Technical analysis
Candles, levels, trends, indicators, patterns and Smart Money.
51 terms · 2 guides
Guides
Breakout and retest: how to read the setup
The classic scenario: level, breakout, return, and a trade plan with entry, stop and target.
Read →How to read a candlestick chart: Japanese candles for beginnersCandlestick charts are the most popular way to look at price. Here is how one candle works, how to read them in a row, and the…
Read →For beginners
Bollinger BandsBollinger Bands are an indicator made of a moving average (usually the 20 SMA) and two lines above and below it set two standard…BeginnerBreakoutA breakout is price moving beyond a key level: resistance, support or the edge of a range. It can be true or false, so many traders wait…BeginnerCandlestickA candlestick is a chart element showing the open, high, low and close (OHLC) for one period. The body spans open to close; the wicks…BeginnerDojiA doji is a candle whose open and close are almost equal, so it has almost no body. It shows indecision: neither buyers nor sellers won…BeginnerDouble top and double bottomA double top is a reversal pattern of two highs at roughly the same level with a pullback between them, and a double bottom is its mirror…BeginnerDow theoryDow theory is a set of trend principles drawn from Charles Dow's writing in the late 19th century. Most technical analysis rests on it:…BeginnerEMAEMA (exponential moving average) is a line of the average price over N candles in which recent prices weigh more than older ones. It…BeginnerEngulfing patternAn engulfing pattern is a two-candle pattern where the second candle's body fully covers the first one's body and moves the other way. It…BeginnerFakeoutA fakeout (false breakout) is when price moves beyond a support or resistance level but quickly returns and heads the other way, trapping…BeginnerFibonacci retracementFibonacci retracement levels are horizontal lines at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a price move, where traders look for a pullback…BeginnerFlag and pennantFlags and pennants are trend continuation patterns: a short pause after a sharp move (the pole), after which price often keeps going in…BeginnerGolden cross and death crossA golden cross is when the 50-day moving average crosses above the 200-day one, and a death cross is when it crosses below. They are read…BeginnerHammer and hanging manHammer and hanging man are candles with a small body at the top and a long lower wick. After a drop it is a hammer (hints at a rise);…BeginnerHead and shouldersHead and shoulders is a reversal pattern of three peaks where the middle one (the head) is higher than the two on the sides (the…BeginnerHigher highs and higher lowsHigher highs and higher lows (HH and HL) are rising peaks and rising dips that together form an uptrend. A downtrend is the opposite:…BeginnerMACDMACD is a trend and momentum indicator that shows the difference between two exponential moving averages (usually 12 and 26) along with…BeginnerOverbought and oversoldOverbought and oversold describe a price that has risen or fallen too fast compared with its recent history. They are usually measured…BeginnerPin barA pin bar is a candle with a long wick on one side and a small body at the opposite end. The wick shows that price was sharply rejected…BeginnerPrice actionPrice action is a trading approach where decisions come from price movement itself: candles, levels and market structure, with few or no…BeginnerPrice channelA price channel is price moving between two parallel lines: a trendline and a line drawn parallel to it through the opposite extremes.…BeginnerRange (sideways market)A range (sideways market) is a period when price moves between horizontal support and resistance with no clear trend up or down.BeginnerRetestA retest is price returning to a level it just broke, to test it. If old resistance holds as support (or the reverse), it supports the…BeginnerRSIRSI (Relative Strength Index) is an oscillator from 0 to 100 that compares the strength of recent price gains and losses. Above 70 is…BeginnerSMA (simple moving average)An SMA (simple moving average) is the plain average of the closing prices over the last N candles, recalculated with each new candle and…BeginnerSupport and resistanceSupport and resistance are levels where price previously stopped or turned. Support sits below the price, resistance above it.BeginnerTimeframeA timeframe is the stretch of time one candle or bar covers on a chart: 1 minute, 1 hour, 4 hours, a day, a week. It decides which picture…BeginnerTrendA trend is a sustained direction of price. In an uptrend each peak and trough is higher than the last; in a downtrend each is lower.BeginnerTrendlineA trendline is a sloped line on a chart drawn through the lows in an uptrend or the highs in a downtrend. It shows the direction and angle…BeginnerTriangle patternA triangle is a chart pattern where price swings between two converging lines and the swings get smaller. It can be symmetrical, ascending…BeginnerVolatilityVolatility is how much the price swings over a period. High volatility brings more opportunity but also more risk.BeginnerVolumeVolume is the amount of an asset bought and sold in a period (a candle, a day). It shows how actively people are trading at that price.Beginner
Advanced
ATR (average true range)ATR (average true range) is a volatility indicator that shows how far price has moved per candle on average over the last N candles…AdvancedBOS (break of structure)A break of structure (BOS) is price breaking the last significant high in an uptrend or the last significant low in a downtrend. It…AdvancedCHoCH (change of character)A change of character (CHoCH) is the first break of market structure against the current trend. It is an early signal that the trend may…AdvancedConfluenceConfluence is when several independent signals line up at the same price or zone, such as a level, a Fibonacci ratio and the trend. The…AdvancedDivergenceDivergence is a mismatch between price and a momentum indicator (RSI, MACD), when price makes a new high or low but the indicator does…AdvancedElliott wavesElliott wave theory says markets move in repeating waves: five waves with the trend (an impulse) and three waves against it (a correction).AdvancedFair Value Gap (FVG)A Fair Value Gap (FVG) is a price gap inside three candles: the wicks of the first and third candles do not overlap. In SMC price often…AdvancedHeikin-AshiHeikin-Ashi is a candlestick chart type where each candle is built from averaged prices. It smooths out noise and shows trends more…AdvancedIchimoku CloudIchimoku Cloud is a five-line indicator that shows trend, support and resistance, and momentum on one chart. It was developed in Japan in…AdvancedKillzone (ICT)A killzone is an ICT term for short time windows around the opening of major trading sessions, when price usually moves most: the Asian,…AdvancedLiquidity sweepA liquidity sweep is a quick poke through a high or low where stops cluster, followed by a return. In SMC it is read as big players…AdvancedMarket structureMarket structure is the pattern of price highs and lows: HH, HL, LH, LL. It shows whether there is a trend and when that trend may be…AdvancedOrder blockAn order block is a Smart Money Concepts idea: the last opposite candle before a strong impulse. It is a hypothesis about where big…AdvancedSmart Money Concepts (SMC)Smart Money Concepts (SMC) is a chart-reading approach that tries to follow large players through liquidity, order blocks, imbalances and…AdvancedStochastic oscillatorThe stochastic oscillator is a 0 to 100 indicator that shows where price closed relative to the high-low range of the last N candles…AdvancedSupply and demand zonesSupply and demand zones are price areas where a sharp rally (demand) or drop (supply) started before. The idea is that unfilled orders may…AdvancedVolume profileVolume profile is a histogram on the side of the chart showing how much volume traded at each price level. It helps you find the zones…AdvancedVWAPVWAP (volume-weighted average price) is the average trade price over a period, with each price weighted by the volume traded at it. It is…AdvancedWedgeA wedge is a pattern where price moves between two converging lines that both slope the same way. A rising wedge more often breaks down, a…AdvancedWyckoff methodThe Wyckoff method is a way of reading markets through accumulation and distribution cycles, using price and volume to see whether large…Advanced