Academy #8 Technical Analysis Speakers: Charles & Daniel

1. Academy #8 Technical Analysis Speakers: Charles & Daniel Get connected to B&R Beurs @

2. Introduction • Charles-Antoine Bory • Board member + chairman Audacity • Swiss: good with other people’s money • Many years of investment experience • Daniel Göttmann • Chairman STCM • German: paying the bill in a few years • Many years of investment experience

3. Content • Introduction • Volatility • Charts • Basic patterns • Trend indicators • Momentum indicators • Advanced chart patterns • Links • Conclusion

4. What is technical analysis? • Graphical analysis • “In finance, technical analysis is a security analysis discipline used for forecasting the direction of prices through the study of past market data, primarily price and volume.” Wikipedia • Technical analysis is more concerned with finding cues about the market micro structure! • Belief that the historical performance of stocks and markets are indications of future performance.

5. Technical vs Fundamental • Never forgetyourfundamentalanalysis! • Use technicalanalysis as complement • Combinationis the key!

6. Why is it important? • Identifying securities to buy/sell • Timing of buy and sell orders • Drawing in your professional life

7. Volatility • Volatility is a measure for the variation of the price of a financial instrument over time • Standard deviation • A higher volatility implies a riskier asset • Volatility varies over time • Volatility typically high in bear markets

8. Volatility • Negatively correlated with price

9. Volatility • Stocks: volatility goes up, as prices go down • Implication for options? • Want to trade volatility? Use the VIX

10. Chart Types: Line Charts

11. Chart Types: OHLC

12. Chart Types: Candle Sticks

13. Basic Patterns

14. Patterns: Support • Price level at which demand is thought to be strong enough to prevent the price from declining further

15. Patterns: Resistance • Price level at which selling it thought to be strong enough to prevent the price from rising further

16. Patterns: Change in polarity principle • Resistance becomes support (and vice-versa)

17. Patterns: Trend

18. Patterns: Triple Bottom • Buy signal at (3)

19. Patterns: Triple Top • Sell signal at (3)

20. TrendIndicators

21. Trend: SMA

22. Trend: SMA

23. Trend: SMA

24. Trend: SMA • Golden Cross: fast moving average crosses slow moving average from below • Buy signal! • Typically comes with high trading volumes

25. Trend: SMA • Dead Cross: fast moving average crosses slow moving average from top • Sell signal! \\

26. Trend: Bollinger Bands • 1 movingaverage (e.g. 20 days) +/- 1 standard deviation • Bands as support/resistance • Adjusts to market conditions • Contains ~88% of pricemovements

27. Trend: MACD • MovingAverage Convergence Divergence • MACD=12d EMA – 26d EMA, 9d EMA (signal line) • Trend + momentum • Crossover

28. MomentumIndicators

29. Momentum: RSI • Relative Strength Index • 0<RSI<100 • RSI>70 => overbought (=> sell) • RSI<30 => oversold (=> buy)

30. Momentum: Stochastic Oscillator • Similar to RSI • Used to forsee reversal • 20<STO<80

31. Momentum: other • Rate of Change (ROC) • Commodity Channel Index (CCI) • StochRSI • TIX • Ulitmate Oscillator (ULT) • Aroon […]

32. Advanced Chart Patterns

33. Patterns: Candle patterns

34. Patterns: Head & Shoulder • Most reliable trend-reversal pattern • Detectable by volume peaks • Rises to a peak and subsequently declines. • The price rises above the former peak and again declines. • Price rises again, but not to the second peak, and declines once more.

35. Patterns: Triangles • Ascending • Descending • Use a price range

36. Questions?

37. Volume • The more volume the better • Lower transaction costs (bid-ask spread)

38. What is happening?

39. What is happening?

40. What is happening?

41. What is happening?

42. Recommended websites • Investopedia.com • To lookup easy definitions • Bloomberg.com • Click on “Index Chart” -> “Overlay” / “Indicators” • Stockcharts.com • Perform technical analysis easily • Explanation for each indicator • All indicators available • Chartgame.com • Test your knowledge and predictions!

43. Conclusion • Always combine many indicators at the same time • Avoid multicollinearity • E.g. Candle sticks + Volatility + Volume + SMA + MACD + RSI • Focus on liquid stocks • Always use it as a complementary tool to fundamental analysis • Now, impress your investment group!

44. Thank you for your attention! • Next B&R Beurs events: • 13/12 at 9pm: Social drink @ Sus&Co • 15/12: Deadline ABN Amro Turbo Assignment • 10/01: New Year’s drink (Champagne!!)