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<p>Foreword xiii</p> <p>Preface xv</p> <p>Acknowledgments xxi</p> <p>About the Author xxiii</p> <p><b>Chapter 1 Introduction to the Art and Science of Technical Analysis 1</b></p> <p>1.1 Main Objective of Technical Analysis 1</p> <p>1.2 Dual Function of Technical Analysis 3</p> <p>1.3 Forecasting Price and Market Action 3</p> <p>1.4 Classifying Technical Analysis 11</p> <p>1.5 Subjectivity in Technical Analysis 16</p> <p>1.6 Basic Assumptions of Technical Analysis 30</p> <p>1.7 Four Basic Assumptions in the Application of Technical Analysis 39</p> <p>1.8 Market Participants 40</p> <p>1.9 Chapter Summary 42</p> <p>Chapter 1 Review Questions 43</p> <p><b>Chapter 2 Introduction to Dow Theory 45</b></p> <p>2.1 Origins and Proponents of Dow Theory 45</p> <p>2.2 Basic Assumptions of Dow Theory 46</p> <p>2.3 Challenges to Dow Theory 62</p> <p>2.4 Chapter Summary 64</p> <p>Chapter 2 Review Questions 64</p> <p><b>Chapter 3 Mechanics and Dynamics of Charting 65</b></p> <p>3.1 The Mechanics and Dynamics of Charting 65</p> <p>3.2 Gap Action: Four Types of Gaps 72</p> <p>3.3 Constant Chart Measures 73</p> <p>3.4 Futures Contracts 89</p> <p>3.5 Chapter Summary 97</p> <p>Chapter 3 Review Questions 98</p> <p><b>Chapter 4 Market Phase Analysis 99</b></p> <p>4.1 Dow Theory of Market Phase 99</p> <p>4.2 Chart Pattern Interpretation of Market Phase 104</p> <p>4.3 Volume and Open Interest Interpretation of Market Phase 112</p> <p>4.4 Moving Average Interpretation of Market Phase 115</p> <p>4.5 Divergence and Momentum Interpretation of Market Phase 116</p> <p>4.6 Sentiment Interpretation of Market Phase 118</p> <p>4.7 Sakata’s Interpretation of Market Phase 119</p> <p>4.8 Elliott’s Interpretation of Market Phase 120</p> <p>4.9 Cycle Analysis Interpretation of Market Phase 122</p> <p>4.10 Chapter Summary 124</p> <p>Chapter 4 Review Questions 124</p> <p><b>Chapter 5 Trend Analysis 125</b></p> <p>5.1 Definitions of a Trend 125</p> <p>5.2 Quality of Trend: 16 Price Characteristics Impacting Future Price Action and Trend Strength 132</p> <p>5.3 Price and Trend Filters 144</p> <p>5.4 Trend Participation 145</p> <p>5.5 Price Inflection Points 148</p> <p>5.6 Trendlines, Channels, and Fan Lines 155</p> <p>5.7 Trend Retracements 166</p> <p>5.8 Gaps and Trends 166</p> <p>5.9 Trend Directionality 168</p> <p>5.10 Drummond Geometry 169</p> <p>5.11 Forecasting Trend Reversals 170</p> <p>5.12 Chapter Summary 171</p> <p>Chapter 5 Review Questions 171</p> <p><b>Chapter 6 Volume and Open Interest 173</b></p> <p>6.1 The Mechanics of Volume Action 173</p> <p>6.2 Volume Oscillators 203</p> <p>6.3 Chapter Summary 208</p> <p>Chapter 6 Review Questions 208</p> <p><b>Chapter 7 Bar Chart Analysis 209</b></p> <p>7.1 Price Bar Pattern Characteristics 209</p> <p>7.2 Price Bar Pattern Characteristics 211</p> <p>7.3 Popular Bar Reversal Patterns 218</p> <p>7.4 Volatility‐Based Breakout Patterns 230</p> <p>7.5 Chapter Summary 233</p> <p>Chapter 7 Review Questions 233</p> <p><b>Chapter 8 Window Oscillators and Overlay Indicators 235</b></p> <p>8.1 Defining Indicators and Oscillators 235</p> <p>8.2 Eight Ways to Analyze an Oscillator 240</p> <p>8.3 Cycle Period, Multiple Timeframes, and Lagging Indicators 252</p> <p>8.4 Input Data 253</p> <p>8.5 Trend Trading Using Oscillators 255</p> <p>8.6 Window Oscillators 255</p> <p>8.7 Overlay Indicators 262</p> <p>8.8 Chapter Summary 266</p> <p>Chapter 8 Review Questions 266</p> <p><b>Chapter 9 Divergence Analysis 267</b></p> <p>9.1 Definition of Divergence 268</p> <p>9.2 General Concept of Divergence 272</p> <p>9.3 Standard and Reverse Divergence 291</p> <p>9.4 Price Confirmation in Divergence Analysis 323</p> <p>9.5 Signal Alternation between Standard and Reverse Divergence 337</p> <p>9.6 More Examples of Divergence 338</p> <p>9.7 Chapter Summary 354</p> <p>Chapter 9 Review Questions 355</p> <p><b>Chapter 10 Fibonacci Number and Ratio Analysis 357</b></p> <p>10.1 The Fibonacci Number Series 357</p> <p>10.2 Fibonacci Ratios 359</p> <p>10.3 Fibonacci Retracements, Extensions, Projections, and Expansions 363</p> <p>10.4 Fibonacci (Φ‐Based) Percentage Retracement Levels within an Observed Price Range 368</p> <p>10.5 Fibonacci (Φ‐Based) Percentage Extension Levels beyond an Observed Price Range 375</p> <p>10.6 Fibonacci (Φ‐Based) Percentage Expansion Levels beyond an Observed Price Range 379</p> <p>10.7 Fibonacci (Φ‐Based) Percentage Projection Levels from a Significant Peak or Trough 384</p> <p>10.8 Why Should Fibonacci Ratios or Numbers Work at All? 388</p> <p>10.9 Geometrically versus Numerically Based Fibonacci Operations 389</p> <p>10.10 The Fibonacci Trader’s Technical Toolbox 392</p> <p>10.11 Area of Application 394</p> <p>10.12 Selecting Effective Inflection Points for Fibonacci Operations 396</p> <p>10.13 Fibonacci, Dow, Gann, and Floor Trader’s Pivot Point Levels 397</p> <p>10.14 Probability of Continuation and Reversal in Fibonacci Retracements and Extensions 400</p> <p>10.15 Fibonacci‐Based Entries, Stoplosses, and Minimum Price Objectives 400</p> <p>10.16 Fibonacci Two‐ and Three‐Leg Retracements 402</p> <p>10.17 Fibonacci Fan Lines 409</p> <p>10.18 Fibonacci Channel Expansions 412</p> <p>10.19 Fibonacci Arcs 414</p> <p>10.20 Supportive and Resistive Fibonacci Clusters 415</p> <p>10.21 Potential Barriers in Fibonacci Projections 417</p> <p>10.22 Fibonacci Time and Ratio Projection Analysis on Elliott Waves 417</p> <p>10.23 Chapter Summery 431</p> <p>Chapter 10 Review Questions 431</p> <p><b>Chapter 11 Moving Averages 433</b></p> <p>11.1 Seven Main Components of Moving Averages 433</p> <p>11.2 Nine Main Applications of Moving Averages 451</p> <p>11.3 Chapter Summary 462</p> <p>Chapter 11 Review Questions 463</p> <p><b>Chapter 12 Envelopes and Methods of Price Containment 465</b></p> <p>12.1 Containing Price Action and Volatility about a Central Value 465</p> <p>12.2 Adjusting Bands for Effective Price Containment 475</p> <p>12.3 Methods of Price Containment 477</p> <p>12.4 Chapter Summery 492</p> <p>Chapter 12 Review Questions 492</p> <p><b>Chapter 13 Chart Pattern Analysis 495</b></p> <p>13.1 Elements of Chart Pattern Analysis 495</p> <p>13.2 Preconditions for Reliable Chart Pattern Reversals 499</p> <p>13.3 Popular Chart Patterns 502</p> <p>13.4 Chapter Summery 540</p> <p>Chapter 13 Review Questions 540</p> <p><b>Chapter 14 Japanese Candlestick Analysis 541</b></p> <p>14.1 Elements of Candlestick Analysis 541</p> <p>14.2 Popular Candlestick Patterns and Their Psychology 555</p> <p>14.3 Integrating Candlestick Analysis 578</p> <p>14.4 Filtered Candlesticks 583</p> <p>14.5 Trading with Candlesticks 584</p> <p>14.6 Chapter Summary 588</p> <p>Chapter 14 Review Questions 588</p> <p><b>Chapter 15 Point‐and‐Figure Charting 589</b></p> <p>15.1 Basic Elements of Point‐and‐Figure Charts 589</p> <p>15.2 Basic Point‐and‐Figure Chart Patterns 600</p> <p>15.3 Point‐and‐Figure Minimum Price Objectives 619</p> <p>15.4 Bullish Percent Index and Relative Strength 623</p> <p>15.5 Chapter Summary 624</p> <p>Chapter 15 Review Questions 624</p> <p><b>Chapter 16 Ichimoku Charting and Analysis 627</b></p> <p>16.1 Constructing the Five Ichimoku Overlays 627</p> <p>16.2 Functional Aspect of Ichimoku Overlays 633</p> <p>16.3 Advantages and Disadvantages of Using Ichimoku Charting 643</p> <p>16.4 Time and Price Domain Characteristics of Ichimoku Overlays 644</p> <p>16.5 Basic Ichimoku Price‐Projection Techniques 649</p> <p>16.6 Chapter Summary 649</p> <p>Chapter 16 Review Questions 650</p> <p><b>Chapter 17 Market Profile 651</b></p> <p>17.1 The Search for Fair Price or Value 651</p> <p>17.2 The Daily Profile Formations 665</p> <p>17.3 Chapter Summary 671</p> <p>Chapter 17 Review Questions 671</p> <p><b>Chapter 18 Basic Elliott Wave Analysis 673</b></p> <p>18.1 Elements of Elliott Wave Analysis 673</p> <p>18.2 Rules and Guidelines 676</p> <p>18.3 Motive Waves 676</p> <p>18.4 Corrective Waves 678</p> <p>18.5 Wave Extensions and Truncation 682</p> <p>18.6 Alternation 683</p> <p>18.7 Wave Equality 683</p> <p>18.8 Fibonacci Ratio and Number Analysis of Elliott Waves 684</p> <p>18.9 Chapter Summary 684</p> <p>Chapter 18 Review Questions 684</p> <p><b>Chapter 19 Basics of Gann Analysis 687</b></p> <p>19.1 Techniques of W. D. Gann 687</p> <p>19.4 Chapter Summary 710</p> <p>Chapter 19 Review Questions 711</p> <p><b>Chapter 20 Cycle Analysis 713</b></p> <p>20.1 Elements of Cycle Analysis 713</p> <p>20.2 Principles of Cycle Analysis 720</p> <p>20.3 Additional Cyclic Characteristics 724</p> <p>20.4 Tuning Oscillator and Overlay Indicators to the Dominant Cycle Period 725</p> <p>20.5 Identifying Price Cycles 726</p> <p>20.6 Chapter Summary 731</p> <p>Chapter 20 Review Questions 731</p> <p><b>Chapter 21 Volatility Analysis 733</b></p> <p>21.1 The Concept of Change and Volatility 733</p> <p>21.2 Some Statistical Measures of Price Volatility 743</p> <p>21.3 Other Measures of Market Volatility 754</p> <p>21.4 Chapter Summary 757</p> <p>Chapter 21 Review Questions 757</p> <p><b>Chapter 22 Market Breadth 759</b></p> <p>22.1 Elements of Broad Market Action 759</p> <p>22.2 Components of Market Breadth 762</p> <p>22.3 Market‐Breadth Indicators in Action 765</p> <p>22.4 Chapter Summary 777</p> <p>Chapter 22 Review Questions 777</p> <p><b>Chapter 23 Sentiment Indicators and Contrary Opinion 779</b></p> <p>23.1 Assessing the Emotion and Psychology of Market Participants 779</p> <p>23.2 Price‐Based Indicators versus Sentiment Indicators 783</p> <p>23.3 Assessing Participant Actions 784</p> <p>23.4 Assessing Participants’ Opinions 788</p> <p>23.5 Chapter Summary 791</p> <p>Chapter 23 Review Questions 791</p> <p><b>Chapter 24 Relative Strength Analysis 793</b></p> <p>24.1 Measuring Relative Performance 793</p> <p>24.2 Chapter Summary 811</p> <p>Chapter 24 Review Questions 811</p> <p><b>Chapter 25 Investor Psychology 813</b></p> <p>25.1 General Behavioral Aspects 813</p> <p>25.2 Behavioral Elements Associated with Chart Patterns 815</p> <p>25.3 Behavioral Elements Associated with Market Trends 817</p> <p>25.4 Behavioral Aspects of Market Consolidations 820</p> <p>25.5 Behavioral Aspects of Market Reversals 821</p> <p>25.6 Chapter Summary 823</p> <p>Chapter 25 Review Questions 823</p> <p><b>Chapter 26 Trader Risk Profiling and Position Analysis 825</b></p> <p>26.1 Fulfilling Client Objectives and Risk Capacity 826</p> <p>26.2 Aggressive and Conservative Market Participation 827</p> <p>26.3 Categorizing Clients according to Term Outlook and Sentiment 835</p> <p>26.4 The Seven Participatory Options 838</p> <p>26.5 Triggers, Signals, Price Targets, and Stoplosses 838</p> <p>26.6 Confirming and Non‐Confirming Price Action and Filters 841</p> <p>26.7 Collecting, Categorizing, and Organizing Technical Data 843</p> <p>26.8 Multi‐Timeframe Confirmation 845</p> <p>26.9 Reconciling Technical Outlook with Client Interest 846</p> <p>26.10 Hedging Positions with Derivatives 847</p> <p>26.11 Chapter Summary 847</p> <p>Chapter 26 Review Questions 847</p> <p><b>Chapter 27 Integrated Technical Analysis 849</b></p> <p>27.1 The Integrated Components of Technical Analysis 849</p> <p>27.2 Classification of Clusters and Confluences 854</p> <p>27.3 Chapter Summary 877</p> <p>Chapter 27 Review Questions 877</p> <p><b>Chapter 28 Money Management 879</b></p> <p>28.1 Elements of Money Management 879</p> <p>Chapter 28 Review Questions 912</p> <p><b>Chapter 29 Technical Trading Systems 913</b></p> <p>29.1 Conceptualizing a Trading System 913</p> <p>29.2 Basic Components of a Trading System 915</p> <p>29.3 System Testing and Optimization 915</p> <p>29.4 Performance Measurement 919</p> <p>29.5 Chapter Summary 920</p> <p>Chapter 29 Review Questions 920</p> <p>Appendix A Basic Investment Decision Making Based on Chart Analysis 923</p> <p>Appendix B Official IFTA CFTe, STA Diploma (UK), and MTA CMT Exam Reading Lists 933</p> <p>About the Test Bank and Website 937</p> <p>Index 939</p>

<p><b>MARK ANDREW LIM</b> graduated from King's College London in Special Physics. He was awarded the Bronwen Wood Memorial Prize in financial technical analysis by the Society of Technical Analysis (UK) in 2007 and holds IFTA's CFTe designation. Mark is the author of <i>The Profitable Art and Science of Vibratrading</i> and also a contributing author of <i>The Wiley Trading Guide Volume II</i>. He conducts a range of technical analysis and trading Masterclasses via online webinars and onsite seminars, covering intermediate to advanced profit extraction methodologies for directional and non-directional trading. He can be reached at www.tradermasterclass.com.

<p><b>PRAISE FOR <i>THE HANDBOOK OF TECHNICAL ANALYSIS</i></b> <p>"I believe that this handbook provides an excellent starting point, as well as a comprehensive reference text for technically orientated practitioners. It outlines the primary principles of technical analysis and provides a solid foundation for moving forward into more advanced and cutting edge concepts. I wish I had this book years ago." <br/><b>—Dr. Nazri Khan, MSTA, CFTe,</b> President, Malaysian Association of Technical Analysts (MATA); Vice President, Affin Investment Bank Malaysia <p>"Brilliantly written with proven principles that affords a trader a clear perspective of the markets and opens the door for accelerated levels of market analysis. A must-read for traders who want to better understand the trading universe." <br/><b>—Lily Thniah,</b> Trainer, Educator, and Trader, www.globaltraders.com.my <p>"The difference between perfect trading knowledge and trading performance is the ability and innovativeness of a trader in integrating theory into live, real-world trading. Sharing his insights, readers will quickly realize the path toward successful trading. This handbook is a MUST-READ for all traders!" <br/><b>—Alex Tham Poh Seng,</b> President, Association of Financial and Commodities Traders Malaysia (AFCTM) and ATAM; Head of Palm Oil Desk, Okachi Group <p>"This is a true masterpiece that's hard to come by. Mark has illustrated his ground experiences in dissecting many market instruments through a multifaceted approach. A true 'almanac' for all veteran traders that also serves as a benchmark for all trader wannabes. All profit hunters should have this book in their hands!" <br/><b>—DAR Wong,</b> Director & Investment Strategist, Dektos Investment Corporation <p>"Mark's dedication towards his lifelong chosen craft can be easily seen through the amount of care and attention he has poured into his handbook. He is generous in sharing his years of experience in the field. His handbook is written in a structured and detailed manner, with many leading examples." <br/><b>—Nancy Chow,</b> Director, Marketing and Strategic Product Development, AmInvest <p><b>A self-study exam preparatory guide for financial technical analysis and certifications</b> <p><i>The Handbook of Technical Analysis</i> is the first exam preparation book that focuses on technical analysis certifications. It is an invaluable resource for students taking IFTA CFTe Level I and II (US), STA Diploma (UK), ATAA Diploma of Technical Analysis (Australia), and MTA CMT Level I, II, and III exams in financial technical analysis. It will also prove useful to university students undertaking courses on technical analysis, as well as serious traders and financial analysts looking to sharpen their skills. The book presents all essential information in an accessible manner and permits the reader to check their comprehension by way of end-of-chapter test questions that span essays, multiple choice, and chart-based annotation exercises.

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