Module 8

• fundamental analysis is a method of assessing the intrinsic value of a security by analyzing various macroeconomic and microeconomic factors. The ultimate goal is to quantify the intrinsic value of a security. Its intrinsic value can then be compared to its current market price to help with investment decisions
• Components of Fundamental Analysis • Economic analysis • Industry analysis • Company analysis
• Fundamental analysis can be either top-down or bottom-up.
• Top- down approach starts the analysis with the consideration of the health of the overall economy.
• bottom-up approach immediately dives into the analysis of individual stocks. The rationale of investors who follow the is that individual stocks may perform much better than the overall industry.
• bottom-up approach is primarily concentrated on various microeconomic factors such as a company’s earnings and financial metrics. Analysts who use such an approach develop a thorough assessment of each company to gain a better understanding of its operations.
• Technical analysis is a tool, or method, used to predict the probable future price movement of a security – such as a stock or currency pair – based on market data.
• Candlestick charting is the most commonly used method of showing price movement on a chart. formed from the price action during a single time period for any time frame. Each on an hourly chart shows the price action for one hour, while each on a 4-hour chart shows the price action during each 4-hour time period
• Candlestick colors are arbitrary choices. Some traders use white and black candlestick bodies (this is the default color format, and therefore the one most commonly used); other traders may choose to use green and red, or blue and yellow.
• The body of the candle represents the range between the opening and closing prices for that particular time period. If the close was higher than the open, then the body will be filled. in; if it closed lower, then the body will be empty.
• Trendlines and Chart Patterns Patterns are the distinctive formations created by the movements of security prices on a chart and are the foundation of technical analysis.
• Pivot points and Fibonacci retracements or extensions both draw horizontal lines to mark potential support and resistance areas
• Daily pivot point indicators, which usually also identify several support and resistance levels in addition to the pivot point, are used by many traders to identify price levels for entering or closing out trades.