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Technical analysis
49 guides in Finabase Learn
- 52-week high and low The highest and lowest prices a security has traded at over the past year, a common reference for range and momentum.
- Accumulation A phase in which informed buyers quietly build positions after a decline, often seen as a sideways range on rising volume.
- Advance-decline line A running total of advancing minus declining stocks each day, used to check whether an index move is broadly supported.
- Average true range (ATR) A volatility measure averaging each bar's true range, which includes any gap from the prior close; usually over 14 periods.
- Bear trap A false breakdown below support that lures traders into selling short just before price reverses higher.
- Bollinger Bands Bands set two standard deviations above and below a 20-period moving average, widening and narrowing with volatility.
- Breakout A move of price through a support or resistance level or out of a chart pattern, often watched for a pickup in volume.
- Bull trap A false breakout above resistance that draws in buyers just before price turns back down.
- Candlestick A price bar that shows the open, high, low and close for a period, with a filled or hollow body between open and close.
- Chart pattern A recognizable shape in price action, such as a head and shoulders or a triangle, that traders read for continuation or reversal.
- Consolidation A period in which price trades sideways in a range, pausing after a move while buyers and sellers reach balance.
- Dead Cat Bounce A brief, short-lived rebound in a falling stock or market that fails and gives way to further declines.
- Death Cross A chart signal where the 50-day moving average crosses below the 200-day moving average, read by some as a bearish shift.
- Distribution A topping phase in which large holders sell into strength, often seen as a range with heavy volume on down days.
- Divergence When price and an indicator move in opposite directions, such as a new price high with a lower RSI high, hinting momentum is fading.
- Double Bottom A bullish reversal pattern of two troughs at about the same price, completed when price rises above the peak between them.
- Double Top A bearish reversal pattern of two peaks at about the same price, completed when price falls below the trough between them.
- Downtrend A series of lower highs and lower lows in price, showing that sellers have the upper hand.
- Exponential moving average (EMA) A moving average that weights recent prices more heavily, so it reacts faster than a simple moving average of the same length.
- Fibonacci retracement Horizontal levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior move, which traders watch as possible support or resistance.
- Golden cross A chart signal where the 50-day moving average crosses above the 200-day moving average, read by some as a bullish shift.
- Head and shoulders A reversal chart pattern of three peaks, the middle one highest, with a neckline whose break completes the pattern.
- Heikin-Ashi A candlestick variant built from averaged prices, which smooths noise and makes trends easier to see at the cost of true prices.
- MACD Moving average convergence divergence: the 12-period EMA minus the 26-period EMA, with a 9-period signal line.
- Market breadth How many stocks are participating in a market move, measured with advancers versus decliners or the share above a moving average.
- Momentum The tendency of assets that have risen or fallen strongly to keep moving in the same direction for a time.
- Moving average The average price over the last N periods, recalculated each period, which smooths noise and shows the trend.
- Oscillator An indicator that moves within a band or around a center line, such as RSI or stochastics, used to gauge momentum and extremes.
- Overbought A reading that price has risen far and fast relative to its recent history, flagged by oscillators such as RSI above 70.
- Oversold A reading that price has fallen far and fast relative to its recent history, flagged by oscillators such as RSI below 30.
- Price action The movement of a security’s price over time, and the style of analysis that reads it directly from bars and levels rather than indicators.
- Price gap A space on a chart where a bar opens above the prior high or below the prior low, leaving a range where no trading occurred.
- Pullback A short, shallow decline against a prevailing uptrend, which traders often treat as a pause rather than the end of the trend.
- Relative strength How a stock has performed compared with a benchmark or its peers, often charted as a ratio line; not the same thing as the RSI.
- Relative Strength Index (RSI) A 0–100 momentum oscillator that compares the size of recent gains with recent losses, with 70 and 30 as common extreme levels.
- Resistance A price level where rallies have repeatedly stalled because selling pressure has tended to overwhelm buying there.
- Simple moving average (SMA) The plain average of the last N closing prices, recalculated each bar; the most common way to smooth a price series and read its trend.
- Stochastic oscillator A momentum indicator that shows where the latest close sits within the high-low range of a recent window, scaled from 0 to 100.
- Support A price level where a falling stock has repeatedly stopped and turned up, because buying has tended to outweigh selling there.
- Swing trading A trading style that holds positions for a few days to a few weeks to capture one price swing, sitting between day trading and longer-term investing.
- Technical analysis The study of price, volume and the patterns they form on charts to judge trends and timing, as opposed to analyzing a company’s financials.
- Timeframe The period each bar or candle on a chart represents, from one minute to one month, and by extension the horizon a trade is meant to play out over.
- Trading volume The number of shares or contracts that change hands in a given period, the basic measure of how actively and how liquidly a security trades.
- Trend The general direction a price is moving over time, up, down or sideways, defined by its sequence of highs and lows.
- Trend reversal A change in the direction of a price trend, from up to down or down to up, as opposed to a temporary pullback within the trend.
- Trendline A straight line drawn on a chart through a series of rising lows or falling highs to show a trend’s path and the level where it would break.
- Uptrend A market or stock whose price makes a series of higher highs and higher lows, the chart signature of sustained buying pressure.
- Volume-weighted average price (VWAP) The average price a security traded at over a period, weighted by the volume at each price; the standard intraday benchmark for execution quality.
- What is technical analysis? A complete guide to reading charts What technical analysis is, the assumptions behind it, how price, volume and time fit together, trend following vs mean reversion, and what the evidence says.
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