Technical+Analysis

[[file:Hyeji, KyuWon TECHNICAL ANALYSIS.key]][[file:TECHNICAL ANALYSIS.key]]
as explained by Mercedes Li and Xiangyi Lau improved by Yoo Hyun Kim + Won Jun Lee Final powerpoint by Kyu Won + Hye Ji

Technical analysis is traditionally contrasted with fundamental analysis
Fundamental analysts study a company's characteristics and other external traits to determine its intrinsic value. If it is currently undertrading its intrinsic value, they will assume that the market is temporarily wrong, then buy stock and wait for the market price to climb up to its intrinsic value. Technical analysts believe that market price and volume reflects all relevant info, so it doesn't look at external factors (eco, polit, soc drives) but instead looks at the history of a market. They study the trends (upward or downward) and the patterns in the company's past market price in order to determine where it may go. Technical analysis is also known as the study of stock charts. In other words, it believes that the past action of the market itself will determine the future course of prices.

SO... What is a stock chart?

- A stock chart is a simple two axis plotted graph of price and time. - Each individual equity, market and index listed on a public exchange has a chart that illustrates this movement of price over time - Stock charts can be created in different time frames (1 minute stock charts, 5 minute stock charts, daily stock charts, monthly stock charts, etc.) - can be drawn in two different ways (arithmetic chart, logarithmic chart) - stock chart analysis can be applied equally to individual stocks and major indices - used to identify and observe the current trend (up trend, down trend, rangebound)

The three different trends...

- Up trend: when there will be a POSITIVE rate of price change over time - Down trend: when there will be a NEGATIVE rate of price change over time - Rangebound trend: there is no apparent direction to the price movement on the stock chart and there will be little or no rate of price change

Three Basic Assumptions of Technical Analysis
1. The market discounts everything. 2. Price moves in trends. 3. History tends to repeat itself.

Technical analysts will

 * study price patterns and market trends to exploit these patterns
 * use models and trading rules based on price like "relative strength index, moving averages, regressions, inter-market and intra-merket price correlations, business cycles, stock market cycles"
 * classically, recognize chart patterns
 * generally analyzes shorter time-frames than fundamental analysis (price and volume charts are available daily, faster than long-term financial statements)

"In general, technical analysis is used for trades, whereas fundamental analysis is used to make an investment. Investors buy assets they believe can increase in value, while traders buy assets they believe they can sell to somebody else at a greater price."

<span style="font-family: Verdana,Geneva,sans-serif;">Technical Analysis Basics (looking at an upward trend)
<span style="font-family: Verdana,Geneva,sans-serif;">media type="youtube" key="GENBVwV8PMs?feature=player_detailpage" height="360" width="640"

<span style="font-family: Verdana,Geneva,sans-serif;">Questions:
 * 1) <span style="font-family: Verdana,Geneva,sans-serif;">Compared to fundamental analysis, what would technical analysis focus on more, intrinsic value or price patterns?
 * 2) <span style="font-family: Verdana,Geneva,sans-serif;">What are the 3 basic assumptions of technical analysis?
 * 3) <span style="font-family: Verdana,Geneva,sans-serif;">Why do technical analysts look at market patterns to determine whether or not to make a trade?

<span style="font-family: Verdana,Geneva,sans-serif;">Works cited:

<span style="font-family: Verdana,Geneva,sans-serif;">http://en.wikipedia.org/wiki/Technical_analysis <span style="font-family: Verdana,Geneva,sans-serif;">http://www.investopedia.com/university/technical/#axzz2LJUcKiCk <span style="font-family: Verdana,Geneva,sans-serif;">http://www.youtube.com/watch?v=GENBVwV8PMs

http://www.tradersedgeindia.com/basics_technical_analysis.htm