Elliott Wave International analyst Jeffrey Kennedy just completed his second year of teaching the technical analysis portion of Options Strategies, Techniques and Nuances for the Individual Investor and Floor Trader -- a graduate-level course at the Georgia Institute of Technology.
Kennedy says that "the class was made up of more than 40 of the most brilliant graduate students I have ever met!" Even so, at the start of the semester, he was surprised to learn that less than 20 percent of them knew what a price chart was.
Some of his students even challenged technical analysis in favor of the Random Walk Theory and the Efficient Market Hypothesis.
Yet Kennedy believes technical analysis has earned its place in the study of finance: he wanted his students to grasp all that the method offers. He believes he met that objective by semester's end.
Jeff Kennedy's commitment to teaching goes beyond the physical classroom; he devotes a great deal of time to educating others as a seminar instructor, and via his writings. One eBook he authored is The Ultimate Technical Analysis Handbook. This work offers a wealth of useful technical analysis insights.
Let me share one with you: it's a price trendline technique called the "Triple Fan." Kennedy writes, "I am surprised at how often this tool ushers in significant moves." He shows the "Triple Fan" in the price chart of coffee below (his explanation is below the chart):
.jpg)
"Down from the September 2003 high in Coffee, three downward sloping trendlines are drawn against peaks 1, 2, and 3; this is your fan. A break of the third trendline often signals a significant move or change in trend, which it did in this case. In December 2003, Coffee gapped above this line and tried to test the top of it before rallying to 80.60."
Here's another "triple fan" in Live Cattle:
Kennedy comments about the chart above: "Beginning with a significant extreme, three downward sloping trendlines are drawn across the tops of three following peaks. Clearly these lines provided important support during the Mad Cow incident in December 2003 and the late selloff in March."
He goes on to explain that even the most basic trendlines can be very useful analytical tools. And trendlines can work in any timeframe and in any market.
The Ultimate Technical Analysis Handbook reveals many more technical analysis insights:
- How One Technical Indicator Can Identify Three Trade Setups
- How to Use Technical Indicators to Confirm Elliott Wave Counts
- How Moving Averages Can Alert You to Future Price Expansion
- How to Identify Fibonacci Retracements
- How to Calculate Fibonacci Projections
- How to Draw and Use Trendlines (The Basics: "How a Kid with a Ruler Can Make a Million")
- How to Use R.N. Elliott's Channeling Technique
- How to Use Jeffrey Kennedy's Channeling Technique
- Time Divergence: An Old Method Revisited
- Head and Shoulders: An Old-School Approach
- Pick Your Poison...and Your Protective Stops: Four Kinds of Protective Stops
What would you expect to pay for a book like this at a bookstore? Probably more than you'd care to...
... The good news is that The Ultimate Technical Analysis Handbook is 100% FREE! Just join Club EWI and you can access this excellent 50-page eBook -- free. Club EWI membership is also free (no obligations when you join), and the sign-up is quick.