An indicator or chart pattern that provides evidence that the initial trading alert in question is indicative of an actual trading opportunity. Traders look to other technical indicators to confirm their expected prediction so that they can have as many technical factors working in their favor as possible. This increases the probability of making a highly successful trade. For example, a trader who witnesses a short-term moving average cross above a longer-term moving average would predict that the upward momentum over the coming weeks is likely to increase. Before this trader decides to place an order for the security he or she may want to look to other indicators as confirmation of the initial prediction. This chart confirmation is used to increase the conviction of the trader, and it generally becomes more influential when three or more indicators are predicting the same type of movement.
A price gap found on a price chart for an asset. These gaps are brought about by normal market forces and, as the name implies, are very common. They are represented graphically by a non-linear jump or drop from one point on the chart to another point. In general, there is no major event that precedes this type of gap. Common gaps generally get filled relatively quickly (usually within a couple of days) when compared to other types of gaps. Common gaps are also known as "area gaps" or "trading gaps".
An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold. The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. It is computed with the following formula: The CCI has seen substantial growth in popularity amongst technical investors; today's traders often use the indicator to determine cyclical trends in not only commodities, but also equities and currencies.The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset's price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.
Following a protracted period of selling or buying, a point wherein market trends are retarded or discontinued. At a selling climax, the market is characterized by a trend reversal whereby the market begins to buy stocks and prices rise. For a buying climax, the opposite occurs, and the market begins to sell, resulting in lower prices. The climax is merely the highest point of selling or buying and can be followed by many trend reversals.
A component of the Ichimoku Kinko Hyo indicator that is created by plotting recent price movement 26-periods behind the latest closing price. The number of periods used to lag the Chikou span is customizable so that transaction signals are generated more or less frequently. Also known as the "lagging span". The trend is deemed to be upward when the Chikou span is located above the closing prices and downward when the indicator is located below them. Many traders watch for the Chikou span to cross below the closing prices as a signal that the price of the asset is getting exhausted and is likely to experience a pullback.
Another name for a technical analyst. This is a person who uses charts to identify patterns that can suggest future activity. Chartists use technical analysis for just about any type of financial security, especially stocks and commodities.
1. The system of intermediaries between the producers, suppliers, consumers, etcetera, for the movement of a good or service. 2. The technical range between support and resistance levels that a stock price has traded in for a specific period of time. 1) There are different types and flavors of channels. Examples are sale channels, distribution channels, Internet channels, and so forth. 2) A breakout of a technical channel is seen as a bullish (on an upward breakout) or bearish signal (on a downward breakout).
A technical momentum indicator invented by the technical analyst Tushar Chande. It is created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period. This oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator because it is range bounded (+100 and -100). The security is deemed to be overbought when the momentum oscillator is above +50 and oversold when it is below -50. Many technical traders add a nine-period moving average to this oscillator to act as a signal line. Bullish signals are generated when the oscillator crosses above the signal, and bearish signals are generated when the oscillator crosses down through the signal.