Technical Analysis Vocabulary

a price point where buying interest is strong enough to prevent further decline

“The stock bounced repeatedly off the $50 support level before finally breaking through.”

a price point where selling pressure is strong enough to prevent further advance

“The stock failed to break above the resistance level at its 52-week high.”

a calculation that smooths price data by creating a constantly updated average price over a defined period

“When the 50-day moving average crossed below the 200-day, traders interpreted it as a bearish signal.”

a chart element showing the open, close, high, and low prices for a period, resembling a candle

“The long-wick candlestick suggested sellers drove the price down before buyers regained control.”

when a price moves above a resistance level or below a support level with increased volume

“The breakout above $200 on heavy volume confirmed the bullish trend continuation.”

a temporary recovery in a declining asset's price, followed by a continuation of the downtrend

“Investors who mistook the dead cat bounce for a reversal suffered further losses.”

a chart pattern with three peaks — a higher middle peak flanked by two lower ones — signaling a trend reversal

“The head and shoulders pattern formed over six months, warning of the major decline ahead.”

relative strength index — a momentum oscillator measuring the speed and magnitude of recent price changes, scaled 0 to 100

“An RSI above 70 indicated the stock was overbought and potentially due for a pullback.”

moving average convergence divergence — a trend-following momentum indicator showing the relationship between two moving averages

“The MACD crossover signal triggered the algorithm to enter a long position.”

horizontal lines on a chart at key Fibonacci ratios indicating where support or resistance may occur

“The stock retraced to the 61.8% Fibonacci level before resuming its uptrend.”

describes a security that has risen sharply and may be due for a price correction

“With an RSI of 85, the stock was deeply overbought after a three-week rally.”

the total number of shares or contracts traded for a security during a given period

“The breakout was confirmed by volume three times the 30-day average.”