Overview
The Technical Analysis Certification Program equips students with the knowledge and skills to analyze and interpret stock market charts effectively. Whether you are a beginner or an experienced trader, mastering technical analysis is essential to make informed decisions when investing or trading in the stock market.
Through this course, students will learn how to identify trends, patterns, and market sentiment by studying price action and charting techniques, enabling them to develop successful trading strategies.
Certifications
Technical Analysis Certification from AOT
Technical Analysis (NCFM Certification)
Course Details
Introduction to Technical Analysis
Chapter 1
What is Technical Analysis?
Technical analysis is the study of historical price movements to forecast future price directions. It relies on charts and various indicators to understand market trends and predict future market behavior.
Philosophy of Technical Analysis
The foundation of technical analysis is built on three key principles:
- Market Discounts Everything – All information (fundamental, political, psychological, etc.) is reflected in the price.
- Price Moves in Trends – Prices follow identifiable trends that can persist over time.
- History Tends to Repeat Itself – Historical price movements repeat due to the collective psychology of market participants.
The Basis of Technical Analysis
Technical analysis relies on the following tools and concepts:
- Charts: Graphical representations of price movements.
- Indicators and Oscillators: Mathematical calculations that help traders interpret price trends.
- Price Patterns: Repeating formations that signal potential price movements.
- Volume Analysis: Studying the trading volume to confirm trends.
Types of Technical Analysis Charts
Chapter 2
Bar Chart
Represents price action over a specified period, showing open, high, low, and close prices.
Line Chart
A simple representation of closing prices over time, helping to identify trends easily.
Candlestick Chart
The most popular chart type, each candlestick represents open, high, low, and close prices.
Kagi Chart
A chart that focuses on price movements and ignores time. It is used to identify trends and reversals.
Three Line Break Chart
A chart type that focuses on price reversals and trend strength, often used to predict future price action.
Point & Figure Chart
A chart type used to track price movements without factoring in time. It helps identify support and resistance.
Candlestick Patterns
Chapter 3
Candlestick patterns help traders predict future price movements based on the opening, closing, high, and low prices within a specific time frame.
Single Candlestick Patterns:
- Hammer & Inverted Hammer: Sign of reversal after a downtrend, indicating potential bullish movement.
- Doji: Indicates indecision in the market, can signal trend reversal.
- Spinning Bottom: Indicates a potential trend reversal from downtrend to uptrend.
Bearish Candlestick Patterns (Trend Reversal from Bullish to Bearish):
- Shooting Star: Shows a reversal after an uptrend, indicating potential bearish movement.
- Hanging Man: Suggests a reversal in an uptrend, leading to a downtrend.
- Spinning Top: Suggests indecision, possibly leading to a reversal.
Marubozu (High Volume Candlestick):
A candle with no wicks, indicating strong market sentiment in the direction of the close
Double Candlestick Patterns:
- Tweezer Top & Tweezer Bottom: Signal reversal when two candles of the same size appear at the top or bottom of a trend.
- Bullish & Bearish Engulfing: A strong reversal signal, where one candlestick completely engulfs the previous one.
- Piercing Pattern & Dark Cloud Cover: Indicate potential trend reversals (bullish or bearish, respectively).
- Bullish & Bearish Harami: Indicates potential reversal, with the second candle being contained within the first.
Triple Candlestick Patterns:
- Morning Star: A three-candle pattern signaling a reversal from bearish to bullish.
- Evening Star: A three-candle pattern signaling a reversal from bullish to bearish.
- Three White Soldiers: A bullish pattern showing strong buying pressure over three consecutive days.
- Three Black Crows: A bearish pattern indicating sustained selling pressure.
Support and Resistance Levels
Chapter 4
Understanding support and resistance is essential for making entry and exit decisions.
- Support Level: A price level where an asset tends to find buying interest, preventing the price from falling further.
- Resistance Level: A price level where selling interest is strong, preventing the price from rising further.
Support and Resistance Levels
Chapter 5
Chart patterns represent price movements that can indicate potential future market movements. The most commonly used patterns include:
- Head and Shoulders: A reversal pattern that signals a change in trend direction.
- Reverse Head and Shoulders: An inverted version signaling a bullish trend reversal.
- Flag and Pennant: Continuation patterns that suggest the trend will continue after a brief consolidation.
- Symmetrical Triangles: Continuation pattern formed when price moves in converging trendlines.
- Descending Triangles: Bearish continuation pattern indicating a downtrend.
- Ascending Triangles: Bullish continuation pattern indicating an uptrend.
- Wedge Patterns: Patterns indicating consolidation followed by a breakout.
- Double Top & Double Bottom: Reversal patterns signaling a change in trend direction.
- Rounding Top & Rounding Bottom: Long-term reversal patterns that signal major trend shifts.
- Cup and Handle: A bullish pattern that signals continuation after a consolidation phase.
- Triple Top & Triple Bottom: Reversal patterns that signify a shift in market direction after three attempts to break support or resistance.
Types of Gaps
Chapter 6
Gaps occur when the price of an asset jumps significantly, creating a gap in the chart:
- Common Gap: A small gap, usually of little significance.
- Breakaway Gap: Occurs at the beginning of a trend, signaling a strong move.
- Runaway Gap: Occurs in the middle of a trend, indicating momentum.
- Exhaustion Gap: Occurs at the end of a trend, signaling a possible reversal.
- Island Cluster: A gap with a period of price action in between, indicating a reversal.
Indicators and Oscillators
Chapter 7
Indicators and oscillators are mathematical tools used to analyze price data, volume, and momentum. They help traders make more informed decisions about market conditions.
Leading Indicators (predictive):
- Moving Averages (MA): Used to smooth price data and identify trends.
- RSI (Relative Strength Index): Measures the speed and change of price movements, indicating overbought or oversold conditions.
- Stochastic Oscillator: Shows momentum and potential reversal points based on price relative to past price action.
Lagging Indicators (confirmative):
- Bollinger Bands: A volatility indicator, indicating potential overbought or oversold conditions.
- MACD (Moving Average Convergence Divergence): A trend-following momentum indicator that shows the relationship between two moving averages.
- Parabolic SAR: Used to identify price reversals in a trending market.
- ATR (Average True Range): Measures market volatility and helps set stop-loss levels.
Volume-Based Indicators:
- On-Balance Volume (OBV): Measures buying and selling pressure based on volume flow.
- Money Flow Index (MFI): Combines price and volume to identify overbought or oversold conditions.
Other Popular Indicators:
- CCI (Commodity Channel Index): Measures deviation from the average price, indicating overbought or oversold levels.
- Fractals: Identify reversal points and trends in the market.
Conclusion
The Technical Analysis Certification Program is designed to provide students with comprehensive knowledge and hands-on experience in analyzing market trends, patterns, and indicators. By mastering these techniques, you will be equipped to make informed decisions and enhance your trading and investment strategies in the financial markets.