A technical indicator developed by Alexander Elder that measures the amount of buying and selling pressure in the market. This indicator consists of two separate indicators known as "bull power" and "bear power". These figures allow a trader to determine the position of the price relative to a certain exponential moving average (EMA). Bull Power = Daily High - n-period EMABear Power = Daily Low - n-period EMA Technical traders will use the values of the bull and bear power along with divergence to make transaction decisions. Long positions are taken when the bear power has a value below zero but is increasing and the bull power's latest peak is higher than it was previously. A short position is taken when the bull-power value is positive but falling and the bear power's recent low is lower than any other previous bottom. The slope of the EMA can also be used in both cases to help confirm the direction of the trend.
A technical momentum indicator that is used to illustrate the relationship between the rate of an asset's price change and its volume. This indicator attempts to identify the amount of volume required to move prices. Generally a value greater than zero is an indication that the stock is being accumulated (bought) and negative values are used to signal increased selling pressure.A high positive value appears when prices move upward on low volume. Strong negative numbers indicate that price is moving downward on low volume. A moving average of the indicator can be added to act as a trigger line, which is similar to other indicators like the MACD. Transaction signals can be generated when the indicator crosses over a 9-day moving average, but are generally made when the indicator crosses over the zero line. Traders use the smoothed version of this indicator in an attempt to eliminate false signals.
An indicator used in technical analysis that determines overbought and oversold conditions of a particular asset. This indicator is very similar to the relative strength index (RSI). The main difference between the two is that the RSI uses a fixed number of time periods (usually 14), while the dynamic momentum index uses different time periods as volatility changes. This indicator is interpreted in the same manner as the RSI where readings below 30 are deemed to be oversold and levels over 70 are deemed to be overbought. The number of time periods used in the dynamic momentum index decreases as volatility in the underlying asset increases, making this indicator more responsive to changing prices than the RSI.
A type of candlestick pattern that signals indecision among traders. The pattern is formed when the stock's opening and closing prices are equal and occur at the high of the day. The long lower shadow suggests that the forces of supply and demand are nearing a balance and that the direction of the trend may be nearing a major turning point. A dragonfly doji pattern is a relatively difficult chart pattern to find, but when it is found within a defined trend it is often deemed to be a reliable signal that the trend is about to change direction. As you can see from the chart, on the day of the dragonfly doji (shown within the black box), traders realize that the price was sold down to unjustifiably low levels so they send the price back up to where the stock opened. The close near the day's open suggests that demand is again starting to outweigh supply.
Describes the price movement of a financial asset when the overall direction is downward. A formal downtrend occurs when each successive peak and trough is lower than the ones found earlier in the trend. Notice how each successive peak and trough is lower than the previous one. For example, the low at Point 3 is lower than the low at Point 1. The downtrend will be deemed broken once the price closes above the high at Point 4.Downtrend is the opposite of uptrend Many traders seek to avoid downtrends because they can drastically affect the value of any investment. A downtrend can last for minutes, days, weeks, months or even years so identifying a downtrend early is very important. once a downtrend has been established (series of lower peaks) a trader should be very cautious about entering into any new long positions.
A price movement through an identified level of support or resistance that does not have enough momentum to maintain its direction. Since the validity of the breakout (or breakdown) is compromised, many traders close their positions and the price fails to make the sharp move that many were expecting. A failed break is also commonly referred to as a "false breakout". As you can see from the chart above, technical traders who identified the descending triangle would expect a substantial move lower once the price was able to break below the $21.50 support. However, in the event of a failed break, the move lower would not occur and many traders would be forced to realize a significant loss. Many technical traders will use other technical indicators to confirm that the breakout is valid and that the momentum will likely continue.
The process of analyzing current and historical data to determine future trends. Stock analysts use various forecasting methods to determine future stock price movements, earnings, etc. Economists use forecasting techniques in order to determine future economic trends.
A group of charts that provide price and volume activity together on one data point over a specified time frame. Footprint charts, provided by MarketDelta, attempt to provide traders with increased price transparency and a clearer picture of market activity, similar to that of a level II quote or depth-of-market order book.There are several types of Footprint charts: Footprint Profile - Shows traders the volume at each price through a vertical histogram, in addition to the regular Footprint bars. The Footprint Profile allows traders to see at what prices liquidity is pooling. Bid/Ask Footprint - Adds color to the real-time volume for easier visualization of buyers and sellers probing the bid or ask. Using the Bid/Ask Footprint, traders can see whether it is the buyers or the sellers influencing a price move. Delta Footprint - Displays the net difference between volume initiated by buyers and volume initiated by sellers at each price. The Delta Footprint is used by traders to help confirm that a price trend has started and will continue. Volume Footprint - Different from a volume histogram on traditional charts, the Volume Footprint segments volume not only by time, but by price as well. This chart is meant to help traders determine points of capitulation. The goal of the Footprint charts is to provide both volume and price data to the trader in one data point so that the eyes need to focus in only one place. It also allows traders to see "within" the price bar to provide more transparency over a traditional chart.Footprint charts are available through monthly subscriptions with MarketDelta in addition to requiring a data feed from a participating vendor.