The Handbook of Technical Analysis + Test Bank: The Practitioner's Comprehensive Guide to Technical Analysis

by Mark Andrew Lim

Quick Summary

An encyclopedic reference work covering virtually every aspect of technical analysis, designed as both a practitioner's guide and a preparation resource for the CMT (Chartered Market Technician) and CFTe (Certified Financial Technician) examinations. Lim covers Dow Theory, charting mechanics, market phase analysis, trend analysis, chart patterns, candlestick analysis, volume and open interest, oscillators and momentum indicators, Elliott Wave Theory, cycle analysis, Fibonacci ratios, Gann analysis, market breadth, sentiment analysis, intermarket analysis, and risk management, with review questions for each chapter.

Detailed Summary

Mark Andrew Lim's "The Handbook of Technical Analysis" is one of the most comprehensive single-volume references in the field of technical analysis, published by Wiley as part of its Trading series. The book's scope is encyclopedic, covering the full curriculum required for professional technical analysis certifications while also serving as a practical reference for working analysts and traders.

Chapter 1 establishes the philosophical foundations, including the main objective of technical analysis (identifying the direction, magnitude, and duration of price trends), its dual function (forecasting and risk management), the role of subjectivity, and the four basic assumptions: markets discount everything, prices move in trends, history tends to repeat, and market action reflects human psychology.

The Dow Theory chapter covers the theory's origins through Charles Dow, William Peter Hamilton, and Robert Rhea, its six basic assumptions, and the challenges to the theory in modern markets. Charting mechanics are covered in exhaustive detail, including bar, candlestick, point and figure, Renko, Kagi, and line break charts, along with gap analysis, futures contract considerations, and scaling options.

Market Phase Analysis provides multiple frameworks for understanding where a market sits in its cycle: Dow Theory's three phases, chart pattern interpretation, volume analysis, moving average analysis, divergence and momentum analysis, sentiment analysis, Sakata's methods (traditional Japanese analysis), Elliott Wave phases, and cycle analysis phases.

The extensive treatment of chart patterns covers every recognized pattern from head and shoulders, double and triple tops/bottoms, triangles, flags, pennants, wedges, diamonds, and broadening formations, with specific rules for identification, measuring price targets, and assessing pattern reliability. The candlestick analysis section is similarly comprehensive, covering all major single-candle, dual-candle, and triple-candle patterns with their reliability statistics.

Volume and open interest analysis, oscillator construction and interpretation (RSI, Stochastics, MACD, CCI, Williams %R, and many others), and moving average systems receive dedicated chapters. Elliott Wave Theory, Fibonacci analysis, Gann Theory, and cycle analysis each receive detailed treatment. The intermarket analysis chapter covers the relationships between bonds, stocks, commodities, and currencies that form the basis of top-down market analysis.

Each chapter concludes with review questions, and the companion test bank provides additional questions for examination preparation. The book's comprehensiveness makes it the standard reference for technical analysis practitioners and students worldwide.