A Beginners Guide to Technical Analysis of Stock Charts
Learn the techniques a full-time Professional Trader uses every day for Swing Trading and Day Trading. Analyzing daily charts and weekly charts is important when Swing Trading. To be a successful Day Trader, it is imperative to know how to quickly and correctly read stock charts.
These 50 video lessons, that total up to 8.5 hours of playtime, will teach you all about stock charts and the many Technical Indicators you can load onto them. The most common and useful indicators will be covered first, and after the 15th lecture, Stock Chart Setup #1 is presented, which is something you can start to use in your trading right away!
Each lesson begins with a brief explanation of each Technical Indicator. The majority of each 10 minute lesson is spent showing you exactly how an experienced trader uses them. Every video shows numerous chart examples of each indicator in Action.
The final lesson on "Multicollinearity" – or – "There are SO many indicators! Which ones do I USE?", explains how indicators are grouped, and how to avoid a common problem chartists have, by using too many of the same types of indicators on their charts. This lesson will show you how to choose your favorites from each category to get best results.
Questions from students will be answered promptly, and Live Sessions will be planned for one on one discussion about your favorite stock charts.
Welcome to the Course!
This lesson describes all of the subjects that will be covered in this Course.
This lesson show why Candlestick Charts are by far the best form of plotting Price Action.
This lesson shows the most common Single Candlestick Reversal Signals, that may indicate that a reversal of Trend may be occuring.
This lesson describes how three Candlesticks next to each other can form Patterns that may also signal a reversal of Trend.
Chart Patterns are one of the most useful tools you can use! They can signal many different things. This lessons describes how important Support and Resistance are in relation to Chart Patterns.
This lessons shows the most common and useful Bullish and Bearish Chart Patterns.
Support and Resistance
Support and Resistance is one of the most important aspects of Technical Analysis. Generally speaking, it is Bullish when a stock breaks above an area of Resistance, and is Bearish when it breaks below a level of Support.
Moving Averages are one of the most useful indicators of all. They not only define the Trend, but they give Buy and Sell Signals when they cross either up or down through each other.
Bollinger Bands are one chart overlay that is a must to learn. They are one of the primary indicators in my proprietary trading systems for Day Trading and Swing Trading.
The Parabolic SAR is one of the fastest indicators to signal a reversal of Trend. In this lesson, I explain the Buy and Sell Signals the SAR gives.
Volume by Price is an important indicator, that will tell you which price range has the most interest. It also defines Support and Resistance levels.
The RSI is one of the most commonly used and useful indicators. It identifies Overbought and Oversold conditions, and it also defines the direction and strength of the Trend. A number of other indicators are based on the RSI.
The signals from Stochastics are primarily to identify Overbought and Oversold conditions, and you should also be looking for crosses either up or down through the Center Line at 50.
The MACD and it's Histogram identify the direction and strength of the Trend, and give many different kinds of signals. Watch for the MACD to cross up or down through it's Signal Line, and also watch for crosses up or down through the Center Line at zero.
The MACD Histogram is one of the few indicators that will actually tell you which direction the Trend will move next. Watch for Bullish or Bearish Divergences just before a change in Trend happens.
Now that we have covered all of the indicators necessary for this Setup, this is something you can begin to use immediately when doing paper trades or in real-time trading.
Generally speaking, prices are advancing with relative ease when EMV is in positive territory. Conversely, prices are declining with relative ease when it is in negative territory.
Fibonacci Retracements are ratios used to identify potential reversal levels. These ratios are found in the Fibonacci sequence. The most popular Fibonacci Retracements are 61.8% and 38.2%.
OBV was one of the first indicators to measure positive and negative volume flow. Chartists can look for divergences between OBV and price to predict price movements or use OBV to confirm price trends.
The Accumulation Distribution Line is a volume-based indicator designed to measure the cumulative flow of money into and out of a security.
Traders weigh the balance of buying or selling pressure with the absolute level of Chaikin Money Flow. Chartists can also look for crosses above or below the zero line to identify changes on money flow.
ADX measures trend strength without regard to trend direction. It's other two indicators, Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), complement ADX by defining trend direction. Used together, chartists can determine both the direction and strength of the trend.
The CCI is my favorite indicator! It gives the primary Buy and Sell Signals in my proprietary trading system. My Buy Signal occurs when the CCI dips below the -100 line, and then crosses back up through it. My Sell Signal occurs when the CCI rises above the +100 line, and then falls below it again. Center Line crossovers show either strength or weakness.
Now that we have covered all of the indicators necessary for this more advanced chart setup, I now present you with Stock Chart Setup #2.
Aroon is an indicator system that determines whether a stock is trending or not and how strong the trend is.
Average True Range is an indicator that measures Volatility. It is important to remember that ATR does not provide an indication of price direction, just volatility.
PPO is a momentum oscillator and it's signals are generated with signal line crossovers, centerline crossovers and Bullish or Bearish divergences.
Bollinger BandWidth is an indicator derived from Bollinger Bands. Falling BandWidth reflects decreasing volatility and rising BandWidth reflects increasing volatility.
%B can be used to identify Overbought and Oversold conditions. As with most momentum oscillators, it is best to look for short-term oversold situations when the medium-term trend is up and short-term overbought situations when the medium-term trend is down
ROC is a pure momentum oscillator that measures the percent change in price from one period to the next. As a momentum oscillator, ROC signals include center line crossovers, divergences and overbought-oversold readings.
The Coppock Curve is a momentum indicator that is used to identify long-term buying opportunities in the S&P 500 and Dow Industrials. It's primary signals are generated with crosses above and below the zero line.
The Chaikin Oscillator is a momentum indicator for the Accumulation Distribution Line. Basically, the Chaikin Oscillator turbo charges the Accumulation Distribution Line by measuring momentum.
The Correlation Coefficient is a statistical measure that reflects the correlation between two securities. The Correlation Coefficient is positive when both securities move in the same direction, up or down. and it is negative when the two securities move in opposite directions.
The Force Index is uses both price and volume to measure buying and selling pressure. The price portion covers the trend, while the volume portion determines the intensity. At its most basic, chartists can use a long-term Force Index to confirm the underlying trend. The bulls have the edge when the 100-day Force Index is positive. The bears have the edge when the 100-day Force Index is negative.
TRIX is an indicator that combines trend with momentum. The triple smoothed moving average covers the trend, while the 1-period percentage change measures momentum. In this regard, TRIX is similar to MACD and PPO.
KST is a momentum oscillator based on the smoothed rate-of-change for four different time frames. KST measures price momentum for four different price cycles. It can be used just like any momentum oscillator. Chartists can look for divergences, overbought/oversold readings, signal line crossovers and centerline crossovers.
MFI is an oscillator that uses both price and volume to measure buying and selling pressure. As a momentum oscillator tied to volume, the Money Flow Index is best suited to identify reversals and price extremes with a variety of signals.
Mass Index uses the high-low range to identify trend reversals based on range expansions. In this sense, the Mass Index is a volatility indicator that does not have a directional bias. Instead, the Mass Index identifies range bulges that can foreshadow a reversal of the current trend.
Williams %R is a momentum oscillator that measures the level of the close relative to the high-low range over a given period of time. It gives signals when a stock chart is Overbought or Oversold, and crosses up or down through the centerline give Bullish and Bearish signals.
StochRSI is an oscillator that measures the level of RSI relative to its high-low range over a set time period. Traders looking to enter a stock based on an overbought or oversold reading in RSI might find themselves continuously on the sidelines. StochRSI increases sensitivity and generates more Overbought/Oversold signals.
The Vortex Indicator is a unique directional indicator that provides clear signals and defines the overall trend. A bullish signal triggers when the positive trend indicator crosses above the negative trend indicator or a key level. A bearish signal triggers when the negative trend indicator crosses above the positive trend indicator or a key level.
The Ultimate Oscillator is a momentum oscillator designed to capture momentum across three different time frames. The multiple time frame objective seeks to avoid the pitfalls of other oscillators. Price trend favors the bulls when above 50 and the bears when below 50.
TSI captures the ebbs and flows of price action with a steadier line that filters out the noise. As with most momentum oscillators, chartists can derive signals from overbought/oversold readings, centerline crossovers, bullish/bearish divergences and signal line crossovers.
Standard Deviation is a statistical measure of volatility. Price moves greater than the Standard deviation show above average strength or weakness.
The Ulcer Index is a volatility indicator that measures downside risk. It measures the drawdown investors can expect to stomach on any given security.
PVO is a momentum oscillator for volume. It is used to define the ups and downs for volume, which can then be use to confirm or refute other signals. Typically, a breakout or support break is validated when PVO is rising or positive.
This lessons explains why there are big gaps either up or down on many securities daily charts at the opening bell. Gaps are explained, and a few strategies for trading gaps are shown.
The Price Relative compares the performance of one security to another with a ratio chart. This indicator is also known as the Relative Strength Comparative. Often, the Price Relative is used to compare the performance of a stock against a benchmark index, such as the S&P 500. Chartists can also use the Price Relative to compare the performance of a stock to its sector or industry group. This makes it possible to determine if a stock is leading or lagging its peers. The Price Relative can also be used to find stocks that are holding up better during a broad market decline or showing weakness during a broad market advance.
SCTR is a statistical ranking system at stockcharts.com that allows chartists to compare the technical strength of one stock against all the stocks in its peer group, to compare a stock against it's Sector, or an Index like the S&P500 or Dow. Do you want to trade only the best stocks? Trade only the highest ranked SCTR's.
Multicollinearity is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. Analysts need to be careful and not utilize technical indicators that reveal the same type of information.