in the market. It is appropriate for students taking IFTA CFTe Level I and II (US), STA Diploma (UK), Dip TA (Aus), and MTA CMT Level I, II, and III exams in financial technical analysis, as well as for students in undergraduate, graduate, or MBA courses.

The book is also an excellent resource for serious traders and technical analysts, and includes a chapter dedicated to advanced money management techniques. This chapter helps complete a student's education and also provides indispensable knowledge for FOREX, bond, stock, futures, CFD, and option traders.

• Learn the definitions, concepts, application, integration, and execution of technical-based trading tools and approaches
• Integrate innovative techniques for pinpointing and handling market reversals
• Understand trading mechanisms and advanced money management techniques
• Examine the weaknesses of popular technical approaches and find more effective solutions

The book allows readers to test their current knowledge and then check their learning with end-of-chapter test questions that span essays, multiple choice, and chart-based annotation exercises. This handbook is an essential resource for students, instructors, and practitioners in the field. Alongside the handbook, the author will also publish two full exam preparatory workbooks and a bonus online Q&A Test bank built around the most popular professional examinations in financial technical analysis.

Autorentext

MARK ANDREW LIM graduated from King's College London in Special Physics. He was awarded the Bronwen Wood Memorial Prize in financial technical analysis by the Society of Technical Analysis (UK) in 2007 and holds IFTA's CFTe designation. Mark is the author of The Profitable Art and Science of Vibratrading and also a contributing author of The Wiley Trading Guide Volume II. He conducts a range of technical analysis and trading Masterclasses via online webinars and onsite seminars, covering intermediate to advanced profit extraction methodologies for directional and non-directional trading. He can be reached at www.tradermasterclass.com.

Inhalt

Foreword xiii

Preface xv

Acknowledgments xxi

About the Author xxiii

Chapter 1 Introduction to the Art and Science of Technical Analysis 1

1.1 Main Objective of Technical Analysis 1

1.2 Dual Function of Technical Analysis 3

1.3 Forecasting Price and Market Action 3

1.4 Classifying Technical Analysis 11

1.5 Subjectivity in Technical Analysis 16

1.6 Basic Assumptions of Technical Analysis 30

1.7 Four Basic Assumptions in the Application of Technical Analysis 39

1.8 Market Participants 40

1.9 Chapter Summary 42

Chapter 1 Review Questions 43

Chapter 2 Introduction to Dow Theory 45

2.1 Origins and Proponents of Dow Theory 45

2.2 Basic Assumptions of Dow Theory 46

2.3 Challenges to Dow Theory 62

2.4 Chapter Summary 64

Chapter 2 Review Questions 64

Chapter 3 Mechanics and Dynamics of Charting 65

3.1 The Mechanics and Dynamics of Charting 65

3.2 Gap Action: Four Types of Gaps 72

3.3 Constant Chart Measures 73

3.4 Futures Contracts 89

3.5 Chapter Summary 97

Chapter 3 Review Questions 98

Chapter 4 Market Phase Analysis 99

4.1 Dow Theory of Market Phase 99

4.2 Chart Pattern Interpretation of Market Phase 104

4.3 Volume and Open Interest Interpretation of Market Phase 112

4.4 Moving Average Interpretation of Market Phase 115

4.5 Divergence and Momentum Interpretation of Market Phase 116

4.6 Sentiment Interpretation of Market Phase 118

4.7 Sakata's Interpretation of Market Phase 119

4.8 Elliott's Interpretation of Market Phase 120

4.9 Cycle Analysis Interpretation of Market Phase 122

4.10 Chapter Summary 124

Chapter 4 Review Questions 124

Chapter 5 Trend Analysis 125

5.1 Definitions of a Trend 125

5.2 Quality of Trend: 16 Price Characteristics Impacting Future Price Action and Trend Strength 132

5.3 Price and Trend Filters 144

5.4 Trend Participation 145

5.5 Price Inflection Points 148

5.6 Trendlines, Channels, and Fan Lines 155

5.7 Trend Retracements 166

5.8 Gaps and Trends 166

5.9 Trend Directionality 168

5.10 Drummond Geometry 169

5.11 Forecasting Trend Reversals 170

5.12 Chapter Summary 171

Chapter 5 Review Questions 171

Chapter 6 Volume and Open Interest 173

6.1 The Mechanics of Volume Action 173

6.2 Volume Oscillators 203

6.3 Chapter Summary 208

Chapter 6 Review Questions 208

Chapter 7 Bar Chart Analysis 209

7.1 Price Bar Pattern Characteristics 209

7.2 Price Bar Pattern Characteristics 211

7.3 Popular Bar Reversal Patterns 218

7.4 Volatility Based Breakout Patterns 230

7.5 Chapter Summary 233

Chapter 7 Review Questions 233

Chapter 8 Window Oscillators and Overlay Indicators 235

8.1 Defining Indicators and Oscillators 235

8.2 Eight Ways to Analyze an Oscillator 240

8.3 Cycle Period, Multiple Timeframes, and Lagging Indicators 252

8.4 Input Data 253

8.5 Trend Trading Using Oscillators 255

8.6 Window Oscillators 255

8.7 Overlay Indicators 262

8.8 Chapter Summary 266

Chapter 8 Review Questions 266

Chapter 9 Divergence Analysis 267

9.1 Definition of Divergence 268

9.2 General Concept of Divergence 272

9.3 Standard and Reverse Divergence 291

9.4 Price Confirmation in Divergence Analysis 323

9.5 Signal Alternation between Standard and Reverse Divergence 337

9.6 More Examples of Divergence 338

9.7 Chapter Summary 354

Chapter 9 Review Questions 355

Chapter 10 Fibonacci Number and Ratio Analysis 357

10.1 The Fibonacci Number Series 357

10.2 Fibonacci Ratios 359

10.3 Fibonacci Retracements, Extensions, Projections, and Expansions 363

10.4 Fibonacci ( Based) Percentage Retracement Levels within an Observed Price Range 368

10.5 Fibonacci ( Based) Percentage Extension Levels beyond an Observed Price Range 375

10.6 Fibonacci ( Based) Percentage Expansion Levels beyond an Observed Price Range 379

10.7 Fibonacci ( Based) Percentage Projection Levels from a Significant Peak or Trough 384

10.8 Why Should Fibonacci Ratios or Numbers Work at All? 388

10.9 Geometrically versus Numerically Based Fibonacci Operations 389

10.10 The Fibonacci Trader's Technical Toolbox 392

10.11 Area of Application 394

10.12 Selecting Effective Inflection Points for Fibonacci Operations 396

10.13 Fibonacci, Dow, Gann, and Floor Trader's Pivot Point Levels 397

10.14 Probability of Continuation and Reversal in Fibonacci Retracements and Extensions 400

10.15 Fibonacci Based Entries, Stoplosses, and Minimum Price Objectives 400

10.16 Fibonacci Twö and Three Leg Retracements 402

10.17 Fibonacci Fan Lines 409

10.18 Fibonacci Channel Expansions 412

10.19 Fibonacci Arcs 414

10.20 Supportive and Resistive Fibonacci Clusters 415

10.21 Potential Barriers in Fibonacci Projections 417

10.22 Fibonacci Time and Ratio Projection Analysis on Elliott Waves 417

10.23 Chapter Summery 431

Chapter 10 Review Questions 431

Chapter 11 Moving Averages 433

11.1 Seven Main Components of Moving Averages 433

11.2 Nine Main Applications of Moving Averages 451

11.3 Chapter Summary 462

Chapter 11 Review Questions 463

Chapter 12 Envelopes and Methods of Price Containment 465

12.1 Containing Price Action and Volatility about a Central Value 465

12.2 Adjusting Bands for Effective Price Containment 475

12.3 Methods of Price Containment 477

12.4 Chapter Summery 492

Chapter 12 Review Questions 492

**Chapter 13 Ch…