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Prelims

Indranarain Ramlall (University of Mauritius, Mauritius)

Applied Technical Analysis for Advanced Learners and Practitioners

ISBN: 978-1-78635-634-5, eISBN: 978-1-78635-633-8

Publication date: 21 November 2016

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Citation

Ramlall, I. (2016), "Prelims", Applied Technical Analysis for Advanced Learners and Practitioners, Emerald Group Publishing Limited, Leeds, pp. i-xix. https://doi.org/10.1108/978-1-78635-634-520161018

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Emerald Group Publishing Limited

Copyright © 2017 Emerald Group Publishing Limited

Half Title Page

APPLIED TECHNICAL ANALYSIS FOR ADVANCED LEARNERS AND PRACTITIONERS

In Charts We Trust

Title Page

APPLIED TECHNICAL ANALYSIS FOR ADVANCED LEARNERS AND PRACTITIONERS

In Charts We Trust

BY

INDRANARAIN RAMLALL

University of Mauritius, Mauritius

United Kingdom – North America – Japan India – Malaysia – China

Copyright Page

Emerald Group Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2017

Copyright © 2017 Emerald Group Publishing Limited

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No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

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A catalogue record for this book is available from the British Library

ISBN: 978-1-78635-634-5 (Print)

ISBN: 978-1-78635-633-8 (Online)

List of Figures

Chapter 1
Figure 1.1 Types of Oscillators.
Figure 1.2 Types of Candlesticks.
Figure 1.3 Piercing Line.
Figure 1.4 Dark Cloud Cover.
Figure 1.5 Candlesticks Chart.
Figure 1.6 Relative Strength Index Chart.
Figure 1.7 Bollinger Band Chart.
Figure 1.8 Moving Average Convergence Divergence Chart.
Chapter 2
Figure 2.1 Types of Chart Patterns.
Figure 2.2 Head and Shoulders.
Figure 2.3 ∩-Shaped Head and Shoulders.
Figure 2.4 V-Shaped Head and Shoulders.
Figure 2.5 Double Top.
Figure 2.6 Triggering Point for Sell-Off under a Double Top.
Figure 2.7 Stop Loss Point in the Case of a Sell-Off under a Double Top.
Figure 2.8 Triggering Points to Buy and Sell Under Double Bottoms.
Figure 2.9 Ascending Triangle.
Figure 2.10 Stop Loss under Ascending Triangle.
Figure 2.11 Descending Triangle.
Figure 2.12 Symmetrical Triangle.
Figure 2.13 Bullish Flag.
Figure 2.14 Bearish Flag.
Figure 2.15 Pennant in an Uptrend.
Figure 2.16 Pennant in a Downtrend.
Figure 2.17 Bullish Rectangle.
Figure 2.18 Bearish Rectangle.
Chapter 3
Figure 3.1 Sell Signal When Column of Os Declines below a Previous Column of Os.
Figure 3.2 Buy Signal When Column of Xs Rises above a Previous Column of Xs.
Figure 3.3 Applied Example under Point and Figure Chart.
Chapter 4
Figure 4.1 Bearish Divergence.
Figure 4.2 Bullish Divergence.
Chapter 5
Figure 5.1 Classification of Sentiment Indicators.
Chapter 7
Figure 7.1 Elliott Wave Analysis under a Bullish Market.
Figure 7.2 Elliott Wave Analysis under a Bearish Market.
Figure 7.3 Link between 5 Waves Patterns and the Fibonacci Sequence.
Figure 7.4 Kondratieff Waves in the United States.
Figure 7.5 Elliott Wave Theory and Fibonacci Retracement.
Figure 7.6 Trend, Retracement and Extension.
Figure 7.7 Bullish Market Waves under Elliott Wave Pattern.
Figure 7.8 Detailed Wave Structure under Bullish Market.
Figure 7.9 Alternation under Bull Market When Wave 2 Represents a Sharp Correction, Wave 4 is Expected to be a Sideways Correction.
Figure 7.10 Alternation under Bull Market When Wave 4 Constitutes a Sharp Correction.
Figure 7.11 Alternation under Bear Market When Wave 2 Represents a Sharp Correction.
Figure 7.12 Alternation under Bear Market When Wave 2 Constitutes a Sharp Correction (Steep Wave).
Figure 7.13 Channelling.
Figure 7.14 Final Channel.
Figure 7.15 Combination.
Figure 7.16 Contracting Diagonal in a Bull Market.
Figure 7.17 Contracting Diagonal in a Bear Market.
Figure 7.18 First Wave Extension in Bull Market.
Figure 7.19 First Wave Extension in Bear Market.
Figure 7.20 Third Wave Extension in Bull Market.
Figure 7.21 Third Wave Extension in Bear Market.
Figure 7.22 Fifth Wave Extension in Bull Market.
Figure 7.23 Fifth Wave Extension in Bear Market.
Figure 7.24 Fifth Wave Extension of the Fifth Wave in a Bull Market.
Figure 7.25 Third Wave Extension of the Third Wave in a Bull Market.
Figure 7.26 Flat.
Figure 7.27 Flat in a Bull Market.
Figure 7.28 Flat in a Bear Market (Occur only in Corrective Phase (1-2-3)).
Figure 7.29 Expanded Flat Correction.
Figure 7.30 Irregular Flat.
Figure 7.31 Failure.
Figure 7.32 Thrust.
Figure 7.33 Contracting/Symmetrical Triangle in a Bull Market.
Figure 7.34 Contracting Triangle in a Bear Market.
Figure 7.35 Contracting Diagonal Triangle in a Bull Market.
Figure 7.36 Barrier Triangle in a Bull Market.
Figure 7.37 Barrier Triangle in a Bear Market.
Figure 7.38 Expanding Triangle in a Bull Market.
Figure 7.39 Expanding Triangle in a Bear Market.
Figure 7.40 Bull Market Truncation/Bull Market Failure.
Figure 7.41 Bear Market Truncation/Bear Market Failure.
Figure 7.42 Single Zigzag.
Figure 7.43 Zigzag in a Bull Market.
Figure 7.44 Zigzag in a Bear Market (Upward Sloping).
Figure 7.45 Double Zigzags in a Bear Market (Upward Sloping).
Figure 7.46 Components of Cycles.
Chapter 8
Figure 8.1 Illustration of MACD Components.
Chapter 9
Figure 9.1 Bearish Divergence
Figure 9.2 Bullish Divergence
Chapter 11
Figure 11.1 Black Candlestick.
Figure 11.2 White Candlestick.
Figure 11.3 Hammer Pattern.
Figure 11.4 Hanging Man Pattern.
Figure 11.5 Shooting Star Pattern.
Figure 11.6 Bearish Engulfing Candlesticks Pattern.
Figure 11.7 Bullish Engulfing Candlesticks Pattern.
Figure 11.8 Harami in a Bearish Reversal.
Figure 11.9 Harami in a Bullish Reversal.
Figure 11.10 Piercing Line Pattern.
Figure 11.11 Dark Cloud Cover.
Figure 11.12 Tweeter Top Pattern.
Figure 11.13 Tweeter Bottom Pattern.
Figure 11.14 Morning Star Pattern.
Figure 11.15 Evening Star Pattern.
Figure 11.16 Three White Soldiers Pattern.
Figure 11.17 Three Black Crows Pattern.
Chapter 12
Figure 12.1 Fibonacci Retracement: Low-High.
Figure 12.2 Fibonacci Retracement: High-Low.
Figure 12.3 A Fibonacci in a Downtrend.
Figure 12.4 A Fibonacci in an Uptrend.
Figure 12.5 Fibonacci Extensions under High-Low Swing.
Figure 12.6 Fibonacci Extensions under Low-High Swing.
Figure 12.7 Fibonacci Price Projections under Low-High Swing.
Figure 12.8 Fibonacci Price Projections under High-Low Swing.
Appendix
Figure A1 Holistic Assessment of Technical Analysis Tools.

List of Tables

Chapter 1
Table 1.1 Volume-Price Relationships.
Table 1.2 Comparative Assessment between Fundamental and Technical Analyses.
Table 1.3 RSI Values and Interpretation.
Chapter 2
Table 2.1 Differences between ∩-Shaped Head and Shoulders and V-Shaped Head and Shoulders.
Chapter 3
Table 3.1 Recommended Guidelines for Box Size.
Chapter 7
Table 7.1 Computing the Fibonacci Ratio.
Table 7.2 Impulsive and Corrective Waves and Cycle under Elliott Wave Theory.
Chapter 9
Table 9.1 Different States Noted under RSI.
Table 9.2 RSI Computation.
Chapter 14
Table 14.1 Full Set of Technical Analysis Tools under R Package.

Dedication

Dedicated to my parents, God and to all hard working souls.

“Strength does not come from physical capacity. It comes from an indomitable will.”

— Mahatma Gandhi

Preface

This book constitutes the result of a consistent and rigorous work I have undertaken for more than seven years in an attempt to master various tools which fall under the purview of technical analysis. I began to show interest in the field of technical analysis for the first time when I got introduced to technical analysis tools during my tenure as financial analyst/fund manager in one of the largest fund management company in Mauritius. The thirst for more knowledge and mastery of the technical analysis tools became more pressing and fascinating when I got accustomed to on-the-shelf technical analysis tools embedded in Reuters system at the Bank of Mauritius. With time, I consolidated my knowledge and experience with readings from different sources. When I realized that what I had could be produced as a book to the whole world, I decided to publish my work as a book. And this is how this book got its existence.

Despite the fact that many books prevail in technical analysis, I found that most of the books linger too much about the authors’ experience in lieu of unleashing real objective analysis of the various techniques under discussions. For instance, a 200-page book may actually contain only around 40–50 pages of real information value. Such a shortcoming acted as the main motive behind the present book. In essence, the book has been written with each page containing instant value information to thereby assist in direct and effective knowledge dissemination. This is a key distinctive feature of the book relative to other books on technical analysis. Beyond that, the book addresses all key features of technical analysis. Most importantly, a chapter is dedicated to technical analysis programming using R. Readers who do not even understand R can simply copy the commands and use them in a learning by experiencing approach. If another title were to be used for this book, it could have been called: Pearls of Technical Analysis as the book weaves through various techniques and tools of technical analysis and bring them under one single roof. For instance, very detailed analysis is provided pertaining to the Elliott Wave theory so that readers can master them quickly.

In a nutshell, this book is the fruit of a long-term study of technical analysis by the author. The book can be used both by new and advanced learners. The book has been written in such a way that there is not only a comprehensive coverage of the tool but also fully applied and discussed examples to enshrine the assimilation process. The book can also be used as a quick referenced manual for traders, practitioners, and researchers. Bullet points are widely used to ensure effective knowledge transmission and to shun off superfluous readings chiefly when time optimisation is widely considered as key in today’s evolving world.

To me, technical analysis is not so different compared to astrology. While the former is employed to predict asset prices, the latter is used to determine the future events in a life of an individual. Such a state of affairs can best be captured by the golden ratio which permeates nearly each and every aspect of the way nature and man operates.

I believe to have attained a certain level of “self-chartism” accomplishment after completing the book and welcome comments and suggestions. Same can be sent to or .

March 2016

Dr. Indranarain Ramlall

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