TRASLATION PRACTICE A QUICK LOOK AT BOLLINGER BANDS Bollinger bands is a popular band analysis similar to the Alpha Beta trend. It can be used as a system in itself or with Oscillators such as the Relative Strength Index (RSI).
The analysis is standard in both Reuters Technical Analysis (RTA) and Reuters Technical Analysis for Unix (RTAu). Bollinger Bands consist of 3 lines. 2 charted ones above and the other below the moving average of closing prices, which makes up the third line. The moving average of close data needs to be created seoaratelv to complete the bollineer bands analysis. This analysis varies from other percentage band analyses because the distance of each band from the moving average is not fixed. Instead, the price channel these bands form around the moving average is flexible, being determined by specifying a number of standard deviations from it. John Bollineer. who created Bollineer Bands and used them in stock tradine. Used a standard deviation of 2 which captures about 95% of price action within the bands. A different number of standard deviations can be selected dependina on the market traded for example, 1.8 standard deviations would be more appropriate for futures trading. The length of the moving average which is used to calculate the bands is usually 20 days or less. Care should be taken here as these sample sizes are small and statistical error Quite possible. The only statistical inference that should be drawn from this analysis is that most (approx. 95%) of the price action will be contained. A useful feature of Bollinger Bands is automatic narrowing and widening in response to volatility — narrow in calm markets and wide in volatile markets. This makes them an effective trend indicator, especially when used in conjunction with another trend following tool. TRADING RULES Use Bollinger Bands with a price chart and simple moving average (the same length as the Bollinger Bands) then keep a look out for the following signals: Fig 1 Bollinger Bands(top) used with an RSI(bottom). Trendlines show divergence between the RSI and Price which confirms the Bollinger Bands. Prices near the lower band may signal an oversold market. Prices near the upper band may signal an overbought market. The bands often narrow before a sharp move in price, either UD or down.
A narrowing of the bands often indicates the start of a new trend, which is confirmed when prices break and close out of the band. An interval that closes above the top band, followed by another that closes within, may signal a reversal and a good time to sell. VOCABULARY i: ei deviation — отклонение ae to’capture — охватывать э appropriate — подходящий to take care — позаботиться a: sample — образец i ‘inference — вывод ei to contain — содержать to keep a lockout — следить trend reversal — смена тренда э: to confirm — подтверждать э: divergence — отклонение A to comfort — успокаивать An interval that closes below the bottom band, followed by another that closes within, may signal a reversal and a good time to buy. If prices are in a downtrend and back in the bands, this is interpreted as a signal the existing down trend will not continue and that the market will move sideways and then probably back up. Bollinger Bands form an area of Support and Resistance.
Use them to take profits.
If prices break above or below the Bands, it results in a changed Support and Resistance. Trend reversals can be confirmed when used with an Oscillator, such as the Relative Strenght Index (RSI). Signals such as: Price being close to the lower band with the RSI confirming a trend reversal should be a safe buy signal. Price divergence with an RSI can confirm the bottom or top of a band (see Fig. 1). A final point — like any other technical analysis technique, the trader must incorporate their own personality and comfort levels to the trading rules of Bollinger Bands. Good luck!
EXERCISES Ex.
1. Put questions to the underlined words. Ex. 2. Analyse noun collocations. Ex. 3. Translate the article. THE ELLIOTT WAVE According to Elliott a rising stock market unfolds in five-wave/three-wave pattern and forms one complete bull market /bear market cycle of eight waves (1-3-5-B). The five-wave upward movement is called an impulse wave and the counter trend movement — a corrective wave. Waves 1, 3, 5 can subdivide into five waves of smaller scale. Corrective waves 2 and 4 can form three smaller waves each too.
Impulse subwaves are numbered (1-2-3-4-5). Corrective subwaves are lettered (A,B,C).
Thus waves in any series can be subdivided and resubdivided into waves of smaller degree or expanded into waves of larger degree. THE LARGER SCALE PATTERN Vocabulary ou to unfold — развертываться i impulse — импульс, побуждение ei scale — масштаб se to expand — расширять The analyst should take into consideration that in an uptrend market, the low of the second wave never goes below the beginning of the first wave. The third wave is never the shortest. The forth wave does not penetrate the price range of a first wave. Market movements are essentially the same but they may differ in the size or duration.
Large scale movements incorporate smaller scale subdivisions which are similar to them in their «fractal» geometry. One of the three impulse subwaves (W-1, W-3, W-5) can have extensions i.e. elongated movements. These subdivisions increase the number of waves to nine for the main sequence. The increased number of movements does not change the technical significance of price pattern. e to penetrate — проникать э: to incorporate — объединять ae fractal «geometry» — «геометрия частей» фрактальная геометрия TRANSLATION PRACTICE ELLIOTT WAVE THEORY According to Elliott, markets move in cyclical waves, with a kind ofself-similaritv within the waves.
The big waves consist of smaller waves which themselves contain smaller waves and so on. The names of the waves according to their size are as follows, with increasing length in time and amount: sub-minuette minuette [mmjuet] minute [minit] minor intermediate primary cycle super cycle grand supercycle The time frame starts with minutes and even single trades and ends in movements lasting for several hundred years from beginning to end. A complete cycle on one stage of observation consists of several movements, of which some are in the direction of the wave and some are in the opposite. Now let us listen to Elliott himself: «The rules to be derived… are: 1) Waves in the direction of the main movement, or the odd numbered waves, are made up of five lesser waves. 2) Corrective waves, or waves against the main movement (even numbered waves) are made up of three lesser waves.» The basic concept states that this structure is repeated at the next level of waves again, like the movement of (2) to (3), while consisting of five waves itself, is part of the next-state movement towards (1).
The system is thus valid on all possible levels of observation and the only problem the analyst has to solve is correct wave countine. odd numbered — нечетные (числа) even numbered — четные (числа) to stretch — растягивать i: to proceed — проходить э: distortion — искажение e irregular — неправильный, нерегулярный Since markets do not move in the ideal way. some correction might fail to close above the previous correction’s low, (in an upward trend like above), some of the odd moves might fail in closing above the previous odd-waves top and so on. These distortions make wave-detecting and wave-counting quite difficult and subject to personal opinion, which is the main problem when one tries to computerize the system. The main interest of the investor is always the fifth wave since it indicates a turnaround of the trend. «Sometimes the fifth wave will ‘stretch’, that is, deploy or spread out. The fifth wave. instead of proceeding in the normal one-wave pattern of the same degree as the movement as a whole, simply stretches or sub-divides into five waves of lower degree… Such spreading out is a characteristic of markets that are unusually strong (or weak, if a down movement.)» invalidity long run bet неправомерность — большой срок — пари For distortions of the ideal structure. Elliott formed a consistent system of triangles, diagonals, irregular corrections and wave extensions. Since distorted waves can follow each other, their detection becomes extremely difficult-to-read. And 1Э to inhere — подразумевать ae self-similarity — самоподобие э: ei interpritation — интерпретация i: to delete — стирать, удалять this is the reason why Elliott could make surprising and extremely accurate predictions on the one hand at times. whereas he failed at others. Distorted waves are known ex post. but not in advance. But correct detection of distorted waves as such helps to predict the next waves ending. If this wave is distorted again, reasoned by whatsoever, prediction failed again to some extent. This offers opportunity to critics to claim invalidity of results, which is to some extent true, but which does not necessarily mark the whole system as nonsense, since the next forecast might be extremely correct.
Thus the system can be right in the long-run, but the investor might suffer from distortions in the short run. Actually, only comouter-testina could prove if it is possuble to make money with the system. (Hence that todays knowledge about pattern recognition often refers to similar ideas, yet named differently and more modern). Moreover the critics should be aware, that even the best traders are right three to four out often bets, and never know why they were wrong. Elliott Waves can make you know why you failed, which includes a kind of element of self learning.
Now after having introduced the basic structure it might be interesting to conclude similarities to modern theories.
First of all, the system inheres self-similarity, which is in the meanwhile well-introduced by chaos-theory approaches to financial markets. Secondly there are similarities to modem pattern recogntion. since a five wave structure simply is-a pattern. Thirdly, Fibonacci time series are quite modern as well and Elliott himself found the similarities astonishing: «From my experience I have learned that 144 is the highest number of practical value. In a complete cycle of the shock market, the number of Minor waves is 144, as shown in the following table. All are Fibonacci numbers and the entire series is employed. The length of waves may vary but not the number». According to Elliott, the wave structure is including all activities of man. A.J. Frost and R.R. Prechtergo even further by claiming that the wave structure and its mathematical expression, the Fibonacci series, is a basic principle of the world as a whole. The great variety of different interpretations of one wave and its meaning for the overall stmcture makes it rather impossible to computerize Elliott Wave without deleting some essential parts. Glenn Neelv tried to form a system which follows Elliott and works with full computer support, but he is often criticized for oversimplifying in order to computerize.
COMPRESENSION QUESTIONS 1. How does a rising stock market infold?
2. What is an impulse wave? 3.
What can corrective waves form? 4. Does the increased number of movements change the technical significance of price pattern?
5. How do markets move according to Elliott? 6.
What is the main problem which the analyst has to solve? 7. What makes wave — counting difficult? 8. Which wave is the most important for the investor and why? 9. Why is distorted wave detection extremely difficult? EXERCISES Ex. 1. Put questions to the underlined words.
Ex. 2. Draw up a plan of the article. Ex. 3. Discuss the pros and cons of the Elliott wave theory. Ex. 4.
Read and translate the text and the article. FOREX FORECASTING KEY INTEREST RATES U.S. — Key Interest Rates. The rates to watch are: Federal (Fed) funds rate — sets the tone for money market rates. Discount rate — usually sets the floor for the Fed funds rate. The Fed funds and discount rates are the two key interest rates. Deoositorv institutions hold non-interest bearine reserve accounts at the Fed to meet reserve requirements and handle interbank transactions.
Deposits above the minimum required are traded overnight and the Fed funds rate is what banks charge each other for these overnight loans.
The Fed has an objective for the funds rate which is never formallv published. However. so-called Fed watchers can usually tell what the target is by observing where the funds rate trades in conjunction with the Fed’s money market operations. The first time the Fed announced a rise in interest rates at The time it took place was on February 4, 1994 when it issued a statement saving that the Federal Open Market Committee had decided to increase slightly the degree of pressure on reserve positions. However, a series of rate rises in early 1994 were accompanied by formal Fed statements which the markets believe were designed to make its intentions clear.
What is not clear is whether this will become the standard method by which rate changes are signalled. Traditionally.
Fed watchers had to wait until the release of the minutes of the regular Federal Open Market Committee meetings, which are published six weeks after wards, for confirmation of any perceived change in monetary policy. All institutions with reservable deposits can borrow at the Discount rate from the Fed’s discount window for short term adjustment purposes and limited other uses.
The Fed funds rate is usually above the discount rate. When the funds rate is at, or be low, the discount rate there is little use of the discount window by healthy banks which have access to the funds market. (There is no U.S. equivalent of the lombard rate which other central banks use to penalise institutions requiring emergency funds. However, there are circumstances when the Fed may charge a market rate above the basic discount rate. For example, borrowing under the seasonal programme is at a market rate average of Fed funds and certificates of deposit (CDs).
Extended credit borrowing by banks in difficulty can also be at an above market rate.) Open market ooerations are conducted with a eroup of pri mary dealers in government securities (about 40) which are mainly subsidiaries of bank holding companies and securities houses. Eligible paper includes Treasury bills, notes, bonds and, for repos, government agency securities.
OCABULARY
to set the tone — задавать тон i non-interest bearing — беспроцентный о: target — планируемая цифра, установленный курс л in conjunction — в связи с, связанный с… ai to be designed — предполагаться i minutes — протоколы i: perceived — предполагаемый л for adjustment purposes — для целей урегулирования