agec 420, lec 311 agec 420 markets tradesim technical analysis
TRANSCRIPT
AGEC 420, Lec 31 1
Agec 420
• Markets
• TradeSim
• Technical Analysis
AGEC 420, Lec 31 2
Corn Market
• Bot 1 MidAm Dec Corn @ 2.29¼, March 6 Close
$ +/-
Tu., Apr. 9 2.22 ¾ -$65.00
CBOT: http://www.cbot.com/
AGEC 420, Lec 31 3
Cattle Market
• April 3; buy 1 MidAm April LC @ 71.55
NOT FILLEDClose Change
Apr. 3 71.625
Apr. 4 70.125 -1.50
Apr. 5 68.675 -1.45
Apr. 8 67.675 -1.00
Apr. 9 68.925 +1.25
Apr. 10 (11:30am) 67.425 -1.50
Cattle: http://futures.tradingcharts.com/chart/LC/42
AGEC 420, Lec 31 4
Technical Analysis
2 main types1. Charting
– Bar charts are the most common– Others – Japanese candlestick– Elliot wave theory
2. Indices– Moving averages– Relative strength index
AGEC 420, Lec 31 5
The Bar Chart
• Axes show price and time
• Vertical bars – price range (day or week)
• top of the bar --> highest price
• bottom --> lowest price
• tick on RHS: closing price
AGEC 420, Lec 31 6
Charts
Two basic “categories” of chart patterns
1. Trends and trend reversalsRationale:
bandwagon effects,
gradual release of information
AGEC 420, Lec 31 7
Charts
“Categories” of chart patterns (cont.)
2. Resistance and support planes and associated topping and bottoming patternsRationale: “investors memory”
sell when it gets back to the price they bought at
buy when it gets down to where they wish they had bought
AGEC 420, Lec 31 8
Charts
Trends and reversals
AGEC 420, Lec 31 9
Downtrend and reversal
Downtrend:Downward sloping line drawn above prices,
connecting the highs.
Close above a downtrend --> buy signal
10 AGEC 420, Lec 31
Close above a downtrend
July Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
30-M
ar
6-A
pr
11 AGEC 420, Lec 31
Close above a downtrend
July Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
30-M
ar
6-A
pr
Close above downtrend
12 AGEC 420, Lec 31
Close above a downtrend
July Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
AGEC 420, Lec 31 13
Uptrend and reversal
Uptrend:Upward sloping line drawn underneath prices,
connecting the lows.
Close below an uptrend --> sell signal
14 AGEC 420, Lec 31
Close below an uptrend
July Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
30-M
ar
6-A
pr
15 AGEC 420, Lec 31
Close below an uptrend
July Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
30-M
ar
6-A
pr
16 AGEC 420, Lec 31
Close below an uptrendJuly Wheat, 1999
250260270280290300310320
29-D
ec
5-Ja
n
12-J
an
19-J
an
26-J
an
2-Fe
b
9-Fe
b
16-F
eb
23-F
eb
2-M
ar
9-M
ar
16-M
ar
23-M
ar
30-M
ar
6-A
pr
AGEC 420, Lec 31 17
Charts
Resistance and support planes
Topping and bottoming patterns
AGEC 420, Lec 31 18
Tops and Bottoms
• Double top (bottom)
• Head and Shoulders (top or bottom)
Illustrate on blackboard