Technical Analysis
Explore 88 essential terms and definitions in technical analysis. From fundamental concepts to advanced strategies.
88 terms
Accumulation/Distribution Line
intermediateA volume-based indicator that measures the cumulative flow of money into and out of a security, helping identify whether a stock is being accumulated (bought) or distributed (sold).
Advance-Decline Line
intermediateA market breadth indicator that tracks the cumulative difference between the number of advancing and declining stocks each day, measuring the overall health of the market.
Aroon Indicator
advancedA technical indicator consisting of two lines (Aroon Up and Aroon Down) that measure how recently a security made a new high or low, helping identify trend changes and strength.
Ascending Triangle
intermediateA bullish chart pattern formed by a horizontal resistance line and a rising support line converging toward each other, typically resolving with an upward breakout.
Average Directional Index (ADX)
intermediateA technical indicator that measures the strength of a trend regardless of its direction, with values above 25 typically indicating a strong trend and below 20 indicating a weak or absent trend.
Average Directional Movement (ADM)
advancedA system of indicators measuring trend direction and strength using three components: the +DI (positive directional indicator), -DI (negative directional indicator), and ADX.
Average True Range (ATR)
intermediateA volatility indicator that measures the average range of price movement over a specified period, accounting for gaps, to help traders set stop-losses and gauge market volatility.
Bearish Divergence
intermediateA technical signal that occurs when price makes a new high while an indicator (such as RSI or MACD) makes a lower high, suggesting weakening upward momentum and a potential reversal.
Bollinger Bands
intermediateA volatility indicator consisting of a middle moving average and two bands that expand and contract based on price volatility.
Breakout
fundamentalA price movement where a security moves above a resistance level or below a support level on increased volume, often signaling the start of a new trend.
Bullish Divergence
intermediateA technical signal where price makes a lower low while an indicator (such as RSI or MACD) makes a higher low, suggesting weakening downward momentum and a potential upward reversal.
Candlestick Chart
fundamentalA chart type showing open, high, low, and close prices for each period, with color-coded bodies indicating direction.
Candlestick Patterns
intermediateVisual price patterns formed by Japanese candlesticks that indicate potential reversals or continuations in price trends.
Chaikin Money Flow (CMF)
advancedA volume-weighted indicator that measures buying and selling pressure over a specified period by analyzing where the close falls within the high-low range relative to volume.
Chandelier Exit
advancedA volatility-based trailing stop that hangs from the highest high (for longs) or lowest low (for shorts) by a multiple of the Average True Range, adapting to market volatility.
Choppiness Index
advancedA technical indicator that measures whether the market is trending or choppy (range-bound) on a scale of 0 to 100, helping traders choose appropriate strategies.
Commodity Channel Index (CCI)
intermediateA versatile momentum oscillator that measures a security's variation from its statistical mean, identifying cyclical turning points, overbought/oversold conditions, and trend strength.
Consolidation
fundamentalA period where a security's price trades within a defined range after a significant move, as the market digests gains or losses before the next directional move.
Cup and Handle
intermediateA bullish continuation chart pattern resembling a teacup, formed by a rounded bottom (the cup) followed by a small downward drift (the handle), typically leading to an upside breakout.
Death Cross
intermediateA bearish technical signal that occurs when a short-term moving average (typically the 50-day) crosses below a long-term moving average (typically the 200-day), suggesting potential further downside.
Descending Triangle
intermediateA bearish chart pattern formed by a horizontal support line and a declining resistance line converging toward each other, typically resolving with a downward breakdown.
Divergence
fundamentalA condition where the price of a security moves in the opposite direction of a technical indicator, signaling potential trend weakness or an upcoming reversal.
Doji
intermediateA candlestick pattern where the opening and closing prices are virtually equal, creating a cross-like shape that signals market indecision and a potential trend reversal.
Donchian Channel
intermediateA technical indicator that plots the highest high and lowest low over a specified period (typically 20 days), forming a channel used for breakout trading and trend identification.
Double Top / Double Bottom
fundamentalReversal patterns where price tests a resistance level twice (double top, bearish) or a support level twice (double bottom, bullish) before reversing direction.
Elder-Ray Index
advancedA technical indicator that measures buying and selling pressure using Bull Power and Bear Power components, calculated relative to an exponential moving average.
Elliott Wave Theory
advancedA technical analysis theory proposing that market prices unfold in recognizable wave patterns driven by investor psychology, typically consisting of five impulse waves and three corrective waves.
Engulfing Pattern
intermediateA two-candle reversal pattern where the second candle's body completely engulfs the first, signaling a shift in momentum β bullish when it follows a downtrend, bearish after an uptrend.
Evening Star
intermediateA bearish three-candle reversal pattern consisting of a large bullish candle, a small-bodied candle that gaps up, and a large bearish candle that closes well into the first candle's body.
Exponential Moving Average (EMA)
fundamentalA type of moving average that gives greater weight to recent prices, making it more responsive to new information than a simple moving average.
Fibonacci Extension
intermediateA technical tool that projects potential price targets beyond the prior high or low using Fibonacci ratios (such as 1.272, 1.618, and 2.618), commonly used for setting profit targets.
Fibonacci Retracement
intermediateA technical tool using horizontal lines at Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%) to identify potential support/resistance levels.
Flag & Pennant Pattern
intermediateContinuation chart patterns that form during brief consolidation periods within a strong trend, resembling a flag on a pole.
Force Index
advancedAn oscillator developed by Alexander Elder that measures the power behind price movements using price change, direction, and volume.
Gann Theory
advancedA trading methodology developed by W.D. Gann using geometric angles, time cycles, and price patterns to forecast market movements.
Gap Fill
intermediateThe tendency for a stock price to return to and "fill" a price gap that was left on the chart when the price jumped between sessions.
Golden Cross
fundamentalA bullish technical signal that occurs when a shorter-term moving average crosses above a longer-term moving average, typically the 50-day crossing above the 200-day.
Hammer
fundamentalA bullish reversal candlestick pattern with a small body near the top and a long lower shadow, appearing at the bottom of downtrends.
Hanging Man
intermediateA bearish reversal candlestick pattern identical in shape to a hammer but appearing at the top of uptrends, warning of potential selling pressure.
Harami Pattern
intermediateA two-candlestick reversal pattern where the second candle's body is completely contained within the first candle's body, signaling potential trend change.
Head and Shoulders
fundamentalA highly reliable reversal chart pattern featuring three peaks β the middle one (head) higher than the two flanking peaks (shoulders) β signaling a bearish trend change.
Heikin-Ashi
intermediateA modified candlestick charting technique that uses averaged price data to filter out market noise and make trends easier to identify.
Ichimoku Cloud
intermediateA comprehensive Japanese charting system that defines support/resistance, trend direction, momentum, and trading signals using five interrelated lines and a shaded "cloud."
Inverted Hammer
intermediateA bullish reversal candlestick pattern with a small body near the bottom and a long upper shadow, appearing at the end of downtrends.
Keltner Channel
intermediateA volatility-based envelope indicator using an EMA centerline with upper and lower bands set at multiples of the Average True Range (ATR).
Klinger Oscillator
advancedA volume-based indicator that measures the long-term trend of money flow while remaining sensitive enough to detect short-term fluctuations.
Market Profile
advancedA charting method that organizes price and time data into a bell-curve distribution, showing where the most trading activity occurred at each price level.
Marubozu
intermediateA candlestick with no shadows (wicks), indicating that the opening or closing price was the extreme of the session, showing strong directional conviction.
McClellan Oscillator
advancedA market breadth indicator that measures the difference between a 19-day and 39-day EMA of net advancing issues, gauging the pace of market participation.
Money Flow Index (MFI)
intermediateA volume-weighted momentum oscillator that measures buying and selling pressure by combining price and volume data, often called the "volume-weighted RSI."
Morning Star
fundamentalA bullish three-candlestick reversal pattern featuring a large bearish candle, a small-bodied middle candle (the "star"), and a large bullish candle, signaling a bottom.
Moving Average
fundamentalA calculation that averages a security's price over a specific number of periods, smoothing price data to identify trends.
Moving Average Convergence Divergence (MACD)
intermediateA trend-following momentum indicator showing the relationship between two moving averages of a security's price.
On-Balance Volume (OBV)
fundamentalA cumulative volume indicator that adds volume on up days and subtracts volume on down days, designed to show whether volume is flowing into or out of a security.
Order Block
intermediateA price zone where institutional traders placed large orders, identified by the last opposing candle before a strong directional move, used in smart money trading concepts.
Overbought/Oversold
fundamentalMarket conditions where a security has risen too far too fast (overbought) or fallen too far too fast (oversold), suggesting a potential reversal or pause.
Parabolic SAR
intermediateA trend-following indicator that places dots above or below price to indicate trend direction and provide trailing stop-loss levels.
Pivot Points
intermediateCalculated support and resistance levels derived from the previous session's high, low, and close, widely used by day traders and floor traders.
Point and Figure Chart
intermediateA charting method that plots only significant price movements using X's (rising prices) and O's (falling prices), filtering out time and minor fluctuations.
Price Channel
fundamentalA chart pattern formed by drawing parallel lines along a security's highs and lows, defining the range within which price has been trending.
Pullback
fundamentalA temporary decline in price within an ongoing uptrend, typically to a support level or moving average, offering a buying opportunity.
Rate of Change (ROC)
intermediateA momentum oscillator that measures the percentage change in price between the current price and the price a certain number of periods ago.
Relative Strength Index (RSI)
intermediateA momentum indicator measuring the speed and magnitude of price changes on a 0-100 scale, used to identify overbought or oversold conditions.
Relative Vigor Index (RVI)
advancedA technical oscillator that measures the conviction of a recent price move by comparing closing prices relative to the trading range.
Renko Chart
intermediateA chart type that uses fixed price movements (bricks) instead of time intervals, filtering out noise to show clear trends and reversals.
Resistance Level
fundamentalA price level where selling pressure typically overcomes buying pressure, preventing further advance.
Shooting Star
fundamentalA bearish reversal candlestick pattern with a small body near the low and a long upper shadow, appearing at the top of an uptrend.
Simple Moving Average (SMA)
fundamentalA technical indicator that calculates the arithmetic mean of a security's price over a specified number of periods to smooth price data and identify trends.
Spinning Top Candle
fundamentalA candlestick pattern with a small body and long upper and lower shadows, indicating market indecision between buyers and sellers.
Stochastic Oscillator
fundamentalA momentum indicator comparing a security's closing price to its price range over a specified period, identifying overbought and oversold conditions.
Supply and Demand Zones
intermediatePrice areas on a chart where significant buying (demand) or selling (supply) previously occurred, expected to cause price reactions when revisited.
Support and Resistance
fundamentalKey price levels where buying pressure (support) prevents further decline or selling pressure (resistance) prevents further advance.
Support Level
fundamentalA price level where buying pressure typically overcomes selling pressure, preventing further decline.
Three Black Crows
fundamentalA bearish reversal candlestick pattern consisting of three consecutive long-bodied bearish candles that close progressively lower.
Three White Soldiers
fundamentalA bullish reversal candlestick pattern consisting of three consecutive long-bodied bullish candles that close progressively higher.
Trend Line
fundamentalA diagonal line drawn across price highs or lows to identify the prevailing trend direction and potential support/resistance.
Triangle Pattern
fundamentalA chart pattern formed by converging trendlines connecting a series of highs and lows, indicating consolidation before a breakout.
TRIX
advancedA triple-smoothed exponential moving average oscillator that filters market noise and identifies trend direction and momentum changes.
Volume
fundamentalThe number of shares or contracts traded in a security or market during a given period, indicating trading activity and liquidity.
Volume Analysis
intermediateThe study of trading volume to confirm price trends, identify reversals, and gauge the strength of market moves.
Volume Profile
intermediateA charting tool that displays the total volume traded at each price level over a specified period, revealing areas of high and low trading activity.
Volume Spread Analysis (VSA)
intermediateA methodology that analyzes the relationship between price spread, volume, and closing position to detect institutional ("smart money") activity.
Volume-Weighted Average Price (VWAP)
fundamentalA trading benchmark that calculates the average price weighted by volume throughout the day, showing the true average price institutional traders paid.
Wedge Pattern
fundamentalA chart pattern formed by converging trendlines that both slope in the same direction, typically signaling a reversal against the wedge's slope.
Williams %R
intermediateA momentum oscillator that measures overbought and oversold levels by comparing the current close to the highest high over a lookback period.
Wolfe Wave
advancedA naturally occurring pattern in all markets that identifies price reversal points through a five-wave structure based on supply-demand equilibrium.
Wyckoff Method
intermediateA comprehensive market analysis approach based on studying the relationship between price, volume, and time to identify institutional accumulation and distribution phases.
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