essentials of ta for fin mkts - chen 2010

[...]... many consider point-and-figure trading to be the purest form of price action trading Although volume is customarily excluded on point and figure charts, it is the star of Chapter 13 Used primarily by stock market traders, volume is considered both a leading indicator as well as a confirming indicator When trading equities, volume can be a vital tool for providing important confirmation of price action Confirmation... choose to use different types of charts at different times, whether it is a line chart, a bar chart, a candlestick chart, a point-and-figure chart, or any of a number of other chart types T echnical versus Fundamental When many people in the financial world refer to technical analysis, it is often in direct contrast to the other major school of market analysis, fundamental analysis The contrast between... primary basics of technical analysis—charts These are the primary tools of technical analysts and traders, whether the chart of choice is a line chart, a bar chart, a candlestick chart, a point-and-figure chart, or some other manner of graphically depicting price action All of these chart types are presented and discussed in Chapter 4, including their structures and methods of interpretation After these... important concept within technical analysis and the heart of the discipline: trend The definitions and characteristics of uptrends, downtrends, and no trend are covered, as well as methods to identify trend conditions After the heart of technical analysis is discussed, Chapter 6 talks about another vital aspect of the field that can be considered the soul of technical analysis: support and resistance... the basis for much of the technical analysis that is published in the media as well as for many technical trading methods and strategies The chapter on support and resistance is followed by a discussion of the practical drawing tools necessary for depicting both trends and 6 What to Expect support/resistance levels These important drawing tools include trend lines, trend channels, and horizontal support... Support Becomes Resistance Becomes Support Summary 7 60 64 Primary Drawing Tools: Trend Lines, Trend Channels, and Horizontal Support and Resistance Introduction to Drawing Tools 66 Static Support and Resistance 67 Dynamic Support and Resistance 72 Horizontal Support and Resistance Lines 78 Trend Lines 81 Parallel Trend Channels 87 Summary 8 65 89 Chart Patterns: Bar Shapes and Candlestick Formations 91 Introduction... markets Without these vital components of a sound trading plan, failure can almost be assured Chapter 15 covers some of the most important aspects of a good risk and money management plan By the end of this book, the goal is for the reader to be well on his or her way to becoming well rounded and knowledgeable on the 8 Summary art and science of technical analysis To truly master any of the concepts discussed... analysis body of knowledge  Understand some of the most vital components of Dow theory 11 The Story of Technical Analysis T he Beginning: Japanese Rice Markets Technical analysis has had a long and colorful history marked by the emergence of many different characters who have had a significant combined influence on the course of the major financial markets From what is known about the earliest use of technical... currently president of CandleCharts.com and author of the definitive book on the subject of candlesticks, Japanese Candlestick Charting Techniques, discusses ‘‘why technical analysis.’’ Nison states: I frequently give on-site and Web-based custom seminars to some of the top financial firms Interestingly, some of these, up until they ‘‘saw the light’’ with Nison candlesticks, had used only fundamental analysis... characterized as a medium-term swing, often a countertrend reaction, which usually retraces between one-third and two-thirds of the primary trend and lasts from around three weeks to three months Finally, a minor trend is a short-term price move that can last anywhere from a few hours to several weeks Minor trends exist within the context of secondary trends, which in turn are often reactions to primary . Congre ss Cataloging-in-Publication Data: Chen, James, 197 1- Essentials of technical analysis for financial markets / James Chen. p. cm.— (Essentials series) Includes index. ISBN 97 8-0 -4 7 0-5 372 9-9 (pbk.) 1 Shilling Essentials of XBRL, Bryan Bergeron For more information on any of the above titles, please visit www.wiley.com. E1FFIRS 02/20 /2010 12:40:7 Page 3 ESSENTIALS of Technical Analysis for Financial. Accounting, Steven M. Bragg Essentials of Sarbanes-Oxley, Sanjay Anand Essentials of Shared Services, Bryan Bergeron Essentials of Supply Chain Management, Michael Hugos Essentials of Trademarks and Unfair