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A Handbook of Technical Analysis: The Practitioner's Comprehensive Guide to Technical Analysis

Book Description

A self study exam preparatory guide for financial technical analysis certifications

Written by the course director and owner of www.tradermasterclass.com, a leading source of live and online courses in trading, technical analysis, and money management, A Handbook of Technical Analysis: The Practitioner's Comprehensive Guide to Technical Analysis is the first financial technical analysis examination preparatory book in the market. It is appropriate for students taking IFTA CFTe Level I and II (US), STA Diploma (UK), Dip TA (Aus), and MTA CMT Level I, II, and III exams in financial technical analysis, as well as for students in undergraduate, graduate, or MBA courses.

The book is also an excellent resource for serious traders and technical analysts, and includes a chapter dedicated to advanced money management techniques. This chapter helps complete a student's education and also provides indispensable knowledge for FOREX, bond, stock, futures, CFD, and option traders.

  • Learn the definitions, concepts, application, integration, and execution of technical-based trading tools and approaches

  • Integrate innovative techniques for pinpointing and handling market reversals

  • Understand trading mechanisms and advanced money management techniques

  • Examine the weaknesses of popular technical approaches and find more effective solutions

  • The book allows readers to test their current knowledge and then check their learning with end-of-chapter test questions that span essays, multiple choice, and chart-based annotation exercises. This handbook is an essential resource for students, instructors, and practitioners in the field. Alongside the handbook, the author will also publish two full exam preparatory workbooks and a bonus online Q&A Test bank built around the most popular professional examinations in financial technical analysis.

    Table of Contents

    1. Cover Page
    2. Title Page
    3. Copyright
    4. Dedication
    5. Contents
    6. Preface
      1. OVERVIEW OF THE BOOK CONTENTS
      2. ONLINE MATERIALS
      3. EXAM PREPARATORY WORKBOOKS
    7. Acknowledgments
    8. About the Author
    9. CHAPTER 1: Introduction to the Art and Science of Technical Analysis
      1. 1.1 MAIN OBJECTIVE OF TECHNICAL ANALYSIS
      2. 1.2 DUAL FUNCTION OF TECHNICAL ANALYSIS
      3. 1.3 FORECASTING PRICE AND MARKET ACTION
      4. 1.4 Classifying Technical Analysis
      5. 1.5 SUBJECTIVITY IN TECHNICAL ANALYSIS
      6. 1.6 BASIC ASSUMPTIONS OF TECHNICAL ANALYSIS
      7. 1.7 FOUR BASIC ASSUMPTIONS IN THE APPLICATION OF TECHNICAL ANALYSIS
      8. 1.8 MARKET PARTICIPANTS
      9. 1.9 CHAPTER SUMMARY
      10. CHAPTER 1 REVIEW QUESTIONS
      11. REFERENCES
    10. CHAPTER 2: Introduction to Dow Theory
      1. 2.1 ORIGINS AND PROPONENTS OF DOW THEORY
      2. 2.2 BASIC ASSUMPTIONS OF DOW THEORY
      3. 2.3 CHALLENGES TO DOW THEORY
      4. 2.4 CHAPTER SUMMARY
      5. CHAPTER 2 REVIEW QUESTIONS
      6. REFERENCES
    11. CHAPTER 3: Mechanics and Dynamics of Charting
      1. 3.1 THE MECHANICS AND DYNAMICS OF CHARTING
      2. 3.2 GAP ACTION: FOUR TYPES OF GAPS
      3. 3.3 CONSTANT CHART MEASURES
      4. 3.4 FUTURES CONTRACTS
      5. 3.5 CHAPTER SUMMARY
      6. CHAPTER 3 REVIEW QUESTIONS
      7. REFERENCES
    12. CHAPTER 4: Market Phase Analysis
      1. 4.1 DOW THEORY OF MARKET PHASE
      2. 4.2 CHART PATTERN INTERPRETATION OF MARKET PHASE
      3. 4.3 VOLUME AND OPEN INTEREST INTERPRETATION OF MARKET PHASE
      4. 4.4 MOVING AVERAGE INTERPRETATION OF MARKET PHASE
      5. 4.5 DIVERGENCE AND MOMENTUM INTERPRETATION OF MARKET PHASE
      6. 4.6 SENTIMENT INTERPRETATION OF MARKET PHASE
      7. 4.7 SAKATA'S INTERPRETATION OF MARKET PHASE
      8. 4.8 ELLIOTTS INTERPRETATION OF MARKET PHASE
      9. 4.9 CYCLE ANALYSIS INTERPRETATION OF MARKET PHASE
      10. 4.10 CHAPTER SUMMARY
      11. CHAPTER 4 REVIEW QUESTIONS
      12. REFERENCES
    13. CHAPTER 5: Trend Analysis
      1. 5.1 DEFINITIONS OF A TREND
      2. 5.2 QUALITY OF TREND: 16 PRICE CHARACTERISTICS IMPACTING FUTURE PRICE ACTION AND TREND STRENGTH
      3. 5.3 PRICE AND TREND FILTERS
      4. 5.4 TREND PARTICIPATION
      5. 5.5 PRICE INFLECTION POINTS
      6. 5.6 TRENDLINES, CHANNELS, AND FAN LINES
      7. 5.7 TREND RETRACEMENTS
      8. 5.8 GAPS AND TRENDS
      9. 5.9 TREND DIRECTIONALITY
      10. 5.10 DRUMMOND GEOMETRY
      11. 5.11 FORECASTING TREND REVERSALS
      12. CHAPTER 5 REVIEW QUESTIONS
      13. REFERENCES
    14. CHAPTER 6: Volume and Open Interest
      1. 6.1 THE MECHANICS OF VOLUME ACTION
      2. 6.2 VOLUME OSCILLATORS
      3. 6.3 CHAPTER SUMMARY
      4. CHAPTER 6 REVIEW QUESTIONS
      5. REFERENCES
    15. CHAPTER 7: Bar Chart Analysis
      1. 7.1 PRICE BAR PATTERN CHARACTERISTICS
      2. 7.2 PRICE BAR PATTERN CHARACTERISTICS
      3. 7.3 POPULAR BAR REVERSAL PATTERNS
      4. 7.4 VOLATILITY-BASED BREAKOUT PATTERNS
      5. CHAPTER 7 REVIEW QUESTIONS
      6. REFERENCES
    16. CHAPTER 8: Window Oscillators and Overlay Indicators
      1. 8.1 DEFINING INDICATORS AND OSCILLATORS
      2. 8.2 EIGHT WAYS TO ANALYZE AN OSCILLATOR
      3. 8.3 CYCLE PERIOD, MULTIPLE TIMEFRAMES, AND LAGGING INDICATORS
      4. 8.4 INPUT DATA
      5. 8.5 TREND TRADING USING OSCILLATORS
      6. 8.6 WINDOW OSCILLATORS
      7. 8.7 OVERLAY INDICATORS
      8. CHAPTER 8 REVIEW QUESTIONS
      9. REFERENCES
    17. CHAPTER 9: Divergence Analysis
      1. 9.1 DEFINITION OF DIVERGENCE
      2. 9.2 GENERAL CONCEPT OF DIVERGENCE
      3. 9.3 STANDARD AND REVERSE DIVERGENCE
      4. 9.4 PRICE CONFIRMATION IN DIVERGENCE ANALYSIS
      5. 9.5 SIGNAL ALTERNATION BETWEEN STANDARD AND REVERSE DIVERGENCE
      6. 9.6 MORE EXAMPLES OF DIVERGENCE
      7. 9.7 SUMMARY
      8. 9.8 END OF CHAPTER QUESTIONS
      9. REFERENCES
    18. CHAPTER 10: Fibonacci Number and Ratio Analysis
      1. 10.1 THE FIBONACCI NUMBER SERIES
      2. 10.2 FIBONACCI RATIOS
      3. 10.3 FIBONACCI RETRACEMENTS, EXTENSIONS, PROJECTIONS, AND EXPANSIONS
      4. 10.4 FIBONACCI (Φ-BASED) PERCENTAGE RETRACEMENT LEVELS WITHIN AN OBSERVED PRICE RANGE
      5. 10.5 FIBONACCI (Φ-BASED) PERCENTAGE EXTENSION LEVELS BEYOND AN OBSERVED PRICE RANGE
      6. 10.6 FIBONACCI (Φ-BASED) PERCENTAGE EXPANSION LEVELS BEYOND AN OBSERVED PRICE RANGE
      7. 10.7 FIBONACCI (Φ-BASED) PERCENTAGE PROJECTION LEVELS FROM A SIGNIFICANT PEAK OR TROUGH
      8. 10.8 WHY SHOULD FIBONACCI RATIOS OR NUMBERS WORK AT ALL?
      9. 10.9 GEOMETRICALLY VERSUS NUMERICALLY BASED FIBONACCI OPERATIONS
      10. 10.10 THE FIBONACCI TRADERS TECHNICAL TOOLBOX
      11. 10.11 AREA OF APPLICATION
      12. 10.12 SELECTING EFFECTIVE INFLECTION POINTS FOR FIBONACCI OPERATIONS
      13. 10.13 FIBONACCI, DOW, GANN, AND FLOOR TRADER'S PIVOT POINT LEVELS
      14. 10.14 PROBABILITY OF CONTINUATION AND REVERSAL IN FIBONACCI RETRACEMENTS AND EXTENSIONS
      15. 10.15 FIBONACCI-BASED ENTRIES, STOPLOSSES, AND MINIMUM PRICE OBJECTIVES
      16. 10.16 FIBONACCI TWO- AND THREE-LEG RETRACEMENTS
      17. 10.17 FIBONACCI FAN LINES
      18. 10.18 FIBONACCI CHANNEL EXPANSIONS
      19. 10.19 FIBONACCI ARCS
      20. 10.20 SUPPORTIVE AND RESISTIVE FIBONACCI CLUSTERS
      21. 10.21 POTENTIAL BARRIERS IN FIBONACCI PROJECTIONS
      22. 10.22 FIBONACCI TIME AND RATIO PROJECTION ANALYSIS ON ELLIOTT WAVES
      23. END OF CHAPTER QUESTIONS
      24. REFERENCES
    19. CHAPTER 11: Moving Averages
      1. 11.1 7 MAIN COMPONENTS OF MOVING AVERAGES
      2. 11.2 8 MAIN APPLICATIONS OF MOVING AVERAGES
      3. 11.3 CHAPTER SUMMARY
      4. CHAPTER 11 REVIEW QUESTIONS
      5. REFERENCES
    20. CHAPTER 12: Envelopes and Methods of Price Containment
      1. 12.1 CONTAINING PRICE ACTION AND VOLATILITY ABOUT A CENTRAL VALUE
      2. 12.2 ADJUSTING BANDS FOR EFFECTIVE PRICE CONTAINMENT
      3. 12.3 METHODS OF PRICE CONTAINMENT
      4. CHAPTER 12 REVIEW QUESTIONS
      5. REFERENCES
    21. CHAPTER 13: Chart Pattern Analysis
      1. 13.1 ELEMENTS OF CHART PATTERN ANALYSIS
      2. 13.2 PRECONDITIONS FOR RELIABLE CHART PATTERN REVERSALS
      3. 13.3 POPULAR CHART PATTERNS
      4. CHAPTER 13 REVIEW QUESTIONS
      5. REFERENCES
    22. CHAPTER 14: Japanese Candlestick Analysis
      1. 14.1 ELEMENTS OF CANDLESTICK ANALYSIS
      2. 14.2 POPULAR CANDLESTICK PATTERNS AND THEIR PSYCHOLOGY
      3. 14.3 INTEGRATING CANDLESTICK ANALYSIS
      4. 14.4 FILTERED CANDLESTICKS
      5. 14.5 TRADING WITH CANDLESTICKS
      6. CHAPTER 14 REVIEW QUESTIONS
      7. REFERENCES
    23. CHAPTER 15: Point-and-Figure Charting
      1. 15.1 BASIC ELEMENTS OF POINT-AND-FIGURE CHARTS
      2. 15.2 BASIC POINT-AND-FIGURE CHART PATTERNS
      3. 15.3 POINT-AND-FIGURE MINIMUM PRICE OBJECTIVES
      4. 15.4 BULLISH PERCENT INDEX AND RELATIVE STRENGTH
      5. 15.5 CHAPTER SUMMARY
      6. CHAPTER 15 REVIEW QUESTIONS
      7. REFERENCES
    24. CHAPTER 16: Ichimoku Charting & Analysis
      1. 16.1 CONSTRUCTING THE FIVE ICHIMOKU OVERLAYS
      2. 16.2 FUNCTIONAL ASPECT OF ICHIMOKU OVERLAYS
      3. 16.3 ADVANTAGES AND DISADVANTAGES OF USING ICHIMOKU CHARTING
      4. 16.4 TIME AND PRICE DOMAIN CHARACTERISTICS OF ICHIMOKU OVERLAYS
      5. 16.5 BASIC ICHIMOKU PRICE-PROJECTION TECHNIQUES
      6. 16.6 CHAPTER SUMMARY
      7. CHAPTER 16 REVIEW QUESTIONS
      8. REFERENCES
    25. CHAPTER 17: Market Profile
      1. 17.1 THE SEARCH FOR FAIR PRICE OR VALUE
      2. 17.2 THE DAILY PROFILE FORMATION
      3. 17.3 CHAPTER SUMMARY
      4. CHAPTER 17 REVIEW QUESTIONS
      5. REFERENCES
    26. CHAPTER 18: Basic Elliott Wave Analysis
      1. 18.1 ELEMENTS OF ELLIOTT WAVE ANALYSIS
      2. 18.2 RULES AND GUIDELINES
      3. 18.3 MOTIVE WAVES
      4. 18.4 CORRECTIVE WAVES
      5. 18.5 WAVE EXTENSIONS AND TRUNCATION
      6. 18.6 ALTERNATION
      7. 18.7 WAVE EQUALITY
      8. 18.8 FIBONACCI RATIO AND NUMBER ANALYSIS OF ELLIOTT WAVES
      9. SUMMARY
      10. CHAPTER 18 REVIEW QUESTIONS
      11. REFERENCES
    27. CHAPTER 19: Basics of Gann Analysis
      1. 19.1 TECHNIQUES OF W. D. GANN
      2. CHAPTER 19 REVIEW QUESTIONS
      3. REFERENCES
    28. CHAPTER 20: Cycle Analysis
      1. 20.1 ELEMENTS OF CYCLE ANALYSIS
      2. 20.2 PRINCIPLES OF CYCLE ANALYSIS
      3. 20.3 ADDITIONAL CYCLIC CHARACTERISTICS
      4. 20.4 TUNING OSCILLATOR AND OVERLAY INDICATORS TO THE DOMINANT CYCLE PERIOD
      5. 20.4 IDENTIFYING PRICE CYCLES
      6. CHAPTER 20 REVIEW QUESTIONS
      7. REFERENCES
    29. CHAPTER 21: Volatility Analysis
      1. 21.1 THE CONCEPT OF CHANGE AND VOLATILITY
      2. 21.2 SOME STATISTICAL MEASURES OF PRICE VOLATILITY
      3. 21.3 OTHER MEASURES OF MARKET VOLATILITY
      4. CHAPTER 21 SUMMARY
      5. CHAPTER 21 REVIEW QUESTIONS
      6. REFERENCES
    30. CHAPTER 22: Market Breadth
      1. 22.1 ELEMENTS OF BROAD MARKET ACTION
      2. 22.2 COMPONENTS OF MARKET BREADTH
      3. 22.3 MARKET-BREADTH INDICATORS IN ACTION
      4. 22.4 CHAPTER SUMMARY
      5. CHAPTER 22 REVIEW QUESTIONS
      6. REFERENCES
    31. CHAPTER 23: Sentiment Indicators and Contrary Opinion
      1. 23.1 ASSESSING THE EMOTION AND PSYCHOLOGY OF MARKET PARTICIPANTS
      2. 23.2 PRICE-BASED INDICATORS VERSUS SENTIMENT INDICATORS
      3. 23.3 ASSESSING PARTICIPANT ACTIONS
      4. 23.4 ASSESSING PARTICIPANTS' OPINIONS
      5. 23.5 CHAPTER SUMMARY
      6. CHAPTER 23 REVIEW QUESTIONS
      7. REFERENCES
    32. CHAPTER 24: Relative Strength Analysis
      1. 24.1 MEASURING RELATIVE PERFORMANCE
      2. 24.2 CHAPTER SUMMARY
      3. CHAPTER 24 REVIEW QUESTIONS
      4. REFERENCES
    33. CHAPTER 25: Investor psychology
      1. 25.1 GENERAL BEHAVIORAL ASPECTS
      2. 25.2 BEHAVIORAL ELEMENTS ASSOCIATED WITH CHART PATTERNS
      3. 25.3 BEHAVIORAL ELEMENTS ASSOCIATED WITH MARKET TRENDS
      4. 25.4 BEHAVIORAL ASPECTS OF MARKET CONSOLIDATIONS
      5. 25.5 BEHAVIORAL ASPECTS OF MARKET REVERSALS
      6. CHAPTER 25 REVIEW QUESTIONS
      7. REFERENCES
    34. CHAPTER 26: Trader Risk Profiling and Position Analysis
      1. 26.1 FULFILLING CLIENT OBJECTIVES AND RISK CAPACITY
      2. 26.2 AGGRESSIVE AND CONSERVATIVE MARKET PARTICIPATION
      3. 26.3 CATEGORIZING CLIENTS ACCORDING TO TERM OUTLOOK AND SENTIMENT
      4. 26.4 THE SEVEN PARTICIPATORY OPTIONS
      5. 26.5 TRIGGERS, SIGNALS, PRICE TARGETS, AND STOPLOSSES
      6. 26.6 CONFIRMING AND NON-CONFIRMING PRICE ACTION AND FILTERS
      7. 26.7 COLLECTING, CATEGORIZING, AND ORGANIZING TECHNICAL DATA
      8. 26.8 MULTI-TIMEFRAME CONFIRMATION
      9. 26.9 RECONCILING TECHNICAL OUTLOOK WITH CLIENT INTEREST
      10. 26.10 HEDGING POSITIONS WITH DERIVATIVES
      11. 4.11 CHAPTER SUMMARY
      12. CHAPTER 26 REVIEW QUESTIONS
      13. REFERENCES
    35. CHAPTER 27: Integrated Technical Analysis
      1. 27.1 THE INTEGRATED COMPONENTS OF TECHNICAL ANALYSIS
      2. 27.2 CLASSIFICATION OF CLUSTERS AND CONFLUENCES
      3. 27.3 CHAPTER SUMMARY
      4. END OF CHAPTER QUESTIONS
      5. REFERENCES
    36. CHAPTER 28: Money Management and Performance Measurement
      1. 28.1 ELEMENTS OF MONEY MANAGEMENT
      2. CHAPTER 28 REVIEW QUESTIONS
      3. REFERENCES
    37. CHAPTER 29: Technical Trading Systems
      1. 29.1 CONCEPTUALIZING A TRADING SYSTEM
      2. 29.2 BASIC COMPONENTS OF A TRADING SYSTEM
      3. 29.3 SYSTEM TESTING AND OPTIMIZATION
      4. 29.4 PERFORMANCE MEASUREMENT
      5. SUMMARY
      6. CHAPTER 29 REVIEW QUESTIONS
      7. REFERENCES
    38. APPENDIX A: Basic Investment Decision Making Based on Chart Analysis
      1. A.1 USING TECHNICAL DATA TO SUPPORT CLIENT'S OBJECTIVE
      2. A.2 ADVICE FOR THE LONG-TERM INVESTOR (BULLISH OUTLOOK)
      3. A.3 ADVICE FOR THE LONG-TERM INVESTOR (BEARISH OUTLOOK)
      4. A.4 ADVICE FOR THE SHORT- AND MEDIUM-TERM BULLISH TRADER
      5. A.5 ADVICE FOR THE SHORT- AND MEDIUM-TERM BEARISH TRADER
    39. APPENDIX B: Official IFTA CFTe, STA Diploma (UK), and MTA CMT Exam Reading Lists
      1. 1. IFTA CFTE OFFICIAL READING LIST
      2. 2. MTA CFTE OFFICIAL READING LIST
      3. 3. IFTA STA (UK) DIPLOMA EXAM OFFICIAL READING LIST
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