A candlestick formation that is commonly used to signal the continuation of the current trend. The pattern is formed when a series of candlesticks have demonstrated the following:1. The bar is a large white candlestick within a defined uptrend.2. The second bar is another white candlestick that has gapped above the close of the previous bar.3. The last bar is a red candlestick that closes within the gap between the first two bars. It is important to note that the red candle does not need to fully close the gap. In technical analysis, it is not uncommon to see the price of the asset close the gap created in the price. Sometimes traders get ahead of themselves and send the price higher too quickly, which can result in a slight pullback. The red candlestick that forms the upside tasuiki gap is as a period of slight consolidation before the bulls continue to send the price higher.
A stock's volume when the security closes at a price higher than the previous day's close. In other words, if a stock increases in price during the day, the volume for that day is considered to be up volume.
Refers to the group of investors who hold a short position and are quick to exit their positions at the first sign of strength in the underlying asset. This group of investors looks to capture the gain on a move lower, but they are usually unwilling to take on as much risk as other investors. Weak shorts differ from other traders because they will close their position at the first sign that it will move against them. It is not uncommon for this group of investors exit a position only to see the asset move to a price that would have made the trade profitable if they had left it open.
A weighted measure of how much a stock has risen or fallen over a certain period, usually a year. Generally, more emphasis is placed on recent activity by assigning higher weights to it than those assigned to earlier movements. This helps to give a return figure that has a greater focus on the most current period and is a more relevant measure for short-term analysis. This technique is popular with technical analysts. If the stock was up over the period, it will have a positively weighted alpha. An unchanged stock price has a small weighted alpha. A stock whose price has fallen over the period will have a negatively weighted alpha. Technical analysts use this measure to identify companies that have shown a strong trend over the past year and, more specifically, to focus their attention on companies whose momentum is building.
A price zone in which a stock finds support and begins to trade upward once again. In technical analysis, support occurs not at a finite point, but in a zone. The "density" of the zone of support (how far the price can move down through it) depends on the volume of trading as the price approaches and enters the zone. The higher the volume of trading in the zone of support, the higher the point at which actual support will most likely occur. As the price of a security falls toward a zone of support, it is a test: how far the price moves down through the zone will be an important indicator for future attempts to pass through it.It is important to note that even though higher volume can raise the actual support point within the zone, the chance of the support zone being wiped out is also higher. When trying to catch the bottom of a retracement, it is imperative that stop-loss orders be used.
A price zone in which a stock finds resistance and begins to trade downward. In technical analysis, that support occurs not at a finite point, but in a zone. The "density" of the zone of resistance (how far up the price can move through it), depends on the volume of trading as the price approaches and enters the zone. The higher the volume of trading in the zone of resistance, the lower the point at which the actual resistance will most likely occur. As the price of a security climbs toward a zone of resistance, it is a test: how far the price moves down through the zone will be an important indicator for future attempts to pass through it.It is important to note that even though higher volume can lower the actual resistance point within the zone, the chance of the resistance zone being wiped out is also higher. When trying to pick the top of a retracement, it is imperative that stop-loss orders be used.
A trend following indicator that is used to predict when a given security's momentum is reversing. The indicator is used by traders to eliminate random price fluctuations and attempts to profit when the trend changes. The Zig Zag tool is often used in wave analysis to determine the positioning of the stock in the overall cycle. Like many trend following indicators, the disadvantage is that the result is based off past price history and doesn't change direction until a certain move occurs. Given the lag, many traders will want to use the Zig Zag indicator to confirm the direction of the trend rather than timing an entry/exit.
In technical analysis, it is a naturally occurring trading pattern present in all financial markets. The pattern is composed of five waves showing supply and demand and a fight towards an equilibrium price. These patterns can develop over short- and long-term time frames such as minutes or weeks and are used to predict where a price is heading and when it will get there. Source: www.harmonictrader.com If identified correctly, Wolfe waves can be used to accurately predict the scope (equilibrium price) of the underlying security. To identify Wolfe waves, they must have the following characteristics:Waves 3-4 must stay within the channel created by 1-2Wave 1-2 equals waves 3-4 (shows symmetry)Wave 4 is within the channel created by waves 1-2There is regular time between all wavesWave 5 exceeds trendline created by waves 1 and 3 and is the entry pointThe estimated price is a price along the trendline created by waves 1 and 4 (point 6).