Bear Trap - A Bear Trap is a major downside breakout rapidly followed by an upside price reversal.
Candlesticks - A chart, in simple terms, is a visual representation of stock prices. Charts directly reflect the emotions of market participants. Candlestick charts are the easiest and most accurate way to read price action. At a glance, a trader can easily identify candlestick types, chart patterns and important levels with a high rate of accuracy.
Candlesticks - A chart, in simple terms, is a visual representation of stock prices. Charts directly reflect the emotions of market participants. Candlestick charts are the easiest and most accurate way to read price action. At a glance, a trader can easily identify candlestick types, chart patterns and important levels with a high rate of accuracy.
Candlesticks utilize colors to highlight a positive or
negative bar over a specific interval. While most traders use red and green
candlesticks to represent negative and positive, respectively, some may choose
to use different colors. If the closing price is lower than the opening price
(the price decreased), the candlestick appears red. If the closing price is
higher than the opening price (the price increased), the candlestick appears
green. The wick (also known as the “tail” or “shadow”) refers to the part of
the candlestick that is not part of the body, or not within the open and close
price. While the body of the candlestick is most important, understanding wicks
(tails or shadows) is a very important part of candlestick analysis.
Channel - The parallel trend lines surrounding a price trend on a chart.
Double Top - A technical analysis term for a chart pattern displaying two prominent peaks, where price has risen to the same price level twice. This price level is considered to constitute resistance.
Engulfing Pattern - A reversal pattern on a Japanese Candlestick chart that can be bearish or bullish depending upon whether it is in an uptrend or downtrend. An Engulfing Pattern is a two candlestick pattern, where the first day is characterized by a small body, followed by a day whose body completely engulfs the previous day's real body (it need
not engulf the shadows/wick). The second day's real body (candle) should be the opposite color of the first real body. The bearish engulfing pattern signals the end of an uptrend and the bullish engulfing pattern suggests a downtrend reversal.
Flag - A popular and reliable continuation chart pattern. The flag resembles a parallelogram, or rectangle that slopes against the prevailing trend. The flag represents a minor consolidation or pause in a price trend that takes place before the prior trend resumes.
Fibonacci Numbers - A number sequence discovered by a thirteenth century Italian mathematician Leonardo Fibonacci (ca 1170-1250), who introduced Arabic numbers to Europe, in which the sum of any two consecutive numbers equals the next highest number – i.e., following this sequence: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55 and so on. The ratio of any number to its next highest number approaches 0.618 after the first four numbers.
Gap - When the high of the day is below the low of the previous day or when the low of the day is above the high of the previous day, leaving a break between prices.
Hammer - On a Japanese Candlestick chart, the hammer is known as a reversal candlestick. Hammer candlesticks occur when a security moves significantly lower after the open, but rebounds to close well above the intraday low. In a perfect hammer, this tail is twice the length of the body and the candlestick will have no upper shadow or wick. The smaller the body and the longer the tail, the more significant the hammer is as a bullish indicator.
Head and Shoulders - a chart formation that resembles a human head and shoulders and is generally considered to be predictive of a price reversal. A head and shoulders top (which is considered predictive of a price decline) consists of a high price, a decline to a support level, a rally to a higher price than the previous high price, a second decline to the support level, and a weaker rally to about the level of the first high price.
Indicator - A value that is based on a securities price and/or volume and used to forecast future price movements. Indicators are divided into two groups: trend following/lagging and momentum/leading. Lagging indicators reflect what prices are doing now, or in the recent past, and are useful in a trending market.
Momentum - In technical analysis, the relative change in price over a specific time interval.
Moving Average - one of the most useful and objective tools available to the technical analyst. Moving averages show the average value of a security's price over a certain number of time periods. The most commonly used moving averages are the 20, 30, 50, 100, and 200 day averages. Moving averages smooth a data series and make it easier to spot trends and smooth out price and volume fluctuations or noise that can confuse interpretation. An exponentially smoothed moving average (EMA) gives greater weight to the more recent data, in an attempt to reduce the lag. The shorter the time span, the more sensitive the moving average will be to price changes.
Overbought - A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors.
Oversold - A technical opinion that the market price has declined too steeply and too fast in relation to underlying fundamental factors.
Pennant - A continuation chart pattern formed when there is a large movement in a security, followed by a consolidation period with converging trendlines, which forms the pennant. The pennant is typically followed by a resumption of the initial trend movement
Resistance - a price area where new selling will emerge to dampen a continued rise.
Retracement – A reversal with a major price trend
Reversal - A change of direction in prices.
Support - a price area where new buying is likely to come in and stem any decline.
Technical Analysis - An approach to forecasting prices that examines patterns of price change, rates of change, and changes in volume of trading and open interest, without regard to underlying fundamental market factors. Technical analysis can work consistently only if the theory that price movements are a Random Walk is incorrect.
Trend - The general direction, either upward or downward, in which prices has been moving.
Trendline - In charting, a line drawn across the bottom or top of a price chart indicating the direction or trend of price movement. If up, the trendline is called bullish; if down, it is called bearish.
Triple Top - a reversal pattern of an uptrend. Similar to the head and shoulders top, the pattern features three prominent peaks, however in the case of the Triple Top all three peaks are at roughly the same price level.
