# Book Title: Technical Analysis of the Financial Markets > Author: John J. Murphy | Category: trading | Pages: 494 | Year: 2020 ## Overview & Metadata - Document ID: technical_analysis_of_the_financial_market_-_john_j_murphy - Category: trading - Tags: _john_j_murphy, technical_analysis_of_the_financial_market_ - Primary Markdown Path: trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/technical_analysis_of_the_financial_market_-_john_j_murphy.md - Original PDF Path: trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/technical_analysis_of_the_financial_market_-_john_j_murphy.pdf - Layout Coordinates JSON: trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/technical_analysis_of_the_financial_market_-_john_j_murphy.layout.json - Folder Name: Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy - Starlight Content Route: /trading/technical-analysis-of-the-financial-markets/ - Book LLM Text URL: /trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/llm.txt ## Table of Contents & Structure - Title Page - Page 3 - Copyright - Page 4 - Dedication - Page 6 - Contents - Page 7 - About the Author - Page 19 - About the Contributors - Page 20 - Introduction - Page 21 - Acknowledgments - Page 23 - 1 Philosophy of Technical Analysis - Page 24 - Introduction - Page 24 - Philosophy or Rationale - Page 24 - Technical versus Fundamental Forecasting - Page 27 - Analysis versus Timing - Page 28 - Flexibility and Adaptability of Technical Analysis - Page 29 - Technical Analysis Applied to Different Trading Mediums - Page 30 - Technical Analysis Applied to Different Time Dimensions - Page 30 - Economic Forecasting - Page 31 - Technician or Chartist? - Page 31 - A Brief Comparison of Technical Analysis in Stocks and Futures - Page 32 - Less Reliance on Market Averages and Indicators - Page 35 - Some Criticisms of the Technical Approach - Page 35 - Random Walk Theory - Page 38 - Universal Principles - Page 40 - 2 Dow Theory - Page 41 - Introduction - Page 41 - Basic Tenets - Page 42 - The Use of Closing Prices and the Presence of Lines - Page 47 - Some Criticisms of Dow Theory - Page 48 - Stocks as Economic Indicators - Page 49 - Dow Theory Applied to Futures Trading - Page 49 - Conclusion - Page 50 - 3 Chart Construction - Page 51 - Introduction - Page 51 - Types of Charts Available - Page 51 - Candlesticks - Page 53 - Arithmetic versus Logarithmic Scale - Page 54 - Construction of the Daily Bar Chart - Page 55 - Volume - Page 56 - Futures Open Interest - Page 57 - Weekly and Monthly Bar Charts - Page 59 - Conclusion - Page 61 - 4 Basic Concepts of Trend - Page 62 - Definition of Trend - Page 62 - Trend Has Three Directions - Page 64 - Trend Has Three Classifications - Page 65 - Support and Resistance - Page 67 - Trendlines - Page 75 - The Fan Principle - Page 83 - The Importance of the Number Three - Page 85 - The Relative Steepness of the Trendline - Page 85 - The Channel Line - Page 89 - Percentage Retracements - Page 94 - Speed Resistance Lines - Page 96 - Gann and Fibonacci Fan Lines - Page 98 - Internal Trendlines - Page 99 - Reversal Days - Page 99 - Price Gaps - Page 102 - Conclusion - Page 105 - 5 Major Reversal Patterns - Page 106 - Introduction - Page 106 - Price Patterns - Page 106 - Two Types of Patterns: Reversal and Continuation - Page 107 - The Head and Shoulders Reversal Pattern - Page 109 - The Importance of Volume - Page 113 - Finding a Price Objective - Page 113 - The Inverse Head and Shoulders - Page 115 - Complex Head and Shoulders Patterns - Page 117 - Triple Tops and Bottoms - Page 119 - Double Tops and Bottoms - Page 121 - Variations from the Ideal Pattern - Page 124 - Saucers and Spikes - Page 128 - Conclusion - Page 129 - 6 Continuation Patterns - Page 130 - Introduction - Page 130 - Triangles - Page 131 - The Symmetrical Triangle - Page 132 - The Ascending Triangle - Page 135 - The Descending Triangle - Page 137 - The Broadening Formation - Page 139 - Flags and Pennants - Page 140 - The Wedge Formation - Page 144 - The Rectangle Formation - Page 145 - The Measured Move - Page 149 - The Continuation Head and Shoulders Pattern - Page 150 - Confirmation and Divergence - Page 152 - Conclusion - Page 153 - 7 Volume and Open Interest - Page 154 - Introduction - Page 154 - Volume and Open Interest as Secondary Indicators - Page 154 - Interpretation of Volume for All Markets - Page 158 - Interpretation of Open Interest in Futures - Page 164 - Summary of Volume and Open Interest Rules - Page 169 - Blowoffs and Selling Climaxes - Page 169 - Commitments of Traders Report - Page 169 - Watch the Commercials - Page 170 - Net Trader Positions - Page 171 - Open Interest In Options - Page 171 - Put/Call Ratios - Page 172 - Combine Option Sentiment With Technicals - Page 173 - Conclusion - Page 173 - 8 Long Term Charts - Page 175 - Introduction - Page 175 - The Importance of Longer Range Perspective - Page 175 - Construction of Continuation Charts for Futures - Page 176 - The Perpetual Contract™ - Page 177 - Long Term Trends Dispute Randomness - Page 178 - Patterns on Charts: Weekly and Monthly Reversals - Page 178 - Long Term to Short Term Charts - Page 178 - Why Should Long Range Charts Be Adjusted for Inflation? - Page 179 - Long Term Charts Not Intended for Trading Purposes - Page 180 - Examples of Long Term Charts - Page 181 - 9 Moving Averages - Page 187 - Introduction - Page 187 - The Moving Average: A Smoothing Device with a Time Lag - Page 188 - Moving Average Envelopes - Page 197 - Bollinger Bands - Page 198 - Using Bollinger Bands as Targets - Page 200 - Band Width Measures Volatility - Page 200 - Moving Averages Tied to Cycles - Page 201 - Fibonacci Numbers Used as Moving Averages - Page 202 - Moving Averages Applied to Long Term Charts - Page 202 - The Weekly Rule - Page 204 - To Optimize or Not - Page 209 - Summary - Page 209 - The Adaptive Moving Average - Page 210 - Alternatives to the Moving Average - Page 210 - 10 Oscillators and Contrary Opinion - Page 212 - Introduction - Page 212 - Oscillator Usage in Conjunction with Trend - Page 213 - Measuring Momentum - Page 214 - Measuring Rate of Change (ROC) - Page 219 - Constructing an Oscillator Using Two Moving Averages - Page 219 - Commodity Channel Index - Page 222 - The Relative Strength Index (RSI) - Page 224 - Using the 70 and 30 Lines to Generate Signals - Page 230 - Stochastics (K%D) - Page 230 - Larry Williams %R - Page 233 - The Importance of Trend - Page 234 - When Oscillators are Most Useful - Page 235 - Moving Average Convergence/Divergence (MACD) - Page 236 - MACD Histogram - Page 238 - Combine Weeklies and Dailies - Page 239 - The Principle of Contrary Opinion in Futures - Page 240 - Investor Sentiment Readings - Page 243 - Investors Intelligence Numbers - Page 244 - 11 Point and Figure Charting - Page 246 - Introduction - Page 246 - The Point and Figure Versus the Bar Chart - Page 246 - Construction of the Intraday Point and Figure Chart - Page 250 - The Horizontal Count - Page 253 ## Available Raw Markdown Chunks (Direct Raw .md URLs) - [Raw 001_Title Page.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/001_Title Page.md) - [Raw 002_Copyright.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/002_Copyright.md) - [Raw 003_About the Contributors.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/003_About the Contributors.md) - [Raw 004_Introduction.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/004_Introduction.md) - [Raw 005_Acknowledgments.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/005_Acknowledgments.md) - [Raw 006_1 Philosophy of Technical Analysis.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/006_1 Philosophy of Technical Analysis.md) - [Raw 007_2 Dow Theory.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/007_2 Dow Theory.md) - [Raw 008_3 Chart Construction.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/008_3 Chart Construction.md) - [Raw 009_4 Basic Concepts of Trend.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/009_4 Basic Concepts of Trend.md) - [Raw 010_5 Major Reversal Patterns.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/010_5 Major Reversal Patterns.md) - [Raw 011_6 Continuation Patterns.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/011_6 Continuation Patterns.md) - [Raw 012_7 Volume and Open Interest.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/012_7 Volume and Open Interest.md) - [Raw 013_8 Long Term Charts.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/013_8 Long Term Charts.md) - [Raw 014_9 Moving Averages.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/014_9 Moving Averages.md) - [Raw 015_10 Oscillators and Contrary Opinion.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/015_10 Oscillators and Contrary Opinion.md) - [Raw 016_11 Point and Figure Charting.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/016_11 Point and Figure Charting.md) - [Raw 017_12 Japanese Candlesticks.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/017_12 Japanese Candlesticks.md) - [Raw 018_13 Elliott Wave Theory.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/018_13 Elliott Wave Theory.md) - [Raw 019_14 Time Cycles.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/019_14 Time Cycles.md) - [Raw 020_15 Computers and Trading Systems.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/020_15 Computers and Trading Systems.md) - [Raw 021_16 Money Management and Trading Tactics.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/021_16 Money Management and Trading Tactics.md) - [Raw 022_17 The Link Between Stocks and Futures - Intermarket Analysis.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/022_17 The Link Between Stocks and Futures - Intermarket Analysis.md) - [Raw 023_18 Stock Market Indicators.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/023_18 Stock Market Indicators.md) - [Raw 024_19 Pulling It All Together—A Checklist.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/024_19 Pulling It All Together—A Checklist.md) - [Raw 025_A Advanced Technical Indicators.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/025_A Advanced Technical Indicators.md) - [Raw 026_B Market Profile.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/026_B Market Profile.md) - [Raw 027_C The Essentials of Building a Trading System.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/027_C The Essentials of Building a Trading System.md) - [Raw 028_D Continuous Futures Contracts.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/028_D Continuous Futures Contracts.md) - [Raw 029_Glossary.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/029_Glossary.md) - [Raw 030_Selected Bibliography.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/030_Selected Bibliography.md) - [Raw 031_Selected Resources.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/031_Selected Resources.md) - [Raw 032_Index.md](/trading/Technical_Analysis_of_the_Financial_Market_-_John_J_Murphy/032_Index.md) ## Available Web Reading Pages (Starlight HTML Routes) - [Web 001_Title Page.md](/trading/technical-analysis-of-the-financial-markets/001_title-page/) - [Web 002_Copyright.md](/trading/technical-analysis-of-the-financial-markets/002_copyright/) - [Web 003_About the Contributors.md](/trading/technical-analysis-of-the-financial-markets/003_about-the-contributors/) - [Web 004_Introduction.md](/trading/technical-analysis-of-the-financial-markets/004_introduction/) - [Web 005_Acknowledgments.md](/trading/technical-analysis-of-the-financial-markets/005_acknowledgments/) - [Web 006_1 Philosophy of Technical Analysis.md](/trading/technical-analysis-of-the-financial-markets/006_1-philosophy-of-technical-analysis/) - [Web 007_2 Dow Theory.md](/trading/technical-analysis-of-the-financial-markets/007_2-dow-theory/) - [Web 008_3 Chart Construction.md](/trading/technical-analysis-of-the-financial-markets/008_3-chart-construction/) - [Web 009_4 Basic Concepts of Trend.md](/trading/technical-analysis-of-the-financial-markets/009_4-basic-concepts-of-trend/) - [Web 010_5 Major Reversal Patterns.md](/trading/technical-analysis-of-the-financial-markets/010_5-major-reversal-patterns/) - [Web 011_6 Continuation Patterns.md](/trading/technical-analysis-of-the-financial-markets/011_6-continuation-patterns/) - [Web 012_7 Volume and Open Interest.md](/trading/technical-analysis-of-the-financial-markets/012_7-volume-and-open-interest/) - [Web 013_8 Long Term Charts.md](/trading/technical-analysis-of-the-financial-markets/013_8-long-term-charts/) - [Web 014_9 Moving Averages.md](/trading/technical-analysis-of-the-financial-markets/014_9-moving-averages/) - [Web 015_10 Oscillators and Contrary Opinion.md](/trading/technical-analysis-of-the-financial-markets/015_10-oscillators-and-contrary-opinion/) - [Web 016_11 Point and Figure Charting.md](/trading/technical-analysis-of-the-financial-markets/016_11-point-and-figure-charting/) - [Web 017_12 Japanese Candlesticks.md](/trading/technical-analysis-of-the-financial-markets/017_12-japanese-candlesticks/) - [Web 018_13 Elliott Wave Theory.md](/trading/technical-analysis-of-the-financial-markets/018_13-elliott-wave-theory/) - [Web 019_14 Time Cycles.md](/trading/technical-analysis-of-the-financial-markets/019_14-time-cycles/) - [Web 020_15 Computers and Trading Systems.md](/trading/technical-analysis-of-the-financial-markets/020_15-computers-and-trading-systems/) - [Web 021_16 Money Management and Trading Tactics.md](/trading/technical-analysis-of-the-financial-markets/021_16-money-management-and-trading-tactics/) - [Web 022_17 The Link Between Stocks and Futures - Intermarket Analysis.md](/trading/technical-analysis-of-the-financial-markets/022_17-the-link-between-stocks-and-futures-intermarket-analysis/) - [Web 023_18 Stock Market Indicators.md](/trading/technical-analysis-of-the-financial-markets/023_18-stock-market-indicators/) - [Web 024_19 Pulling It All Together—A Checklist.md](/trading/technical-analysis-of-the-financial-markets/024_19-pulling-it-all-together-a-checklist/) - [Web 025_A Advanced Technical Indicators.md](/trading/technical-analysis-of-the-financial-markets/025_a-advanced-technical-indicators/) - [Web 026_B Market Profile.md](/trading/technical-analysis-of-the-financial-markets/026_b-market-profile/) - [Web 027_C The Essentials of Building a Trading System.md](/trading/technical-analysis-of-the-financial-markets/027_c-the-essentials-of-building-a-trading-system/) - [Web 028_D Continuous Futures Contracts.md](/trading/technical-analysis-of-the-financial-markets/028_d-continuous-futures-contracts/) - [Web 029_Glossary.md](/trading/technical-analysis-of-the-financial-markets/029_glossary/) - [Web 030_Selected Bibliography.md](/trading/technical-analysis-of-the-financial-markets/030_selected-bibliography/) - [Web 031_Selected Resources.md](/trading/technical-analysis-of-the-financial-markets/031_selected-resources/) - [Web 032_Index.md](/trading/technical-analysis-of-the-financial-markets/032_index/)