About Me
Chartered Financial Analyst (CFA)
1 Ethical and Professional Standards
1-1 Code of Ethics
1-2 Standards of Professional Conduct
1-3 Guidance for Standards I-VII
1-4 Introduction to the Global Investment Performance Standards (GIPS)
1-5 Application of the Code and Standards
2 Quantitative Methods
2-1 Time Value of Money
2-2 Discounted Cash Flow Applications
2-3 Statistical Concepts and Market Returns
2-4 Probability Concepts
2-5 Common Probability Distributions
2-6 Sampling and Estimation
2-7 Hypothesis Testing
2-8 Technical Analysis
3 Economics
3-1 Topics in Demand and Supply Analysis
3-2 The Firm and Market Structures
3-3 Aggregate Output, Prices, and Economic Growth
3-4 Understanding Business Cycles
3-5 Monetary and Fiscal Policy
3-6 International Trade and Capital Flows
3-7 Currency Exchange Rates
4 Financial Statement Analysis
4-1 Financial Reporting Mechanism
4-2 Income Statements, Balance Sheets, and Cash Flow Statements
4-3 Financial Reporting Standards
4-4 Analysis of Financial Statements
4-5 Inventories
4-6 Long-Lived Assets
4-7 Income Taxes
4-8 Non-Current (Long-term) Liabilities
4-9 Financial Reporting Quality
4-10 Financial Analysis Techniques
4-11 Evaluating Financial Reporting Quality
5 Corporate Finance
5-1 Capital Budgeting
5-2 Cost of Capital
5-3 Measures of Leverage
5-4 Dividends and Share Repurchases
5-5 Corporate Governance and ESG Considerations
6 Equity Investments
6-1 Market Organization and Structure
6-2 Security Market Indices
6-3 Overview of Equity Securities
6-4 Industry and Company Analysis
6-5 Equity Valuation: Concepts and Basic Tools
6-6 Equity Valuation: Applications and Processes
7 Fixed Income
7-1 Fixed-Income Securities: Defining Elements
7-2 Fixed-Income Markets: Issuance, Trading, and Funding
7-3 Introduction to the Valuation of Fixed-Income Securities
7-4 Understanding Yield Spreads
7-5 Fundamentals of Credit Analysis
8 Derivatives
8-1 Derivative Markets and Instruments
8-2 Pricing and Valuation of Forward Commitments
8-3 Valuation of Contingent Claims
9 Alternative Investments
9-1 Alternative Investments Overview
9-2 Risk Management Applications of Alternative Investments
9-3 Private Equity Investments
9-4 Real Estate Investments
9-5 Commodities
9-6 Infrastructure Investments
9-7 Hedge Funds
10 Portfolio Management and Wealth Planning
10-1 Portfolio Management: An Overview
10-2 Investment Policy Statement (IPS)
10-3 Asset Allocation
10-4 Basics of Portfolio Planning and Construction
10-5 Risk Management in the Portfolio Context
10-6 Monitoring and Rebalancing
10-7 Global Investment Performance Standards (GIPS)
10-8 Introduction to the Wealth Management Process
2.8 Technical Analysis

2.8 Technical Analysis - 2.8 Technical Analysis

Technical Analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Unlike fundamental analysis, which examines a company's financial health, technical analysis focuses on the study of price movements to forecast future trends.

Key Concepts

Price Charts

Price charts are graphical representations of a security's price over time. They are the foundation of technical analysis. Common types of charts include line charts, bar charts, and candlestick charts. Each type provides different insights into price movements.

Example: A candlestick chart displays the open, high, low, and close prices for a specific time period. A green candlestick indicates a price increase, while a red candlestick indicates a price decrease.

Trends and Patterns

Trends and patterns are recurring price movements that can be identified on charts. Trends can be uptrends (rising prices), downtrends (falling prices), or sideways trends (consolidation). Patterns, such as head and shoulders, double tops, and triangles, can signal potential reversals or continuations of trends.

Example: A head and shoulders pattern consists of three peaks, with the middle peak (head) being the highest and the two outside peaks (shoulders) being lower. This pattern often indicates a reversal from an uptrend to a downtrend.

Support and Resistance Levels

Support and resistance levels are price levels where a security tends to stop falling (support) or rising (resistance). These levels are crucial for identifying potential entry and exit points in the market. Support levels can act as a floor, while resistance levels can act as a ceiling.

Example: If a stock has repeatedly bounced off a price level of $50, that level is considered a strong support. Conversely, if the stock has struggled to break above $60, that level is considered a resistance.

Technical Indicators

Technical indicators are mathematical calculations based on the price, volume, or open interest of a security. They help traders identify potential market trends, gauge market momentum, and confirm patterns. Common indicators include Moving Averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD).

Example: The Moving Average Convergence Divergence (MACD) indicator consists of two lines: the MACD line and the signal line. When the MACD line crosses above the signal line, it is often considered a buy signal, and vice versa for a sell signal.

Volume Analysis

Volume analysis involves studying the trading volume of a security to gain insights into market activity. High volume during price increases can confirm a strong uptrend, while high volume during price declines can confirm a strong downtrend. Volume can also help identify potential reversals.

Example: If a stock is in an uptrend but experiences a significant price drop on high volume, it could signal that the uptrend is losing momentum and a reversal may be imminent.

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