1. Capital Markets
Course 6

2. VI. Technical Analysis
The market price is forecasted based on past values
Efficient market hypothesis
The transactions volume and open position are included into the analysis
Analysis based on the indicators study the economic factors which influence the market; technical analysis study the market price evolution
Analysis based on the indicators indicates correct the evolution of the market price, but not the moment; the movement moment is forecasted by the technical analysis
Analysis based on the indicators reflects the reason of the price movement; the technical analysis indicates the effect of the movement

3. VI. Technical Analysis Premises of technical approach:
Market actions discounts everything
Prices moves in trends
Market participants act mostly irrational
History repeats itself

4. VI. Technical Analysis Dow Theory Hypothesis:
The average discount everything
The market has three trends:
- primary trend (major)
- secondary trend
- minor trend
Major trend has three phases
- accumulation phase
- participation phase
- distribution phase
The indexes must confirm each other
Volume must confirm the trend
A trend is assumed to be in effect until it gives definite signals that it has reversed

5. Suource: Bodie, Z. , A. Kane, and A. J
Suource: Bodie, Z., A. Kane, and A. J. Marcus (2007): Essentials of Investments, 6th edition, McGraw Hill International Edition

6. VI. Technical Analysis Trend’s elements: Support Resistance Trend line
Fan lines
Trend channel

7. VI. Technical Analysis Graphic Forms: Head and shoulders
Reversed head and shoulders
Triple top or triple bottom
Round top or round bottom (saucer)
Double top (M)
Double bottom (W)
Triangle

8. VI. Technical Analysis
Charts

9. VI. Technical Analysis Indicators: Moving Average
Moving Average Convergent Divergent
RSI (Relative Strenght Index)
On Balance Volum
Momentum
ROC (Rate of Change)

10. Bibliography
Anghelache G. (2004), Piaţa de capital. Caracteristici. Evoluţii. Tranzacţii, Editura Economică, Bucureşti
Bodie, Z., A. Kane, and A. J. Marcus (2007), Essentials of Investments, 6th edition, McGraw Hill International Edition
Murphy, J. J. (1999), Technical Analysis of the Financial Markets: a comprehensive guide to trading methods and applications, New York Institute of Finance