Benny Fat Part2
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- Pages: 13
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Technical Analysis A study of price (and volume) actions in the past to determine future price actions. The study of price against time is done on a chart
A technical indicator, as its name suggests, indicates a price action and they can be in the form of chart patterns (that repeat frequently) and statistical indicators (like moving average).
It does not take a long time to understand how to analyze a chart. Price information is cheap and easily available. I will provide you with a solid foundation on how to use technical analysis today. Copyright © 2008 by Benny Lee, NextView
23
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION
What can you make out of a chart? Without indicators, you do not understand price actions
Copyright © 2008 by Benny Lee, NextView
24
1
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Would you be able to understand the content of the water in this glass of water? Indicator 3: Finger - Touch
Indicator 1: Eyes - Look
Indicator 2: Nose - Smell
Indicator 4: Chemical – Chemical content
The more you understand, the less risk you will have Copyright © 2008 by Benny Lee, NextView
25
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION
Most Important Price Indications: 1. The Trend 2. Support and Resistance 3. Momentum of the Trend
Important Trading Rule for Technical Analysis: Technical Indicators, no matter how much you apply and try to understand price actions, can only minimize your trading risk. Understanding price actions does not eliminate risk completely.
Copyright © 2008 by Benny Lee, NextView
26
2
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 1. Trends are divided into 3 groups: Up / Bull Trend - Defined by higher highs and higher lows Down / Bear trend - Defined by lower highs and lower lows Sideway / choppy trend - Defined by same level of highs and same level of lows
Sideways Up trend
Down trend
Copyright © 2008 by Benny Lee, NextView
27
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 2. Trend can be determined by drawing trend lines:
Down trend line
Up trend line
Copyright © 2008 by Benny Lee, NextView
28
3
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 3. Support and Resistance can be determined by these trend lines Resistance
A parrallel line is normally created from the trend line and is plotted at the price highs
Support
Up trend line
Copyright © 2008 by Benny Lee, NextView
29
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 3. Support and Resistance can be determined by these trend lines
Down trend line
A parrallel line is created from the trend line and is plotted at the price highs
Resistance
Support
Copyright © 2008 by Benny Lee, NextView
30
4
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend
Up trend
Down trend
Copyright © 2008 by Benny Lee, NextView
31
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend Strong momentum
A strong trend is an indication that the trend has a high chance to continue its trend and make new high (if bull trend) or make new low (if down trend). Therefore, price is expected to continue Copyright © 2008 by Benny Lee, NextView
32
5
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend Weak momentum
A weak trend is an indication that the trend has a low chance to continue its trend and make new high (if bull trend) or make new low (if down trend). Therefore, price is expected to reverse (if it breaks the trend line). Copyright © 2008 by Benny Lee, NextView
33
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum: The Relative Strength Index (RSI) Indicator RSI Calculation RSI =
100 - (
100 ) 1 + RS
Relative Strength, RS = Average Gain Average Loss Average Gain = Total Gains n Average Loss = Total Loss n n = No. of RSI periods
The RSI Indicator consists of the RSI line and 2 horizontal lines. Line 1 = RSI Line 2 = 70 (overbought) Line 3 = 30 (oversold) Copyright © 2008 by Benny Lee, NextView
34
6
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION How to use RSI in an up trend Price
Price
RSI
RSI
Bullish Convergence
Bearish Divergence
Indicates a strong up trend. Price Indicates a weak up trend. Price has a high chance of going has a low chance of going higher higher and creating new high. and therefore expected to RSI has to be above 50 for the reverse down validity Copyright © 2008 by Benny Lee, NextView
35
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION How to use RSI in an down trend Price
Price
RSI
RSI
Bearish Convergence
Bullish Divergence
Indicates a strong down trend. Price has a high chance of going lower and creating new low. RSI
Indicates a weak down trend. Price has a low chance of going lower and therefore expected to reverse up
has to be below 50 for the validity Copyright © 2008 by Benny Lee, NextView
36
7
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Copyright © 2008 by Benny Lee, NextView
37
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Price up trend continues after correction at support
Copyright © 2008 by Benny Lee, NextView
38
8
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Copyright © 2008 by Benny Lee, NextView
39
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Price up trend unable to hold at support
Copyright © 2008 by Benny Lee, NextView
40
9
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
41
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
42
10
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received after market closed, Would you buy?
Copyright © 2008 by Benny Lee, NextView
43
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received after market closed, Would you buy?
Copyright © 2008 by Benny Lee, NextView
44
11
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
45
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
46
12
4/16/2008
Combining Fundamental and Technical Analysis LATEST NEWS REPORTS (past 1 week) 19 Mar RM2.38
A Research company initiates a BUY call on Shangri–La (Shang). RNAV RM3.70. Current price Source: Bursa
CMDF 18 Mar
A Bank upgrades Gamuda from hold to BUY. Price Target RM3.48. Current Price RM3.00 Source: DJ
Newswire 13 Mar RM1.31 CMDF
International Financial broker initiate BUY call on Titan. Target price RM1.78. Current price Source: Bursa
12 Mar RM1.08. CMDF
A Securities Co. initiates a BUY call on Freight Management Hldgs (Freight). Target price Current price RM0.82 Source: Bursa
Copyright © 2008 by Benny Lee, NextView
Combining Fundamental and Technical Analysis
THANK YOU Email: [email protected] Courses Website: www.thenextview.com Forum Website: www.investasiaonline.com Blog: www.tradinglobby.com Copyright © 2008 by Benny Lee, NextView
13
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Technical Analysis A study of price (and volume) actions in the past to determine future price actions. The study of price against time is done on a chart
A technical indicator, as its name suggests, indicates a price action and they can be in the form of chart patterns (that repeat frequently) and statistical indicators (like moving average).
It does not take a long time to understand how to analyze a chart. Price information is cheap and easily available. I will provide you with a solid foundation on how to use technical analysis today. Copyright © 2008 by Benny Lee, NextView
23
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION
What can you make out of a chart? Without indicators, you do not understand price actions
Copyright © 2008 by Benny Lee, NextView
24
1
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Would you be able to understand the content of the water in this glass of water? Indicator 3: Finger - Touch
Indicator 1: Eyes - Look
Indicator 2: Nose - Smell
Indicator 4: Chemical – Chemical content
The more you understand, the less risk you will have Copyright © 2008 by Benny Lee, NextView
25
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION
Most Important Price Indications: 1. The Trend 2. Support and Resistance 3. Momentum of the Trend
Important Trading Rule for Technical Analysis: Technical Indicators, no matter how much you apply and try to understand price actions, can only minimize your trading risk. Understanding price actions does not eliminate risk completely.
Copyright © 2008 by Benny Lee, NextView
26
2
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 1. Trends are divided into 3 groups: Up / Bull Trend - Defined by higher highs and higher lows Down / Bear trend - Defined by lower highs and lower lows Sideway / choppy trend - Defined by same level of highs and same level of lows
Sideways Up trend
Down trend
Copyright © 2008 by Benny Lee, NextView
27
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 2. Trend can be determined by drawing trend lines:
Down trend line
Up trend line
Copyright © 2008 by Benny Lee, NextView
28
3
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 3. Support and Resistance can be determined by these trend lines Resistance
A parrallel line is normally created from the trend line and is plotted at the price highs
Support
Up trend line
Copyright © 2008 by Benny Lee, NextView
29
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend 3. Support and Resistance can be determined by these trend lines
Down trend line
A parrallel line is created from the trend line and is plotted at the price highs
Resistance
Support
Copyright © 2008 by Benny Lee, NextView
30
4
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION The Trend Is Your Friend
Up trend
Down trend
Copyright © 2008 by Benny Lee, NextView
31
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend Strong momentum
A strong trend is an indication that the trend has a high chance to continue its trend and make new high (if bull trend) or make new low (if down trend). Therefore, price is expected to continue Copyright © 2008 by Benny Lee, NextView
32
5
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend Weak momentum
A weak trend is an indication that the trend has a low chance to continue its trend and make new high (if bull trend) or make new low (if down trend). Therefore, price is expected to reverse (if it breaks the trend line). Copyright © 2008 by Benny Lee, NextView
33
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum: The Relative Strength Index (RSI) Indicator RSI Calculation RSI =
100 - (
100 ) 1 + RS
Relative Strength, RS = Average Gain Average Loss Average Gain = Total Gains n Average Loss = Total Loss n n = No. of RSI periods
The RSI Indicator consists of the RSI line and 2 horizontal lines. Line 1 = RSI Line 2 = 70 (overbought) Line 3 = 30 (oversold) Copyright © 2008 by Benny Lee, NextView
34
6
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION How to use RSI in an up trend Price
Price
RSI
RSI
Bullish Convergence
Bearish Divergence
Indicates a strong up trend. Price Indicates a weak up trend. Price has a high chance of going has a low chance of going higher higher and creating new high. and therefore expected to RSI has to be above 50 for the reverse down validity Copyright © 2008 by Benny Lee, NextView
35
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION How to use RSI in an down trend Price
Price
RSI
RSI
Bearish Convergence
Bullish Divergence
Indicates a strong down trend. Price has a high chance of going lower and creating new low. RSI
Indicates a weak down trend. Price has a low chance of going lower and therefore expected to reverse up
has to be below 50 for the validity Copyright © 2008 by Benny Lee, NextView
36
7
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Copyright © 2008 by Benny Lee, NextView
37
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Price up trend continues after correction at support
Copyright © 2008 by Benny Lee, NextView
38
8
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Copyright © 2008 by Benny Lee, NextView
39
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION Momentum – Trust in your friend What is the trend, and what is the momentum?
Price up trend unable to hold at support
Copyright © 2008 by Benny Lee, NextView
40
9
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
41
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
42
10
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received after market closed, Would you buy?
Copyright © 2008 by Benny Lee, NextView
43
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received after market closed, Would you buy?
Copyright © 2008 by Benny Lee, NextView
44
11
4/16/2008
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
45
Combining Fundamental and Technical Analysis TECHNICAL ANALYSIS – TIMING OF TRADING DECISION News report received in the afternoon, Would you buy?
Copyright © 2008 by Benny Lee, NextView
46
12
4/16/2008
Combining Fundamental and Technical Analysis LATEST NEWS REPORTS (past 1 week) 19 Mar RM2.38
A Research company initiates a BUY call on Shangri–La (Shang). RNAV RM3.70. Current price Source: Bursa
CMDF 18 Mar
A Bank upgrades Gamuda from hold to BUY. Price Target RM3.48. Current Price RM3.00 Source: DJ
Newswire 13 Mar RM1.31 CMDF
International Financial broker initiate BUY call on Titan. Target price RM1.78. Current price Source: Bursa
12 Mar RM1.08. CMDF
A Securities Co. initiates a BUY call on Freight Management Hldgs (Freight). Target price Current price RM0.82 Source: Bursa
Copyright © 2008 by Benny Lee, NextView
Combining Fundamental and Technical Analysis
THANK YOU Email: [email protected] Courses Website: www.thenextview.com Forum Website: www.investasiaonline.com Blog: www.tradinglobby.com Copyright © 2008 by Benny Lee, NextView
13
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