Technical Analysis -Advance Level RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

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Flow of Presentation Technical Indicator Japanese Candlesticks Technical Indicators Conclusion RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Technical Indicators A technical indicator is a series of data points that are derived by applying a formula to the price data of a security Price data includes any combination of the open, high, low or close over a period of time RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Technical Indicators A technical indicator offers a different perspective from which to analyze the price action. Some, such as moving averages, are derived from simple formulas and the mechanics are relatively easy to understand Others, such as Stochastics, have complex formulas and require more study to fully understand and appreciate Technical indicators can provide unique perspective on the strength and direction of the underlying price action RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Technical Indicators Why Use Indicators? An indicator can act as an alert to study price action a little more closely Indicators can be used to confirm other technical analysis tools Some investors and traders use indicators to predict the direction of future prices RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Technical Indicators Tips for Using Indicators Indicators indicate Signals should be taken in context with other technical analysis tools Learning how to read indicators is more of an art than a science Hundreds of indicators in use today Choose carefully and moderately  RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Japanese Candlesticks Candlestick charting first appeared sometime after 1850 Credit goes to legendary rice trader named Homma from the town of Sakata Original ideas were modified and refined over many years of trading eventually resulting in the system of candlestick charting that we use today RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Japanese Candlesticks RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Candlesticks Pattern, WHY?? RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Doji Bulls and Bears are at an equilibrium A state of indecision Always take notice RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Gravestone Doji Open and the close occur at the  low of the day Top of a up- trend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Dragonfly Doji Open and the close occur at the  top of the day Bottom of a down- trend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Bullish Engulfing Pattern End of a downtrend Buying pressure Beginning of an up - trend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Bearish Engulfing Pattern Opposite to the bullish pattern End of an up – trending market Selling pressure RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Dark Cloud Cover Two – day bearish pattern End of an upturn Closes below the 50% level RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Piercing Pattern End of a declining market Price opens lower than the previous day Closes above the 50% level RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Hammer Long lower shadows and small real bodies Patter at the bottom of the down-trend is Hammer RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Hanging-man Long lower shadows and small real bodies Pattern at the top of the up-trend is Hanging Man RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Morning Star Bottom reversal signal Beginning of an up - trend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Evening Star Opposite of the Morning Star Top reversal signal Beginning of a down - trend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Major Candlesticks Pattern Shooting Star Warning that the top is near Bottom of a trend is a bullish signal (inverted hammer) RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Moving Averages Simple Moving Averages Exponential Moving Averages RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Moving Averages Simple Moving Averages Average Value of a commodity over a set period Emphasizes the direction trend Upward trend is when a shorter duration MA (for e.g., 15 days) crosses over the longer duration MA (for e.g., 50 days) Downward trend is when a longer duration MA (for e.g., 50 days) crosses over the shorter duration MA (for e.g., 15 days) RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Moving Averages Simple Moving Averages RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Moving Averages Exponential Moving Averages Similar to Simple Moving Averages Except more weight is given to the latest data 12- and 26-day EMA’s are the most popular Example of EMA RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Moving Averages Exponential Moving Averages RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Pivot Points Predictive indicator of market movement Uses the previous time frame prices to calculate the next time frame’s pivot points Calculation used for Pivot Points Resistance 3 = H + 2*(P-L) Resistance 2 = P + (Res1-Sup1) Resistance 1= 2 * P - L Pivot Point = ( H + C + L ) / 3 Support 1 = 2 * P - H Support 2 = P - (Res1-Sup1) Support 3 = L - 2*(H-P) RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Example of Pivot Points Gold Prices on 31st March 2011 Open High Low Close 1435.80 1445.05 1427.80 1431.39 R2 R1 Pivot S1 S2 1452.13 1440.97 1434.77 1424.54 1417.10 RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Example of Pivot Points RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Relative Strength Index Developed by J. Welles Wilder Measures the magnitude of gains against the magnitude of losses over a period Range 0-100 Formula=100-100/(1+RS) where, RS=Average Gain / Average Loss RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Relative Strength Index RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Relative Strength Index RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Bollinger Bands Created by John Bollinger in 1980s Determines the overbought and oversold zones Consists of three curves Upper Band-Middle Band+2 S.D. Middle Band-20 Days SMA Lower Band-Middle Band-2 S.D. RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Bollinger Bands RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Discovered by Leonardo Pisano Series numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on Fibonacci Retracement Levels (Golden Mean) 0.236, 0.382, 0.500, 0.618, 0.764 Fibonacci Extension Levels 0, 0.382, 0.618, 1.000, 1.382, 1.618 RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Retracement Works best when the market is trending Used to determine support and resistance level General consensus is the market always reverses from one of the support/resistance levels RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Retracement Uptrend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Retracement Uptrend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Retracement Downtrend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci Retracement Downtrend RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci with Trend Lines Useful on trending market i.e. Uptrend or Downtrend Example of silver Want to take a long position but don’t know when Draw the trend line from 24th August till 22nd October Draw the Fibonacci levels taking a swing low price of USD 22.79(coinciding with one of the lowest trend levels of 22nd October) and swing high price of USD 29.34. RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci with Trend Lines Silver Prices found support at 61.8 level i.e. USD 25.31 (coinciding with the trend line as well) on 16th November Take a Long position at this level Silver Prices broke the swing high level on 4th December RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci with Japanese Candlesticks Tracking the development of exhaustive candlesticks Indicates a continuation of a trend Example of Gold Draw the Fibonacci levels taking a swing low price of USD 1156 on 27th July and Swing high price of USD 1387.08 on 14th October RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Fibonacci with Japanese Candlesticks Gold prices found support at 23.6 Fib Level on 21st October Formation of a Dragonfly Doji after a bearish candle the preceding day Dragonfly Doji indicates the beginning of a bullish trend Take a long position at this level Gold Prices break the swing high level on 5th November RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

MACD Developed by Gerald Appel in late 1970s Acronym for Moving Average Convergence Divergence Identify a new trend Calculation MACD: (12 Day EMA-26 Day EMA) Signal Line: 9 Day EMA MACD Histogram: MACD-Signal Line Rules for Trading When MACD>Signal Line=Bullish Market When MACD<Signal Line=Bearish Market RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

MACD RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

Conclusion Technical Indicators work in tandem with each other Weigh the pros and cons of each indicator before reaping the results The best strategy forward is using technical and fundamental factors simultaneously RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

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