Glossary of technical analysis terms — quick reference guide.

Ascending Triangle — A bullish continuation pattern characterized by a flat resistance line and a rising support line. The pattern resolves when price breaks above resistance with increasing volume.

Bar Chart — A chart style that displays OHLC (Open, High, Low, Close) data as vertical bars. The left tick marks the open, the right tick marks the close. Also called an OHLC chart.

Candlestick Chart — A Japanese-originated chart style showing the same OHLC data as a bar chart but with a rectangular "body" between the open and close and "wicks" (shadows) extending to the high and low. Provides more visual information at a glance.

Chart Timeframe — The period each bar or candle represents on a chart. Common timeframes include 1-minute, 5-minute, 15-minute, 1-hour, 4-hour, daily, weekly, and monthly. Higher timeframes show broader context; lower timeframes show finer detail.

Descending Triangle — A bearish continuation pattern characterized by a flat support line and a falling resistance line. The pattern resolves when price breaks below support with increasing volume.

Heikin-Ashi — A modified candlestick charting technique that uses average price data to smooth out noise. Each candle's open is the midpoint of the prior candle's open and close. Especially useful for identifying trends and trend reversals.

Line Chart — The simplest chart style, connecting closing prices (or another single price point) with a continuous line. Useful for getting a clean view of the overall trend without intra-period noise.

OHLC — Open, High, Low, Close. The four essential price data points for any given period. All standard chart types (bar, candlestick) display these four values.

Point & Figure Chart — A chart type that filters out time and only plots price changes of a specified magnitude. Uses X columns for rising prices and O columns for falling prices. Eliminates noise from minor price fluctuations.

Renko Chart — A price-focused chart style that uses bricks of a fixed price size rather than time intervals. A new brick is drawn only when price moves by the specified amount. Filters out small movements and highlights the underlying trend.

Scalping — An ultra-short-term trading style where positions are held for seconds to minutes, aiming to capture very small price movements. Requires fast execution, tight spreads, and significant screen time.

Session — A defined trading period for a particular market or region. Examples include the London session (forex), New York session (US stocks), and Asian session. Different sessions have different volatility and liquidity characteristics.

Symmetrical Triangle — A neutral continuation pattern formed by converging trendlines where both the highs and lows are moving toward each other. The breakout direction is not predetermined and must be confirmed by volume and price action.

Tick Chart — A chart where each bar represents a fixed number of trades (ticks), not a time period. For example, a 100-tick chart draws a new bar after every 100 trades. Useful for analyzing price action during fast markets.

Wedge — A chart pattern with converging trendlines that slope in the same direction. A rising wedge (higher highs and higher lows converging) is typically bearish. A falling wedge (lower highs and lower lows converging) is typically bullish.

Bearish Engulfing — A two-candle bearish reversal pattern where a large bearish candle completely engulfs the body of the preceding smaller bullish candle. Appears at the end of an uptrend.

Bear Flag — A bearish continuation pattern consisting of a sharp decline (the flagpole) followed by a shallow rising channel (the flag). The pattern is confirmed when price breaks below the lower boundary of the flag.

Body — The thick rectangular part of a candlestick representing the range between the open and close. A filled (dark/red) body means the close was lower than the open. An empty (light/green) body means the close was higher than the open.

Breakout — When price exits a consolidation pattern or a key support/resistance level. A breakout is typically confirmed by above-average volume and a close beyond the pattern boundary.

Bull Flag — A bullish continuation pattern consisting of a sharp rally (the flagpole) followed by a shallow declining channel (the flag). The pattern is confirmed when price breaks above the upper boundary of the flag.

Bullish Engulfing — A two-candle bullish reversal pattern where a large bullish candle completely engulfs the body of the preceding smaller bearish candle. Appears at the end of a downtrend.

Doji — A candlestick with a very small body (the open and close are essentially equal), indicating indecision in the market. Can signal a potential reversal when it appears after a prolonged trend.

Double Bottom — A bullish reversal pattern forming after a downtrend: price makes two lows at approximately the same level with a rally in between. The pattern is confirmed when price breaks above the intermediate peak (the neckline).

Double Top — A bearish reversal pattern forming after an uptrend: price makes two highs at approximately the same level with a decline in between. The pattern is confirmed when price breaks below the intermediate trough (the neckline).

Evening Star — A three-candle bearish reversal pattern: a large bullish candle, a small-bodied candle (doji or spinning top), and a large bearish candle that closes at least halfway down the first candle's body. Appears at the end of an uptrend.

Gap — A price jump between two consecutive periods where there is no trading. Types include breakaway gaps (start of a trend), runaway/measuring gaps (middle of a trend), and exhaustion gaps (end of a trend).

Hammer — A bullish reversal candlestick with a small body at the top of the candle and a long lower wick at least twice the length of the body. Appears at the bottom of a downtrend.

Hanging Man — A bearish reversal candlestick with the same shape as a hammer (small body at top, long lower wick) but appearing at the top of an uptrend rather than the bottom of a downtrend.

Head and Shoulders — A bearish reversal pattern consisting of three peaks: a left shoulder, a higher head, and a right shoulder (approximately level with the left shoulder). Confirmed when price breaks below the neckline (support connecting the two troughs).

Inverse Head and Shoulders — A bullish reversal pattern that is the inverted version of the head and shoulders. Three troughs: a left shoulder, a lower head, and a right shoulder. Confirmed when price breaks above the neckline.

Harami — A two-candle reversal pattern where the second candle's body is contained entirely within the first candle's body. A bullish harami appears in a downtrend; a bearish harami appears in an uptrend.

Long Wicked Candle — A candlestick with a long wick (shadow) extending above or below the body, showing rejection of prices at that level. A long upper wick indicates selling pressure at the high; a long lower wick indicates buying pressure at the low.

Morning Star — A three-candle bullish reversal pattern: a large bearish candle, a small-bodied candle (doji or spinning top), and a large bullish candle that closes at least halfway up the first candle's body. Appears at the end of a downtrend.

Pennant — A small symmetrical triangle continuation pattern that forms after a sharp price move (the flagpole). The converging trendlines are typically short in duration, lasting 1-3 weeks.

Shooting Star — A bearish reversal candlestick with a small body at the bottom of the candle and a long upper wick at least twice the length of the body. Appears at the top of an uptrend.

Spinning Top — A candlestick with a small body and long upper and lower wicks, indicating that neither bulls nor bears could gain control during the period. Signals uncertainty and potential indecision.

Three Black Crows — A bearish reversal pattern consisting of three consecutive long bearish candles, each closing near its low. Indicates strong selling pressure and a potential trend reversal from bullish to bearish.

Three White Soldiers — A bullish reversal pattern consisting of three consecutive long bullish candles, each closing near its high. Indicates strong buying pressure and a potential trend reversal from bearish to bullish.

Upper Shadow (Wick) — The line extending above a candlestick's body, showing the highest price reached during the period. Also called the upper wick. A long upper shadow indicates selling pressure at higher prices.

Lower Shadow (Wick) — The line extending below a candlestick's body, showing the lowest price reached during the period. Also called the lower wick. A long lower shadow indicates buying pressure at lower prices.

Volume — The number of shares, contracts, or units traded during a given period. Volume confirms the strength of price movements. High volume on breakouts confirms conviction; low volume on breakouts suggests weakness.

Wick — See Upper Shadow and Lower Shadow. The thin line extending above or below a candlestick's body.

Accumulation/Distribution Line (A/D) — A volume-based indicator that measures cumulative money flow by adding or subtracting a percentage of volume based on where price closes within the daily range. Rising A/D confirms accumulation; falling A/D confirms distribution.

ADX (Average Directional Index) — A trend strength indicator ranging from 0 to 100. Values above 25 indicate a strong trend (in either direction). Values below 20 indicate a ranging or non-trending market. ADX does not indicate direction, only strength.

ATR (Average True Range) — A volatility indicator that measures the average range of price movements over a specified period. Higher ATR values indicate higher volatility. Used for setting stop-loss distances and position sizing.

Bollinger Bands — A volatility indicator consisting of a middle band (typically a 20-period SMA) with upper and lower bands plotted two standard deviations away. Price touching the upper band suggests overextended upside; touching the lower band suggests overextended downside.

CCI (Commodity Channel Index) — A momentum oscillator that measures the current price level relative to an average price over a given period. Values above +100 indicate overbought conditions; values below -100 indicate oversold conditions.

CMF (Chaikin Money Flow) — A volume-weighted indicator that measures accumulation/distribution pressure over a specified period. Values above zero suggest buying pressure; values below zero suggest selling pressure.

EMA (Exponential Moving Average) — A type of moving average that gives greater weight to recent prices, making it more responsive to new information than the SMA. The 12 and 26 EMA are commonly used for short-term trend analysis.

Keltner Channels — A volatility-based indicator similar to Bollinger Bands but using ATR instead of standard deviation to set channel width. The middle band is typically a 20-period EMA.

MACD (Moving Average Convergence Divergence) — A trend-following momentum indicator showing the relationship between two EMAs (typically 12 and 26). The MACD line is the difference; the signal line is a 9-period EMA of the MACD. Crossovers and histogram divergences generate signals.

Money Flow Index (MFI) — A volume-weighted version of RSI that uses both price and volume to measure buying and selling pressure. Ranges from 0 to 100, with overbought above 80 and oversold below 20.

OBV (On-Balance Volume) — A cumulative volume indicator that adds volume on up days and subtracts volume on down days. OBV moving in the same direction as price confirms the trend. OBV diverging from price warns of a potential reversal.

Parabolic SAR — A trailing stop-and-reversal indicator that plots dots above or below price. Dots below price suggest an uptrend; dots above suggest a downtrend. The dots accelerate as the trend continues, providing tighter trailing stops.

RSI (Relative Strength Index) — A momentum oscillator ranging from 0 to 100. Values above 70 suggest overbought conditions (potential reversal down). Values below 30 suggest oversold conditions (potential reversal up). The 14-period setting is standard.

SMA (Simple Moving Average) — The arithmetic mean of prices over a specified number of periods. The 50 and 200 SMA are commonly used for long-term trend analysis. The 20 SMA is used for medium-term trend analysis.

Stochastic Oscillator — A momentum indicator comparing the closing price to the price range over a given period. Consists of %K (fast) and %D (slow). Values above 80 suggest overbought; below 20 suggest oversold.

VWAP (Volume-Weighted Average Price) — The average price of a security weighted by volume, typically calculated intraday. Used by institutional traders as a benchmark. Price above VWAP suggests bullish sentiment; below VWAP suggests bearish sentiment.

Williams %R — A momentum oscillator similar to the Stochastic but plotted from 0 to -100. Readings above -20 suggest overbought; readings below -80 suggest oversold.

Bear Market — A prolonged period of declining prices, typically defined as a decline of 20% or more from a recent high. Characterized by lower highs and lower lows, negative sentiment, and increased volatility.

Bull Market — A prolonged period of rising prices, typically defined as an increase of 20% or more from a recent low. Characterized by higher highs and higher lows, positive sentiment, and increasing participation.

Consolidation — A period where price moves sideways within a relatively narrow range, often forming a rectangle, triangle, or flag pattern. Consolidation represents a pause in the trend before the next directional move.

Correction — A temporary decline in price within a larger uptrend, typically retracing 10-20% of the prior advance. Corrections are normal and healthy within bull markets.

Death Cross — A bearish signal that occurs when a shorter-term moving average (typically the 50-period MA) crosses below a longer-term moving average (typically the 200-period MA). Suggests the trend has turned bearish.

Divergence — When the direction of price movements diverges from the direction of an indicator's movements. Regular divergence signals potential trend reversal. Hidden divergence signals potential trend continuation.

Golden Cross — A bullish signal that occurs when a shorter-term moving average (typically the 50-period MA) crosses above a longer-term moving average (typically the 200-period MA). Suggests the trend has turned bullish.

Higher High — A swing high that is higher than the previous swing high. A sequence of higher highs confirms an uptrend.

Higher Low — A swing low that is higher than the previous swing low. A sequence of higher lows confirms an uptrend.

Lower High — A swing high that is lower than the previous swing high. A sequence of lower highs confirms a downtrend.

Lower Low — A swing low that is lower than the previous swing low. A sequence of lower lows confirms a downtrend.

Pullback — A temporary counter-trend move within a larger trend. In an uptrend, a pullback is a decline that stays above the prior swing low. In a downtrend, a rally that stays below the prior swing high.

Resistance — A price level where selling pressure exceeds buying pressure, causing price to reverse or stall. Former resistance often becomes support after a breakout.

Retracement — A price movement against the dominant trend, often measured as a percentage of the prior move. Common Fibonacci retracement levels are 38.2%, 50%, and 61.8%.

Reversal — A change in the direction of the trend. A bullish reversal occurs at the end of a downtrend, switching to an uptrend. A bearish reversal occurs at the end of an uptrend, switching to a downtrend.

Support — A price level where buying pressure exceeds selling pressure, causing price to reverse or stall. Former support often becomes resistance after a breakdown.

Swing High — A local price peak on the chart, identified as a bar or candle with lower highs on both sides. Connects with other swing highs to form resistance lines and downtrend lines.

Swing Low — A local price trough on the chart, identified as a bar or candle with higher lows on both sides. Connects with other swing lows to form support lines and uptrend lines.

Trend — The general direction of prices. An uptrend consists of higher highs and higher lows. A downtrend consists of lower highs and lower lows. A sideways trend has no clear directional bias.

Trendline — A straight line connecting two or more swing highs (for a downtrend line) or swing lows (for an uptrend line). A break of a trendline suggests the trend may be changing.

Backtesting — The process of testing a trading strategy on historical price data to evaluate its performance. Proper backtesting must avoid lookahead bias and account for transaction costs and slippage.

CAGR (Compound Annual Growth Rate) — The annualized rate of return over a specified period, accounting for the compounding effect. A more accurate measure of long-term performance than simple average returns.

Confluence — When multiple technical analysis factors align at the same price level. For example, a Fibonacci retracement level coinciding with a moving average and a prior support level creates a confluence zone.

Correlation — A statistical measure of how two assets move in relation to each other, ranging from +1 (perfect positive correlation) to -1 (perfect negative correlation). Zero means no relationship.

Drawdown — The decline in account equity from a peak to a subsequent trough. Maximum drawdown (Max DD) is the worst peak-to-trough decline over a specified period. A key measure of risk.

Edge — The statistical advantage that a trading strategy has over random entry. Edge can be measured as the positive expectancy per trade or per dollar risked.

Expectancy — The average amount you can expect to win (or lose) per trade, calculated as (Win Rate × Average Win) − (Loss Rate × Average Loss). A positive expectancy means the strategy is profitable over time.

Forward Testing — The process of testing a trading strategy on live market data using a demo or paper trading account. The bridge between backtesting and live trading.

Kelly Criterion — A mathematical formula for optimal position sizing that maximizes long-term growth while managing risk. The full Kelly bet is often considered too aggressive for trading; fractional Kelly is more common.

Max Drawdown — The largest peak-to-trough decline experienced by an account or strategy over a given period. A critical risk metric used to assess whether a strategy's risk is acceptable.

Mean Reversion — A trading strategy based on the assumption that prices tend to revert to their average over time. Works best in ranging markets and fails in strong trending markets.

Monte Carlo Simulation — A statistical technique that runs thousands of random simulations of a trading strategy's potential outcomes to assess the range of possible results and the probability of large losses.

Overfitting — The error of optimizing a trading strategy's parameters too closely to historical data, capturing noise instead of true market patterns. An overfitted strategy performs well in backtesting but fails in live trading.

Paper Trading — See Forward Testing. Trading with simulated money to test a strategy in real-time market conditions without risking capital.

Position Sizing — The process of determining how many shares or contracts to trade based on account size, risk per trade, and stop loss distance. A core component of risk management.

Profit Factor — The ratio of gross profit to gross loss. A profit factor above 1.0 means the strategy is profitable. Above 2.0 is considered very good. Above 3.0 is excellent.

R:R (Risk-Reward Ratio) — The ratio of the amount risked on a trade to the potential reward. A 1:2 R:R means risking $1 to make $2. Higher R:R ratios mean you can have a lower win rate and still be profitable.

Sharpe Ratio — A risk-adjusted return measure calculated as (Strategy Return − Risk-Free Rate) ÷ Standard Deviation of Returns. Higher values indicate better risk-adjusted performance.

Slippage — The difference between the expected price of a trade and the actual price at which it is executed. More common in fast-moving markets or with large orders.

Walk-Forward Analysis — A more robust alternative to simple backtesting where the strategy is optimized on an in-sample period and tested on an out-of-sample period, then rolled forward repeatedly.

Win Rate — The percentage of winning trades out of total trades. A high win rate does not guarantee profitability if average losses exceed average wins.

Breadth — A measure of how many stocks participate in a market move. Indicators like Advance/Decline Line, New Highs/Lows ratio, and the McClellan Oscillator measure market breadth. Strong breadth confirms a trend.

Capitulation — A period of panic selling at the bottom of a downtrend, characterized by extremely high volume and sharp price declines. Often marks the final stage of a bear market before a reversal.

Contango — A situation in futures markets where futures contracts trade at a premium to the spot price. Indicates expectations of higher prices in the future. The opposite of backwardation.

Counter-Trend — A price move against the dominant trend. Counter-trend moves within an uptrend are pullbacks; within a downtrend, they are rallies. Trading counter-trend is generally riskier than trading with the trend.

Fear/Greed Index — A composite market sentiment indicator developed by CNN Business that measures seven factors to determine whether investors are driven by fear (potential buying opportunity) or greed (potential sell signal).

Forward Curve — A graph showing the prices of futures contracts at different expiration dates. The shape of the curve (contango or backwardation) provides information about market expectations.

Fundamental Analysis — A method of evaluating an asset's intrinsic value by examining economic, financial, and qualitative factors such as revenue, earnings, management, and industry conditions. Often used alongside technical analysis.

Liquidity — The ease with which an asset can be bought or sold without affecting its price. High liquidity means tight spreads and the ability to execute large orders with minimal slippage.

Long — A trading position that profits from an increase in price. Going long means buying an asset with the expectation that its price will rise.

Margin — Borrowed money from a broker to trade larger positions than the account balance allows. Margin amplifies both gains and losses and carries the risk of margin calls.

Market Cap — The total market value of a company's outstanding shares, calculated as share price multiplied by the number of outstanding shares. Used to classify companies as large-cap, mid-cap, or small-cap.

Markup Phase — The rising phase after accumulation in Wyckoff market analysis. The period when smart money drives prices higher as public participation increases.

Max Pain — The strike price at which the most options (both calls and puts) expire worthless, causing maximum financial pain for option holders. A concept in options market analysis.

Momentum — The rate of change of price. Positive momentum means prices are accelerating upward. Negative momentum means prices are accelerating downward. Measured by oscillators like RSI, MACD, and ROC.

OCO (One-Cancels-Other) — An order type where two orders are placed simultaneously, and when one is executed, the other is automatically canceled. Commonly used to set a profit target and stop loss at the same time.

On-Chain — Data derived directly from blockchain transactions in cryptocurrency markets. On-chain metrics include transaction volume, active addresses, exchange flows, and miner activity.

Order Block — A specific price zone where institutional or smart money orders are concentrated, identified as the last candle before a strong directional move. A key concept in Smart Money Concepts (SMC).

PDT (Pattern Day Trader) — A US Financial Industry Regulatory Authority (FINRA) designation for traders who execute four or more day trades within five business days. Requires a minimum account balance of $25,000.

Risk-On — A market environment where investors are willing to take on higher risk, favoring stocks, high-yield bonds, and cryptocurrencies over safe-haven assets. Associated with rising markets and positive sentiment.

Risk-Off — A market environment where investors seek safety, favoring government bonds, gold, and cash over riskier assets. Associated with market uncertainty, declines, and negative sentiment.

Sector Rotation — The shifting of investment capital between different market sectors as the economy moves through different phases of the business cycle. A key concept for intermarket and macro analysis.

Short (Shorting) — A trading position that profits from a decline in price. Selling borrowed shares with the expectation of buying them back at a lower price. Carries unlimited risk in theory.

Smart Money — Institutional investors including banks, hedge funds, mutual funds, and professional trading firms. Smart money is typically better informed and has greater resources than retail traders.

Spread — The difference between the bid price (what buyers are willing to pay) and the ask price (what sellers are asking). A narrower spread indicates higher liquidity.

Volume Profile — A charting tool that displays trading volume at specific price levels over a given period, unlike VWAP which is time-weighted. Shows where the most trading activity occurred.

Wyckoff Accumulation — A phase in the Wyckoff method where smart money builds a position over time, characterized by institutional buying during a period of apparent weakness. Precedes the markup phase.

Wyckoff Distribution — A phase in the Wyckoff method where smart money sells its position to the public, characterized by institutional selling during a period of apparent strength. Precedes the markdown phase.

Yield — The income return on an investment, expressed as a percentage. For stocks, the dividend yield. For bonds, the coupon or current yield. Yield is inversely related to price.

This glossary is your quick-reference companion for the entire Technical Analysis course. Bookmark it, refer back when you encounter unfamiliar terms, and use it to refresh your knowledge. Completing all 43 articles gives you a comprehensive foundation in technical analysis. The next step is practice — apply what you have learned on real charts, keep a journal, and continue learning. Thank you for completing the Worldtickers Technical Analysis course! Start over from the beginning or revisit any article using the navigation above. This content is educational and does not constitute financial advice.