Welcome back everyone to the 7th post of the series, Volume. Due to popular demand, let me clarify all you need to know about volume and its impact on Technical Analysis in this post, before I move on to chart patterns as well as trading strategy in the following post. Volume is an important factor of Technical Analysis which often overlooked by many analysts.
Welcome back everyone! After the previous post about support and resistance, I believe that it will only be appropriate to talk about trend lines. Over the series I have used the phrase trend reversal, trend continuation or up/down-trend. Some of you may have understood entirely, or at least partially about trend lines. For the benefit of everyone, especially those who are very new to investing, I will break down everything you need to know about trend lines in this post, so keep on reading.
What is a trend?
In day to day basis, we use the word “trend” to describe the general direction of something that keeps changing e.g. fashion, food or holiday destination. Despite the seemingly random fluctuations, there is always a general direction that can be deciphered from a greater perspective.
In the previous post, I have discussed about candlestick’s history, its inventor as well as a few common single candlestick patterns. As a continuation of the previous post, I will now discuss about the dual candlestick patterns as well as triple candlestick patterns. More advanced patterns will not only indicate turning signals, but also show trend confirmation that can give investor more confidence to take action in the market. At the end of this post, you should be able to identify most common chart patterns, and read between the candlesticks.
Dual candlestick pattern
Tweezer top and bottom
Tweezers do look like those things that you use to pluck your eyebrows. These patterns have the following characteristics:
Now that we have understood what is Technical Analysis and why do they work, let’s us now jump right into the most important basics of Technical Analysis, which is to understand what are candlesticks. To put it simply, candlesticks are basically the individual boxes (can be green-red or black-white) that made up a chart. They represent the open, close, high and low price of a particular instrument within a specific time period. In this post, we are going to learn about the origin of candlesticks, its basic patterns and how to interpret them.
Where it came from
The Japanese candlesticks or what is commonly known as candlesticks have come a long way since it was first used around 1600. It was first used by a rice trader in Japan called Homma. During the period between 16th and 17th Century, many of Japanese areas are engaging in a civil war, which is why many of the candlestick patterns are named after military terms.
It was not until the last 2 decades that candlesticks start to popularize the investment world. After an extensive 3 year long research done by Steve Nison, he finally managed to popularize candlesticks in the West through its initial publication of “Japanese Candlesticks Charting Techniques”, published in 1991.
This article is written by @devinnath from InvestingNote. Devin is a technical analyst who balances FA and TA in his investment decisions. He believes in using news and FA to spot the right stocks and rely on TA to give him the lowest risk-to-reward ratio possible.
In the last post of the TA series, most of you are puzzled by the million dollar question of “Why does TA work?” Most people think that It seems too good to be true if you can actually look into the future just by using some mathematical formula and charts, isn’t it? I too believe that you might have been told by someone, somewhere that in the investment universe, if it is too good to be true, then it is indeed too good to be true. Unfortunately, in TA world not everything is always full of sunshine and rainbow.
This column is jointly written by @fayewang, @calvinwee and @gordon_ong.
-Faye is both a fundamental analyst and economist by nature. She is a global thinker who’s open-minded and enjoys learning from the market.
-Calvin is a fundamental analyst at heart and an ardent disciple of value investing. He relishes the process of searching for undervalued stocks and enjoys collecting dividends from his stocks.
-Gordon has a demonstrable interest in equity investments, financial markets, and negotiating deals. As @NTUInvestmentClub president, he has an understanding of what factors drive an organisation’s success.
Haw Par Corporation Limited is engaged in manufacturing, marketing and trading healthcare products; providing leisure-related goods and services, and investing in properties and securities. The principal activities of the Company are licensing of the Tiger trademarks and owning investments for long-term holding purposes, the history of the brothers Haw and Par traced back to the 19th century. The company distributes its products in the Americas, Africa, the Middle East, Asia, Australasia, and Europe.
Many investors and traders discussed about fancy charting techniques, oscillators and momentum indicators. Before we go deeper into all the fancy jargons, it all comes back down to the basic understanding of technical analysis and where it came from. So, what exactly is Technical Analysis?
There are 4 main things that you should know about Technical Analysis. That is, TA consists of charts, TA is subjective, TA reflects emotions and TA can be used by different instruments.
The Basics of Technical Analysis workshop held last Friday was a full house!
Conducted by top-tier remisier and one of our verified and most reputable users, Joey Choy, it included several key points which is helpful for beginners, given as feedback from the kind crowd who attended.
Some of the key takeaways from the workshop include support/resistance in up/down/sidewards trends, key technical indicators such as MACD, RSI and moving averages.
Here are some photos of how it all went well: