•••
CO L UM N
term trend. Further to the primary
trend, there are secondary and
even tertiary trends, as represented
by block B. Secondary trends are
normally short-term adjustments
to the primary trend, which will
only reach a turning point should
support line A not be able to support price movement.
Graph 2: Representation of sideways price trend
SOURCE: COMPILED BY AUTHOR
Graph 3: Primary and Secondary Trends
SOURCE: COMPILED BY AUTHOR
the market mainly trends (trades)
or whether it is in a secondary
trading (trending) phase, since
trends are mainly made up of
a primary trend and secondary
trends (upwards, downwards or
sideways). This concept is demonstrated graphically by Graph 3.
Line A represents a primary trend,
which normally represents a longer
CONCLUSION
By merely having a reasonable
understanding of the above information, you will be a step ahead of
the rest. However, it will be most
beneficial to combine technical
analysis with fundamental analysis
in order to make the best possible
decision. When the longer term
support line is broken, it can usually be linked to fundamentally
changing supply and demand
factors. The description of and the
manner in which specific technical
indicators work, which generate
more accurate buying and selling
signals in various market conditions, will be discussed in future
articles.
For more information
or to obtain competitive
option prices on a variety of commodities, please contact Susari
Geldenhuys at 018 464 7430 or
072 116 9999 or e-mail her at [email protected].
Susari is an option writer at
Senwes. She obtained a B.Com
(Hons.) and M.Com-degree in
Risk Management and a B.Sc-degree in Business Mathematics
and Informatics at the NWU in
Potchefstroom. She also studied
Derivative Instruments at the VU
(Vrije Universiteit) in Amsterdam
on a bursary programme. The
Pretoria-born Susari, who went
to school in Upington, talk about
options and technical analysis.
28
Feb/Mar 2016 • SENWES Scenario