EBF 301
Global Finance for the Earth, Energy, and Materials Industries

Reading Assignment: Lesson 11

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Reading Assignment:

Errera & Brown - Chapter 8

Key Points of Emphasis

  • Technical Analysis relies on the principals of probability and statistics.
  • The (3) most popular technical charts are Line or "close only," Bar, and Candlestick.
  • Line Charts record only the daily Closing price and are best used for long-term trending.
  • Bar Charts indicate the daily Open, High, Low and Closing prices for the trading day.
  • Candlestick Charts also show the OHLC but do so in a fashion as to illustrate the market direction, up or down, for that day's trading.
  • Identifying the current trend is the first step.
  • Determining if the trend is going to change is the next step. This can be ascertained if the preponderance of the evidence indicates it will. Buy/Sell decisions will then be made.
  • Trendlines are used to indicate the trends.
  • Various price patterns exist for Traders to identify.
  • Volume is a good indicator of market activity and can reinforce the day's price movement.
  • Resistance is the price level at which Sellers enter the market again. It establishes a "ceiling" price in the current market.
  • Support is the price level at which Buyers enter the market again. It establishes a "floor" price in the current market.
  • Moving Averages are good studies to utilize if you believe in the statistical premise of "reversion to the mean."