The following is a list of terms used in association with Japanese Candlestick Analysis. Some terms are purely of Western origin; others are purely of Japanese origin. Many are used for description in both Western and Japanese techniques, becoming intermingled through the years. Read below to further your stock analysis education.
The conventional graphic depiction of price activity. The trading range is illustrated with a vertical line representing the high to low prices during a time period. Open price is shown by a short horizontal line attached to the left side of a vertical line, the close is a horizontal line to the right side. Price is represented on the vertical scale of the chart. Time is represented on the horizontal scale.
A topping or bottoming action. Occurring at the end of an extended move. Prices move sharply and rapidly in the direction of the current trend on high volume. If the price reverses direction after this movement, a blow-off has occurred.
When prices gap away from a technically defined area, such as a congestion area or a trendline.
The movement that pushes through a resistance level or a support level.
When a move or an indicator substantiates the anticipated action resulting from another indicator.
Trading activity where the price movement stays within an observable trading range for an extended period of time.
Trading in a range of the congestion area with the implication that the trend is resting and will resume the direction of the current trend.
A pattern that has been observed to indicate that the current trend will continue.
When short-term moving averages cross under the longer-term moving averages and a bearish signal is given.
Also known as a stalling pattern, prices are coming to a point of a reversal.
The disparity between indicators when a price action has made a move. One indicator confirms that the move was correct, the other shows the opposite. For example, if prices hit high and the relative strength index does not, a divergence has occurred.
An easily recognized technical pattern illustrated by a W-shaped bottom where prices reverse at approximately the same lows.
Price movement that resembles an M where the highs are approximately the same.
Prices gap down in the next time period to levels below the total trading range of the previous time period.
Prices trading lower usually represented by lower lows and/or lower highs.
Stay tuned for next week’s Glossary with Terms E-L.
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