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Technical analysis is an important component of disciplined trading. Discipline helps to reduce emotion in investors. As 
soon as you have money in the market, emotion takes centre stage and objectivity stays sideline.

As a Component of Disciplined Trading
• When your money is in
the market, you will discover how deeply the counterproductive aspects of tension, anticipation, and anxiety alter the way
you invest and view the markets - usually in proportion to the funds committed. Technical analysis can put objectivity
back into the centre stage. They provide a mechanism to set entry and exit points or to set risk/reward ratios. By using
them, you foster a risk and money management approach to trading.

Provides Market Objectivity
• Technical analysis contributes to market objectivity. It is human nature to see the market as we want to see it, not as it
really is. The following happens very often.
• An investor buys and the market falls the next moment. He does not cut loss. Although there is no room for hope in the
market, he will look at all the fundamental bullish news he can in order to buoy his hope that the market will turn in his
direction. Meanwhile prices continue to decline. Perhaps the market is trying to tell him something. There are messages
for the investors to pick up.
• Technical analysis can be used like an antenna to pick up these messages. If this investor stepped back and objectively
viewed the price activity, he might get a better feel of the market.

Market Moving Factor
• Technical Analysis is important even if you do not fully believe in their use. This is because, at times, the technical are
the major reason for a market move. Since they are a market moving factor, they should be watched.
• The market price for one day may have no bearing on the price the following day. But an important component is left out - 
people. People remember prices from one day to the next and act accordingly. Thus, price, itself, is an important
component in market analysis.
• Last but not least, the price action is the most direct and easily accessible method of seeing overall supply/demand 
relationships. There may be fundamental news not known to the general public but you can expect it already in the price.
Those who have advance knowledge of some market moving event will most likely buy or sell until current prices reflect
their information. This knowledge, at times, consequently, may be discounted when the event occurs. Thus, current
prices should reflect all available information, whether known by the general public or by a select few.

Indicators
There are a lot of indicators available in the market as such, users are spoilt with choices. Therefore, it is important to choose the indicators which suit yourself the best in correctly sporting the entry and exit signal. In this section, you will be exposed to some indicators. Each indicator will be described with the aid of diagram to further enhance the explanations. Below mention are thirty-eight indicators for your understanding:

1. Simple moving averages
2. Exponential moving averages (EMAs)
3. Moving-average convergence divergence (MACD)
4. Weighted moving averages
5. Envelopes
6. Bollinger bands
7. Overbought and oversold levels
8. Rate-of-change (ROC)
9. Relative-strength indicator (RSI)
10. Chaunde momentum oscillator (CMO)
11. Relative momentum index (RMI)
12. Stochastics
13. Parabolic SAR
14. Fibonacci retracements
15. Gann fans
16. Acceleration/deceleration indicator
17. Volume
18. Average directional movement index
19. Average true range
20. Standard Deviation
21. Elder-ray indicator
22. DeMarker
23. Force index
24. Ichimoku kinko hyo
25. Momentum
26. Moving average of oscillator
27. Relative vigor index (RVI)
28. Williams’ percentage range
29. Money flow index (MFI)
30. On balance volume (OBV)
31. Bill Williams volume accumulation/distribution indicator
32. Bill Williams alligator oscillator
33. Bill Williams gator oscillator
34. Bill Williams fractals
35. Bill Williams market facilitation index
36. Pivot point
37. Heiken ashi
38. Zigzag
39. Elliott wave theory

Simple moving averages (SMA)
• Moving averages are one of the oldest and most popular tools used by technicians. It's strength is as a trend-following
device which offers the technician the ability to catch major moves.
• Thus, it is utilized most effectively in trending markets. However, since moving averages are lagging indicators they can
catch a trend only after it has turned.
• Constructed by totalling series of data and divide it by the total number of observations.
• Example, calculates 5-day simple moving averages, simply add up closing prices for the last 5 days and divide the total
value by 5.
• May have more than one simple moving averages line in a chart. Eg. 5 SMA, 30 SMA, 60 SMA. The longer is the period,
the lagging is the line.

Exponential moving averages (EMAs)
• The exponential moving average is a special type of weighted moving average. Like the basic weighted moving average,
the exponential moving average is front weighted.
• Unlike other moving averages, though, the exponential moving average incorporates all prior prices used in the data.
This type of moving average assigns progressively smaller weights to each of the past prices.
• Each weight is exponentially smaller than the previous weight, hence, the name exponential moving average.
• More leading indicator then simple moving average.
• May have more than one exponential moving averages line in a chart. Eg. 5 EMA, 30 EMA. The longer is the period, the
lagging is the line.

Moving-average convergence divergence (MACD)
• MACD is a trend-deviation indicator.
• It is made up from a set of three lines namely, long, short and signal line.
• Calculation is exponentially basis; most recent periods are more heavily weighted.
• Both long and short lines are also known as moving averages (MAs).
• Both MAs lines continually converge and diverge from each other.
• A third exponential moving average (EMA) is used to smooth the MACD, which is the signal line.
• Crossover of this signal line is known as buy and sells signals.
• The default value for MACD is as such:
o Long = 26
o Short = 12
o Signal = 9
• Short moving average crossed long moving average upward means up trend.
• Short moving average crossed long moving average downward means down trend.

Weighted moving averages
• Weighted moving averages detect turn or reverse direction of trend faster than simple moving averages.
• It has higher weightage to most recent periods as the multiplications moves on.
• The calculation for weighted moving averages starts with a set of simple moving averages.
• At each set of simple moving averages, simply start with the first set of simple moving averages with multiplied of 1, for
second set with multiplied of 2, for third set with multiplied of 3, and so on until the last set of simple moving averages.

Envelopes
• Envelopes act as price support and resistance areas.
• It consists of maximum and minimum divergence points.
• It is plotted as fixed percentages above and below a moving average.
• Prices fluctuate within the support and resistance areas.
• Periods are likely to be bearish when upper band of envelope is not touched and likely to be bullish when lower band of
envelope is not touched.

Bollinger bands
• Bollinger bands is plotted as standard deviations above and below an average based on closing prices.
• It consists of two bands and they expand and contract as the volatility of prices change.
• Bollinger bands determines the upper and lower band distance. When bands narrow, tendency that sharp price
changes will follow.
• Narrow bands will start to diverge once price begins to take off, it’s the indication of a breakout might occur.
• When prices exceed a band, trend is expected to continue.
• When prices move out a reversal formation after crossed outside a band, likelihood to expect a trend reversal.

Overbought and oversold levels
• Overbought and oversold levels notify the trader if the market has become overextended and, thus, vulnerable to a 
correction.
• Using an oscillator as an overbought/oversold indicator requires caution. Because of how they are constructed,
oscillators are mainly applied in lateral price environments.
• Using an oscillator as an overbought/oversold indicator when a new major trend is about to commence can cause
problems.
• If, for example, there is a break above the top of a congestion band, it could indicate the start of a new bull leg and the
oscillator could stay overbought while prices ascend.
• The chart of overbought/oversold indicator are formed by three horizontal lines namely, highest level as overbought line, 
lowest level as oversold line and middle level as equilibrium line.
• All three horizontal lines represent level for anticipating a trend reversal.
• Overbought level would induce profit taking action while oversold level would induce buying action.

Rate-of-change (ROC)
• It is to compare the price of today with respect to the price x period ago.
• Tomorrow’s price would be compared with the price x-1 period ago, and so forth.
• ROC indicator benchmarked against the price that has been determined.
• Example price at 5 weeks ago would be defined as horizontal benchmark line. Rising of ROC above benchmark line
refers to price higher than what is was 5 weeks ago with expanding velocity. Above the benchmark but heading
downwards refers falling momentum of the security and shrinking of price.
• ROC below benchmark refers to price lower than what is was 5 weeks ago.

Relative-strength indicator (RSI)
• The Relative Strength Index (RSI) is a popular technical tool. Many charting services plot the RSI and many investors
closely monitor it.
• The RSI compares the relative strength of price advances to price declines over a specified period.
• The formula for RSI is as follows:

RSI = (100 - (100 / 1 + RS))
RSI =  average of x days’ up closes/average of x days’ down closes.

RS = average of x days’ up closes/average of x days’ down closes.

• The two main uses of RSI are as an overbought/oversold indicator and as a tool to monitor divergences.
• As an overbought/oversold indicator, the RSI implies that the market is overbought if it approaches the upper end of this
band (that is, above 70 or 80). At that point, the market may be vulnerable to a pullback or could move into a period of
consolidation.
• Conversely, at the lower end of the RSI range (usually below 30 or 20), it is said to reflect an oversold condition.
• As a divergence tool, RSI calculations can be helpful when prices make a new high for the move and the RSI fails to
make a concurrent high. This is called a negative divergence and is potentially bearish.
• A positive divergence occurs when prices make a new low, but the RSI does not. Divergences are more meaningful
when RSI oscillator readings are in overbought or oversold regions.

Chaunde momentum oscillator (CMO)
• Chaunde momentum oscillator is a variation on relative-strength indicator (RSI).
• It is used together with overbought and oversold level oscillator.
• The scaled is confined within +100 (overbought) to –100 (oversold).
• 0 is termed as the equilibrium point.
• Above highest (overbought level) horizontal line refers to overbought and below lowest (oversold level) horizontal line
refers to oversold.
• CMO reaches overbought and oversold extreme level more times compared to RSI.

Relative momentum index (RMI)
• Relative momentum index is a variation on relative-strength indicator (RSI).
• The formula consists of the modification on standard RSI formula.
• It uses period to form RMI formula. The longer is the period, the lesser is the volatility.
• RMI smooth the indicator and emphasise on the degree of the price fluctuation.
• RMI has more attempts of touching overbought and oversold level than RSI.
• It is used together with overbought and oversold level.
• Above highest (overbought level) horizontal line refers to overbought and below lowest (oversold level) horizontal line
refers to oversold.

Stochastics
• The stochastic oscillator is another popular tool used by technicians. As an oscillator, it provides overbought and
oversold readings, signals divergences, and affords a mechanism to compare a shorter-term trend to a longer-term
trend.
• The stochastic indicator compares the latest closing price with the total range of price action for a specified period.
• Stochastic values are between 0 and 100. A high stochastic reading would mean the close is near the upper end of the
entire range for the period. A low reading means that the close is near the low end of the period's range.
• The idea behind stochastics is that, as the market moves higher, closes tend to be near the highs of the range or, as the
market moves lower, prices tend to cluster near the lows of the range.
• Looking at the chart, stochastics are formed with two lines, the %K line and the %D line.
• %D line provides major signals, therefore deemed as important.
• %K is usually plotted as solid line and the calculation is as follows:
%K = 100[(C – Ln) / (Hn – Ln)]
n = no. of trading period
C = most recent close price
L = lowest low price for the last n trading period
H = highest high price for the last n trading period
• %D is usually plotted as dashed line and calculation is as follows:
%D = 100 X (Hn / Ln)
n = no. of trading period
H = no. of period sum of (C – Ln)
L = no. of period sum of (Hn – Ln)
• Overbought condition is fulfilled when %D line crosses above the overbought level.
• Oversold condition is fulfilled when %K line crosses below the oversold level.

Parabolic
• Parabolic is used for stop-loss signal.
• It consists of a curve shape that is plotted in the chart above and below the price.
• This curve is known as SAR (stop and reversal system).
• In a rising trend, the stop is continually being raised and in a declining trend, the stop is continually being lowered.
• When parabolic is triggered, it will have the tendency to reverse the trend direction.

Fibonacci retracements
• Fibonacci retracement is used for projecting future pivotal points.
• It is formed with sequence begins with 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, and so on.
• It uses number 2 and add to the previous number in the series.
• 2+1=3, 3+2=5, 5+3=8, and so forth.
• The types of level appeared in Fibonacci are 0.0%, 23.6%, 38.2%, 50.0%, 61.8%, 100.0% and 161.8%.
• They refer to the percentage of the distance between the major low and high and perform as support and resistance.
• Fibonacci retracement is used by measuring distance between the major low and high and all pivot level will appear.

Gann fans
• Gann fans is for anticipating of price turning points.
• A 45 degree angle was used as it gave a perfect balance between time and price.
• The Distance on chart must be the same for both time and price in order to achieve the perfect balance.
• The different level of the Gann fans are 1X8, 1X4, 1X3, 1X2, 1X1, 2X1, 3X1, 8X1.
• They perform as support and resistance.
• When one line is penetrated, the next line will be the new support or resistance level.

Acceleration/deceleration indicator
• Acceleration/deceleration indicators measure the acceleration and deceleration of current price driving force.
• It performs as a warning signal for change in price direction.
• The indicator will change its direction prior to the change of price driving force.
• The horizontal line is the balance of price driving force and acceleration.
• If acceleration/deceleration is higher than the horizontal line, the acceleration has tendency to continue with upward price
movement.
• If acceleration/deceleration is lower than the horizontal line, the deceleration has tendency to continue with downward
price movement.
• Avoid buying when indicator displayed red coloured bar.
• Avoid selling when indicator displayed green coloured bar.

Volumes
• The theory behind volume states that the greater the volume, the greater the force behind the move. As long as volume
increases, the current price trend should continue.
• If, however, volume declines as a price trend progresses, there is less reason to believe that the trend will continue.
• Volume can also be useful for confirming tops and bottoms. A light volume test of a support level suggests a diminution
of selling force and is, consequently, bullish. Conversely, a light volume test of a previous high is bearish since it 
demonstrates a draining of buying power.
• Volume is also used to confirm price changes: The beginning of the trend has to be accompanied with an increase of
volume to be considered as a significant new trend.
• Volume is also used to anticipate changes in price: increase in volume take places before the change in price.
• Short term trend volume confirmation are as follow:
o Uptrend – rise in both price and volume
o Downtrend – fall in both price and volume
• Long term trend volume confirmation are as follow:
o Uptrend – higher volume at higher peaks
o Downtrend – higher volume at lower trough
• A downtrend that stalled while volume remains high means buyers are in controlled and this is termed as accumulation.
• An uptrend that stalled while volume remains high means sellers are in controlled and this is termed as distribution.
• High volume prior to peak symbolises upward breakout is more likely and a high volume prior to trough symbolises
downward breakout is more likely.
• High volume after breakout is significant and low volume after breakout is usually insignificant.

Average directional movement index
• Average directional movement index is used to determine existence of price trend.
• It involves two direction indicators namely 14 period +DI and 14 period –DI.
• In average directional movement index, there is the existence of “rule of points of extremum”, it is used to eliminate false
signals.
• “Points of extremum” refers to the point when +DI and –DI crossed each other.
• When +DI higher than –DI, point will be the maximum price of the day upon crossed with –DI.
• When +DI lower than –DI, point will be the minimum price of the day upon crossed with –DI.
• Buy when +DI is higher than –DI and exceed the point of extremum.
• Sell when +DI is lower than –DI and failed to exceed the point of extremum.

Average true range
• Average true range is the moving average of values of true range.
• It displays the market volatility.
• The calculations is based on the followings:
o Difference between current highs and lows price.
o Difference between previous closing and current maximum price.
o Difference between previous closing and current minimum price.
• The higher the indicator’s value, the higher the chances of a change in trend.
• The lower the indicator’s value, the weaker is the trend’s movement.

Standard deviation
• Standard deviation measures volatility which shows difference of the closing price and mean closing price.
• The larger the difference between closing price and the mean closing price, the higher is the standard deviation and
volatility.
• The closer the closing price is to the mean closing price, the lower is the standard deviation and volatility.
• It is use to determine spread between upper and lower of Bollinger bands.

Elder-ray indicator
• Elder-ray indicator is used for estimating power struggling between bulls and bears.
• The moving average displayed is the agreed price between buyers and sellers in a period.
• The maximum price shows maximum power of buyer while the minimum price shows minimum power of sellers.
• The bull power is define as difference between maximum price and the 13-day exponential moving average.
• The bear power is define as difference between minimum price and the 13-day exponential moving average.

DeMarker
• DeMarker is the comparison of maximum price of that period with previous maximum price of that period.
• If current maximum price is higher than previous maximum price, then the difference between the two maximum prices
will be recorded.
• If current maximum price is lower/equal to previous maximum price, then nothing will be recorded.
• When DeMarker falls below 30, generally expect of a bullish reversal.
• When DeMarker rises above 70, generally expect of a bearish reversal.

Force index
• Force index measures buying power in both prices increase and decrease.
• It consists of price trend, price decrease and transacted volumes to form the indicator.
• It uses two moving averages to effectively open and close positions.
• Generally buy when buying forces fall below zero during the period when index is increasing. It also signals the
continuation of the buying power momentum when price hits to new peak.
• Generally sell when index turns positive during the increasing of selling momentum. It also signals continuation of the
decreasing momentum when index falls to the new trough.
• The indicator remains on one level if price changes do not correlate to the change in volume. This is a signal that the 
trend is going to change soon.

Ichimoku kinko hyo
• Ichimoku kinko hyo is use to gauge momentum with futures areas for support and resistance level.
• It comprises of five lines namely the Tenkan-sen, Kijun-sen, Senkou span A, Senkou span B and Chickou span.
• Tenkan-sen – is to measure short-term momentum.
Tenkan - sen = (Highest High - Lowest Low) / 2
o It is use in combination with Kijun-sen to anticipate future momentum.
o Generally buy when Tenkan-sen line moves above Kijun-sen line.
o Generally sell when Tenkan-sen line moves below Kijun-sen line.
• Kijun-sen – is to measure medium-term momentum.
Kijun - sen = (Highest High - Lowest Low) / 2
o It is use in combination with Tenkan-sen to anticipate future momentum.
o Generally buy when Tenkan-sen line moves above Kijun-sen line.
o Generally sell when Tenkan-sen line moves below Kijun-sen line.
• Senkou span A – is to measure momentum and future areas of support and resistance level.
Senkou span A = (Tenkan sen - Kijun sen) / 2
o It is plotted next to Senkou span B
o The area between the two lines filled with shaded lines is known as cloud.
o ‘Cloud’ is to anticipate levels of future support and resistance level.
o It is considered as a downward trend when Senkou span A is below Senkou span B.
o When both Senkou span crossed each other, it is an anticipation of a reversal of current trend.
• Senkou span B – is to create ‘cloud’ of the indicator.
Senkou span B = (Highest High - Lowest Low) / 2
o It is the slowest moving component of the Ichimoku indicator.
o It is plotted next to Senkou span A
o The Area between the two lines filled with shaded lines is known as cloud.
o ‘Cloud’ is to anticipate levels of future support and resistance level.
o It is considered as a downward trend when Senkou span A is below Senkou span B.
o When both Senkou span crossed each other, it is an anticipation of a reversal of current trend.
• Chikou span – it is created by plotting recent price movement 26-periods behind the latest close price.
o It is also known as ‘lagging span’.
o Considered as an upward trend when Chikou span is above close price.
o Considered as an downward trend when Chikou span is below close price.

Momentum
• Momentum, also called price velocity, is measurement of the difference between the closing price today and the closing
price a specified number of days ago.
• If we use a ten-day momentum we compare today’s close to that of ten days ago. If today’s close is higher, the
momentum is a positive number on the momentum scale. If today's close is lower than that of ten days ago, the
momentum is a minus figure.
• Using the momentum index, price differences (the difference between today's close and that of whatever period you
pick) should rise at an increasing rate as a trend progresses.
• This displays an uptrend with increasingly greater momentum. In other words, the velocity of the price changes is
increasing. If prices are rising and momentum begins to flatten, a decelerating price trend is in effect. This could be an 
early warning that a prior price trend could end. If the momentum crosses under the 0 line, it could be construed as a
bearish sign, above the 0 line, as bullish.
• There are two ways available to use the momentum.
• As a trend-following oscillator:
o Buy when indicator bottoms and turn up.
o Sell when indicator peaks and turns down.
• As a leading indicator:
o Market tops caused by rapid price increase.
o Market bottoms caused by rapid price decrease.

Moving average of oscillator
• Moving average of oscillator is use to smooth momentum.
• The calculation is calculated by the difference between two moving averages.
MAO = MA1 - MA2
MAO = moving average oscillator
MA1 = moving average 1 (self define value)
MA2 = moving average 2 (self define value)
• For usage of moving average of oscillator, it has the flexibility to combine the chart with other moving averages.

Relative vigor index (RVI)
• Relative vigor index is a calculation based on the idea in bullish market, close price is above the open price and in
bearish market, close price is below the open price.
• It is used with 10-day simple moving average in order to eliminate the price fluctuations.
• The main signal is to identify weakness of current trend – namely the bullish divergence and bearish divergence.
• Generally sell – RVI line crossed above signal line when bullish divergence appeared.
• Generally buy – RVI line crossed below signal line when bearish convergence appeared.
• The formula of RVI is as follows:
RVI = (close price - open price) / (high price - low price)

Williams’ percentage range
• Williams’ percentage range is to determine if market is overly bought/sold.
• It also has the ability to anticipate a reversal trend.
• Values ranging between 0-20% indicate oversold.
• Values ranging between 80-100% indicate overbought.
• When indicator reaches overbought/oversold level, wait for price to change direction before enter trade.
• Example, if indicator indicates oversold condition, waits for price to turn upward direction before buy.
• Example, if indicator indicates overbought condition, waits for price to turn downward direction before sell.

Money flow index (MFI)
• Money flow index indicates the rate of money invested into securities and then withdraws.
• When analysing this indicator, the following pointers are required to take note:
o Divergence between indicator and price movements. If prices rise and MFI decline, possibility of a price reversal
situation.
o MFI value above 80 or below 20 is a signal for potential peak or bottom of the market.

On balance volume (OBV)
• On balance volume (OBV) is a net volume figure. When the market closes higher compared to the prior close the volume
figure for that day is added to the cumulative on balance volume figure. When the close is lower, the volume for that day
is subtracted from the cumulative on balance volume figure.
• OBV can be used in a few ways. One way is to confirm a trend. OBV should be moving in the direction of the prevailing
price trend. If prices are ascending along with OBV, increased volume is reflected by the buyers, even at higher price 
levels. This would be bullish. If, conversely, price and OBV are declining, it reflects stronger volume from the sellers and
lower prices should continue.
• OBV is also used in lateral price ranges. If OBV escalates and prices are stable (preferably at a low price area) it would
exhibit a period of accumulation. This would bode well for advancing prices. If prices are moving sideways and OBV is
declining it reflects distribution. This would have bearish implications, especially at high price levels.
• Prices close higher than previous close, all of the day’s volume is considered as up-volume.
• Prices close lower than previous close, all of the day’s volume is considered as down-volume.
• Assumption made on using this indicator is that OBV changes before price changes.
• Since OBV is a leading indicator, there is a ‘non-confirmation’. It may occur at bull market tops or at the bear market 
bottoms.
• Rise in OBV means money flows into that security.
• OBV trend can be broken with two ways. They are as follow:
o Change from rising trend to falling trend or from falling trend to rising trend.
o Trend changes from current trend and remains uncertain for more than three days.
• Buy – on OBV upside breakouts. Continue to hold position until trend changes its direction.
• Sell – on OBV downside breakouts. Continue to hold position until trend changes its direction.

Bill Williams volume accumulation/distribution
• Bill Williams volume accumulation/distribution tracks relationships between price and volume.
• Higher volume is of greater emphasis over lower volume.
• If bar price closes near to high, part of the volume is added to accumulation/distribution indicator.
• If bar price closes near to low, part of the volume is subtracted from accumulation/distribution indicator.
• If bar price closes in the middle of the high and low price, value of indicator will be unchanged.
• A new high price confirmed with accumulation/distribution indicator new high price, means bullish trend.
• A new low price confirmed with accumulation/distribution indicator new low price, means bearish trend.

Bill Williams alligator oscillator
• Bill Williams alligator oscillator is a combination of three balance lines (moving averages) that use fractal geometry and
non linear dynamics.
• The blue line refers to alligator’s jaw
o Balance line for selected timeframe to be used in the chart.
o Chart uses 13-period smoothed moving average.
o Moved 8 bars into the future.
• The red line refers to alligator’s teeth
o Balance line for value timeframe of one level lower than blue line.
o Chart uses 8-period smoothed moving average.
o Moved 5 bars into the future.
• The green line refers to alligator’s lips
o Balance line for value timeframe of one level lower than red line.
o Charts uses 5-period smoothed moving average.
o Moved 3 bars into the future.
• When all three lines (jaw, teeth and lip) come together means alligator is asleep and market is range bound.
• When all three lines spread out, it means alligator is hunting for its prey (bull/bear) and price movement will be strong.
• Once alligator has ample food, all three lines will join together again and it is time to fix profits.
• In an up trend, the price will be above alligator’s mouth and in a down trend, the price will be below alligator’s mouth.

Bill Williams gator oscillator
• Bill Williams gator oscillator displays degree of convergence/divergence of the balance lines (smoothed moving
averages).
• The top bar chart is the difference between value of blue and red lines.
• The bottom bar chart is the difference between value of red and green lines.

Bill Williams fractals
• Bill Williams fractals is to anticipate reversal in current trend and to detect price bar top or bottom.
• It consists of series of at least five consecutive successive bars, highest high in the middle, two lower highs on both
sides. The reversing consists of a series of at least five consecutive successive bars, lowest low in the middle, two 
higher lows on both sides.
• Highs and lows are indicated with up and down arrows.
• Generally buy when price is above the most recent up fractal.
• Generally sell when price is below the most recent down fractal.
• Avoid close of buy position if fractal is lower than red line.
• Avoid close of sell position if fractal is higher than red line.

Bill Williams market facilitation index
• Bill Williams market facilitation index analyses the amount price changes for each unit of volume.
• Market facilitation index and volume increases symbolise market moving in single direction and higher volume of
participation in market.
• Market facilitation index and volume decreases symbolise market participation dropped and usually happens towards
the end of a trend.
• Market facilitation index increases and volume decreases symbolise market is not supported with participation, price is
changing due to speculations.
• Market facilitation index decreases and volume increases symbolise strong battle between buyer and sellers.

Pivot point
• Pivot point is to project potential support and resistance levels.
• The main pivots used are daily pivot, weekly pivot and monthly pivot.
• Formula for daily pivot point, support and resistance is as follows:
o To calculate weekly or monthly pivot, simply replace “yesterday’s” date with “last week” or “last month”.
• There are three support levels:
o S1 = (Pivot Point X 2) – Yesterday’s High
o S2 = Pivot Point – Yesterday’s High + Yesterday’s Low
o S3 = S2 – Yesterday’s High + Yesterday’s Low
• There are three resistance levels:
o R1 = (Pivot Point X 2) – Yesterday’s Low
o R2 = Pivot Point + Yesterday’s High – Yesterday’s Low
o R3 = R2 + Yesterday’s High – Yesterday’s Low

Heiken ashi
• Heiken ashi is use to eliminate irregularities from a chart. Hence, it is able to obtain clear market’s strength and status.
• It uses modified open-high-low-close values from candlesticks.
• Positive candles (green) without wicks represent strong uptrend price movement.
• Positive candles (green) with shadows/wicks represent presence of price movement strength to continue to move
upward.
• Small candles body (regardless of colour) with long shadows/wicks:
o It is similar to doji candlestick formation.
o It is a potential signal for trend reversal.
• Negative candles (red) without shadows/wicks represent strong downtrend price movement.
• Negative candles (red) with shadows/wicks represent presence of price movement strength to continue to move
downward.
• Heiken ashi has the flexibility to combine usage with other indicators.

Zigzag
• Zigzag is to determine price trend, support and resistance, double tops, double bottoms and head and shoulders chart
pattern.
• It uses swing highs and lows for its calculations:
o Swing highs: price closes is both higher than earlier price and price after it.
o Swing lows: price closes is both lower than earlier price and price after it.
• It also uses percentages or number points that are between the swings high and low to construct the indicator.

Elliott wave theory
• The Elliott Wave Theory of market analysis is employed by a broad spectrum of technical analysts. It is as applicable to
intra-day charts as it is to yearly charts. This introductory section only touches on the surface of Elliott. Describing Elliott
Wave methodology can be, and is, a book in itself.
• The Wave principle was discovered by R. N. Elliott early in this century. He noted that, among other aspects, price
movements consists of a five- wave up move followed by a corrective three-wave down move. Waves I, 3, and 5 are
called impulse waves while waves 2 and 4 are called corrective waves. It counts both in a rising market and in a falling
market. Thus, the impulse waves on a down trending market would be sloping downward and the corrective waves
would be upward bounces against the main trend.
• Another major contribution of Elliott was his use of the Fibonacci series of numbers in market forecasting. Wave counts 
and Fibonacci ratios go in hand since these ratios can be used to project price targets for the next wave. Thus, for 
example, wave 3 could be projected to move 1.618 times the height of wave 1; a wave 4 could correct 38.2% or 50% of 
the wave 3 move; and so on.
• To put it simply, every major up trend is made up of three phases:
o In phase one, investors enter the market to pick up good shares as they anticipate an improvement in market
conditions. While this happen, many others make no movement.
o During the next up wave, more investors will join in the market as the market signals become stronger.
o The third up wave is the final phase of any major up trend. The rest who has not enter the market in the second phase
jump in the wagon not wanting to miss any opportunity. They are the late entrants who chase up the share prices
causing them to rise to a new high in a short time.
o The downtrend is now round the corner as the share price become overly priced.

Wave Correction
• The up wave will not skyrocket, reach the peak in one single surge followed by a nose dive. Each up wave is usually
accompanied by a short period of decline. We call the decline correction and consolidation. A correction is caused by
light profit-taking by investors. These small dips should not be cause for alarm as they are only temporary. In technical
term, a correction is a drop of at least 20% of the gain in an up wave. Consolidation is a bigger correction and happen
usually after a period of up trend and involves heavier profits taking as prices rise up quite fairly.

Applying the Elliot Wave Theory
• At the first sign of a bull trend, you may prepare to enter the market. You may hunt for good quality stocks that you think
have the potential to rise in the bull trend. The most appropriate time to enter the market is during the first phase of the
bull trend. When your share prices rise, monitor the market as it approaches the third phase of the bull trend. During this
phase, the big boys will be downloading their holdings to reap profits. This is also the same time you should exit the 
market. Do not be greedy as you will stand to lose when the market reverse its trend in an abrupt manner.

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