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TSAA-SF Study Guide & Certified Exam

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Section 1: Basic TA Concepts

This section explains what constitutes the field of study known as Technical Analysis and what separates it from other forms of financial analysis. Essential concepts that define the subject are covered, which leads into an overview of the application of Technical Analysis.

Definition of Technical Analysis


What is Technical Analysis?

Several articles help to define the fiend by examining the practice of "Chart Analysis" as it is explained by John J. Murphy, author of Technical Analysis of the Financial Markets. here it is described how Technical Analysis is differentiated from other forms of Financial Analysis in several ways. We also examine the benefits that Technical Analysis has to offer that are not found in other forms of analysis.

The Basics of Technical Analysis:

Evaluating and Quantifying Risk:

Technical Analysis vs. Other Theories:


Concepts

Thanks to the work of Charles H. Dow, founder of the Dow Jones Companies (The Wall Street Journal) more than a century ago, Technical Analysis can claim to have its roots embedded in these time-tested methods of analysis. The "Dow Theory" concepts are six specific guidelines for evaluating the broad market indices and securities in general, but they also have become the most basic and important tenets of the practice of Chart Reading. They include...

  • The Market discounts everything
  • Markets have three movements: Primary, Secondary and Minor
  • There are three phrases of price trends: Accumulation, Public Participation, and Distribution
  • The stock market averages must confirm each other
  • Trends persist until there is clear evidence they have ended
  • Volume confirms price action
Here we examine each as basic concepts of Technical Analysis through the following articles.

Dow Theory Concepts:

Trends:

Supply & Demand:

Support & Resistance:

Cyclicality:

   Cycles

Applicable to Multiple Timeframes:


Application of Technical Analysis

The actual practice of Technical Analysis involves identifying patterns within price data  and evaluating the quality of the information within an overall investment decision. In addition to recognizing well established price patterns in charts, we also use indicators derived from price data as supporting evidence. Moreover, the psychology of market participants is weighed through volume studies, cycles, sentiment, and relative strength.

Price patterns:

Indicators:

    Oscillators

Volume Studies:

Cycles:

    Cycles

Sentiment:

Relative Strength:


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