| Analysis (Patterns) | | | | oversold stock. As it closes to the upper line it signals |
| Cup & Handle | | | | that it is oversold and the price should rise soon. |
| The cup and handle is a charting analysis where | | | | Bollinger bands are usually used along with other |
| traders look for of course “cups and | | | | indicators to support a suspected trend or change. |
| handles”. This is where prices begin high then | | | | Relative Strength Index (RSI) |
| dip then rise again. This pattern will resemble a cup. It | | | | The RSI takes the ratio of days the stock has |
| will then steady out for a period of time (this will | | | | finished up against the number of days it has finished |
| resemble a handle) before breaking out again and | | | | down. The time period is around nine to fifteen days. |
| finally shooting to a new high. The goal of the | | | | An RSI below 30 indicates an oversold stock, |
| investor is to buy “at the handle” and | | | | meaning that its price is due for a rise and now is a |
| this would be the most profitable time to enter. | | | | good time for traders to go in. An RSI above 70 on |
| Head & Shoulders | | | | the other hand indicates an overbought stock |
| This is another pattern that looks like a head and | | | | meaning that it is due for a price fall and traders |
| shoulder. It is formed by a peak and dip followed by | | | | should sell off. This shouldn’t be exhaustive in |
| a higher peak and then another dip and rise. The first | | | | your research indicators. In a bullish market many |
| and last peaks are the shoulders and the middle | | | | stocks will seem overbought but may still be due for |
| highest peak is the head. This indicates a downward | | | | a rise. A more accurate way of analysing the stock is |
| trend and the big drop will come soon after the | | | | to see historical charts of how the stock prices |
| second shoulder. | | | | moved with the RSI. |
| Stock Analysis (Indicators) | | | | Money Flow Index (MFI) |
| Bollinger Bands | | | | The MFI looks at the volume of shares and price. It |
| These are sets of 3 lines. The two outer lines show | | | | is similar to the RSI in that it gives a score of 1 to |
| market volatility. As the distance between the outer | | | | 100, and an MFI of 70 and above is a sell signal and |
| lines increase it indicates a more volatile market. As | | | | 30 and below is a buy signal. Long term charting of |
| the distance between the lines decrease it indicates a | | | | MFI is more accurate then short term |
| less volatile market. The middle line is the moving | | | | The key to being accurate in your analysis is to use a |
| average of the two outer lines. The distance of the | | | | mix of these technical analysis indicators and patterns |
| middle line to either the upper or lower line indicates | | | | together. This along side fundamentally analysis is a |
| whether the stock is oversold or overbought. If | | | | sure bet to picking the right times to enter or leave |
| it’s closer to the lower line it signals an | | | | securities. |