# Basics of Technical Analysis - Picking stocks in the market Part 2

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Finance

Published on February 16, 2014

Author: ImranAlmaleh

Source: slideshare.net

## Description

An Introduction to Technical Analysis in the stock market

P2 PICKING STOCKS IN THE MARKET 19 The analysis of securities Made by: Imran Almaleh

PART 2 agenda:  Price patterns:       19 ALWAYS AFTER A TREND Break-out & target rules The Rectangle Heads and Shoulders & reversed Double tops & Double bottoms Advanced technical analysis MACD  CCI  RSI 

BREAK-OUT AND TARGET  Break-out rules: The 3%-5% move  The volume move   Setting your target: Measurement  Sell before you hit your target 

THE RECTANGLE 4 points formation  Break-out confirmation  Target 

HEADS & SHOULDERS After a long trend  Major trend reversal  Support line  Reversed H&S  Break-out  Target 

Reversed H&S

THE DOUBLE TOPS & BOTTOMS  Formation: 1. 2. 3. Peak then 10 to 20% decline ±3% second peak Decline More people selling  Break-out  Target 

H&S

INDICATORS

MACD CCI RSI

THE MACD INDICATOR  The concept Simple momentum indicator  The formula: MACD: (12-day EMA - 26-day EMA) Signal Line: 9-day EMA of MACD  Divergence

THE CCI INDICATOR  The concept Extreme moves indicator  The formula: CCI = (TP - 20-period MA) / (.015 x Mean Deviation) Typical Price (TP) = (High + Low + Close)/3 Constant = 0.015  Divergence

THE RSI INDICATOR The concept  Between 30-70  The formula:  RSI = 100 RS = Average Gain / Average Loss  Divergence

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