Technical Analysis methods that are frequently used by Fundamental Analyst

1. Technical Analysis
ala Fundamental Analyst
MM Dandytra, CSA, CFTe

2. Technical Analysis (CFTe Version)
John J. Murphy
• “Technical Analysis of the Financial Markets”
• The study of market action through the use of chats for the
purpose of forecasting future price trends
Martin J. Pring
• “Technical Analysis Explained”
• The art to identify a trend reversal at a relatively early stage
and ride on that trend until the weight of the evidence shows
or proves that the trend has reversed
John D. Magee and Roberts D. Edwards
• “Technical Analysis of Stocks Trends”
• The science of recording in graphic form the actual history
of trading and then deducing from that pictured history the
probable future trend

3. The Use of Technical Analysis
Technical
Analysis
Trend
Analysis
Timing
Analysis
Price
Analysis
Investment
Strategy
Decision &
Action

4. Technical Analysis Branches
Technical
Analysis
Classic
Modern
(Indicators)

5. Technical Analysis
Technical
Analysis
Basic Theory
Dow Jones
Theory
Trend
Analysis
Supply
Demand
Line Analysis
Support
Resistance
Trendline
Channel
Price Pattern
Analysis
Candlestick
Bar Chart
Gap Analysis
Chart Pattern
Analysis
Reversal
Pattern
Continuation
Pattern
Hybrid
Pattern
Volume
Analysis
Spesific
Theory
Elliot Wave
Gann Method
Fibonacci
Method
Indicators

6. Indicators
Indicators
Momentum
Stochastic
Oscillator
RSI
Trend
Following
Moving
Average
MACD
Volume
On Balance
Volume
Volatility
Bollinger Band
Average
Trading Range
Sentiment
Market
Breadth
Advance
Decline
Quantitative
Methods
Standard
Deviation
Linear
Regression
Line

7. Technical Analysis’ Premises
 Price Discounts Everything
 Price Moves in Trend
 History Repeats Itself

8. Detail Definition of Technical Analysis

9. Technical Analysis
John J. Murphy
• “Technical Analysis of the Financial Markets”
• The study of market action through the use of charts for the
purpose of forecasting future price trends
Martin J. Pring
• “Technical Analysis Explained”
• The art to identify a trend reversal at a relatively early stage
and ride on that trend until the weight of the evidence shows
or proves that the trend has reversed
John D. Magee and Roberts D. Edwards
• “Technical Analysis of Stocks Trends”
• The science of recording in graphic form the actual history
of trading and then deducing from that pictured history the
probable future trend

10. Objects
 Actual History of Market Action
 Recording in Graphic Form or Charts
 Market Action are
 Price
 Volume
 Open Interest (in Futures Market)

11. Objectives
 Deducing From That The Probable Future Trend
 Forecasting Future Price Trends or A Trend Reversal

12. Time
 Relatively Early Stage
 Until Weight of the Evidence The Trend Has
Reversed

13. The Point Is ...
Everything that “use”
Historical Data to
predict Future
Movement is a
Technical Analysis
 FULL STOP !

15. Market
Analyst
Fundamental
Analysis
Economic
Analysis
Technical
Analysis
Bandarmologi
(Tape
Reading)
STRATEGIST
Experience

16. History Repeat Itself & Price Moves in Trend

17. Cycle and Seasonality
Cycle
• Kondratieff
• Presidential
• 40 Months
Coal
Newcastle
Seasonality
• Ramadhan
• January Effect
• Windows
Dressing
• Sell in May
and Go Away

18. January Effect in JCI
January Effect terjadi 15 kali sejak tahun 1991 (23
tahun) sehingga peluang terjadinya adalah 65.2%

19. Windows Dressing in JCI
Sejak tahun 1990, IHSG pada akhir bulan Desember selalu naik
dibanding akhir bulan November kecuali pada tahun 1992, 1994 dan
2000

20. MoM Inflation
Inflasi MoM cenderung turun dari 1Q hingga 2Q lalu kemudian naik lagi
hingga awal 3Q kemudian menjelang 4Q namun kembali naik di akhir
4Q

21. CPIN Near Ramadhan
CPIN naik minimal 24% hingga 93% dua bulan
menjelang Lebaran antara 2009 hingga 2012

22. Siklus 40 Bulan Batubara Newcaslte

23. Kondratieff Cycle and Presidential Cycle

24. (Fundamental) Trend Analysis

25. Uptrend and Downtrend
HH
HH
HL
HL
HH : Higher High
HL : Higher Low
LH : Lower High
LL : Lower Low
LL
LL
LH
LH
UPTREND
DOWNTREND

26. Standard Definition in “Opposite”
 Technical Rebound
 A temporary and
relatively small rise
during Downtrend
 Technical Correction
 A temporary and
relatively small fall
during Uptrend
Technical
Rebound
Technical
Correction

27. Trend Analysis
Trend
• Uptrend
• Downtrend
Strengthening
Trend
• Accelerating
Uptrend
• Accelerating
Downtrend
Against Trend
• Deccelerating
Uptrend
• Deccelerating
Downtrend
• Technical
Rebound
• Technical
Correction
Trend Reversal
• Bullish
Reversal
• Bearish
Reversal

28. Rising YoY ; Rising QoQ
1Q12
4Q12
1Q13
YoY
QoQ

29. Rising YoY ; Falling QoQ
1Q12
4Q12
1Q13
YoY
QoQ

30. Falling YoY ; Rising QoQ
1Q12
4Q12
1Q13
YoY
QoQ

31. Falling YoY ; Falling QoQ
1Q12
4Q12
1Q13
YoY
QoQ

32. Financial Statement – Trend Analysis
 Trend
 Uptrend
 YoY Rise and QoQ Rise
 Downtrend
 YoY Fall and QoQ Fall
 Strengthening Trend
 Accelerating Uptrend
 QoQ Rise > YoY Rise
 Accelerating Downtrend
 QoQ Fall > YoY Fall
 Against Trend
 Deccelerating Uptrend
 QoQ Rise < YoY Rise
 Deccelerating Downtrend
 QoQ Fall < YoY Fall
 Technical Correction
 YoY Rise but QoQ Fall
 Technical Rebound
 YoY Fall but QoQ Rise

33. Chart Pattern Types
Reversal
Pattern
Bullish
Double / Triple
Bottoms
Inverted Head
and Shoulders
Bearish
Double / Triple
Tops
Head and
Shoulders
Continuation
Pattern
Bullish
Ascending
Triangle
Falling
Wedges
Bullish Flag
Cup and
Handle
Bearish
Descending
Triangle
Rising Wedges
Bearish Flag
Hybrid Pattern
Symmetrical
Triangle
Rectangle Rounding Top
Rounding
Bottom

34. Double / Triple Tops
The Pattern Previous Condition & Expected Movement
 Previous Condition :
 Uptrend
 Expected Movement
 Downtrend
Target Price
 The Height between two
or three Tops to Baseline,
projected Downward
Example

35. Head and Shoulders
The Pattern Previous Condition & Expected Movement
 Previous Condition :
 Uptrend
 Expected Movement
 Downtrend
Target Price
 Height between Head and
Neckline, projected
Downward
Example

36. Inflasi YoY – Inverted Head and Shoulders

37. Logic Technical Analysis’ Indicators

38. Technical Analysis’ Indicators
Indicators
Momentum
Stochastic
Oscillator
RSI
Trend
Following
Moving
Average
MACD
Volume
On Balance
Volume
Volatility
Bollinger Band
Average
Trading Range
Sentiment
Market
Breadth
Advance
Decline
Quantitative
Methods
Standard
Deviation
Linear
Regression
Line

39. Logic Indicators (So Far ...)
 Moving Average
 Bollinger Band
 Rate of Change

40. The Basic of Moving Average
 Averaging certain periods
 Price above MA = Bullish
 Price below MA = Bearish
 Short MA above Long MA = Bullish
 Short MA below Long MA = Bearish

41. Fundamental Moving Average
 MA20 ~ 1 Month ~ MoM
 MA60 ~ 3 Months ~
Quarterly or QoQ
 MA200 ~ 1 Year ~
Yearly or YoY
 MA20 is a Monthly
Average Price
 MA60 is a Quarterly
Average Price
 MA200 is a Yearly
Average Price
 MA20 above MA60 =
 Monthly Average Price is
above Quarterly Average
Price
 MoM Rise > QoQ Rise
 MoM Price > QoQ Price
 MA60 above MA200 =
 Quarterly Average Price
is above Yearly Average
Price
 QoQ Rise > YoY Rise
 QoQ Price > YoY Price

42. The Basic of Bollinger Band
 Bollinger Band = MA20 and +/- 2x Standard
Deviation of MA20
 Middle Band (MA20)
 Upper Band (+2x Standard Deviation of MA20)
 Lower Band (-2x Standard Deviation of MA20)
 +/- 2x Standard Deviation = ~95% Datas are Within
The Band

43. Fundamental Bollinger Band
Squeeze
Squeeze
Bulge
Bulge

44. The Basic of Rate of Change
 Rate of Change (RoC) is a percentage of change for
certain period
 RoC 14 = 20% means there is a 20% rise from 14
days ago to current price
 RoC 20 = MoM Change
 RoC 60 = QoQ Change
 RoC 200 = YoY Change

45. Fundamental Rate of Change

46. Liquidity

47. Supply Demand Theory
 When Demand > Supply = Price Rise
 When Demand < Supply = Price Fall

48. Capital Market
Demand Supply
 Buyers or Bull-ishers
 Increase in Funds or
Investor
 Monetary Expantion
 Sellers or Bear-ishers
 Initial Public Offering
 Rights Issue

49. Basic Volume Analysis
Price Volume Indication Explanation
Rise Rise Bullish Volume Confirms Trend
Rise Fall Bearish Volume Against Trend
Fall Rise Bearish Volume Confirms Trend
Fall Fall Bullish Volume Against Trend
Compare today’s price and previous (mostly yesterday) prices to determine the Rise or
Fall of Price and Volume

50. U.S Quantitative Easing 1st, 2nd and the 3rd

51. Why Market Capitalization Matter ?
 Easy Come – Easy Go
 Less Trail
 Better Good Corporate
Governance
 Industry Leader
 Better Future Prospect
 Going (less) Concern
 Current Biggest Market
Cap in JCI :
 HMSP Rp363.8tr
 ASII Rp269.2tr
 BBCA Rp236.8tr
 UNVR Rp221.3tr
 TLKM Rp218.7tr
 BBRI Rp188tr
 PGAS Rp139.4tr
 SMGR Rp94.6tr
 GGRM Rp94.5tr

52. Intermarket Analysis

53. Economic Cycle

54. Intermarket Analysis
Stocks
Market
Bonds
Market
Money
Market
Commodities
Market

55. JCI vs Gov. Bond 10Yr

56. JCI vs Inflation YoY

57. JCI vs USD-IDR

58. Any Questions ?

59. Muhamad Makky Dandytra, CSA, CFTe
Working Experiences
 Currently as Junior Investment
Manager at Mandiri Healthcare
 3 year as Technical Analyst at
Trimegah Securities, AmCapital
Indonesia and Anugerah
Securindo Indah
 1 year as Equity Sales at
Danareksa Sekuritas
Certifications
 Certified Financial
Technician (CFTe) from IFTA
 Bronwen Wood Award 2011
from IFTA
 Certified Securities Analyst
(CSA) from SASB Indonesia
 mmdandytra@gmail.com
 (+62) 813 145 45 317
Contact Information