NCFM Technical Analysis key terms

A method of forecasting price direction by studying past market data, mainly price and volume, on the assumption that market action discounts everything and that price trends tend to persist.

A foundational framework holding that price moves in three nested trends (primary, secondary, minor), that trends persist until clearly reversed, and that index movements should confirm each other.

The general direction in which price is moving over a chosen horizon, classified as up, down, or sideways, and identified by a sequence of higher highs and higher lows or the reverse.

A peak that rises above the previous peak in the same series, one of the structural signals that an uptrend remains intact and that buyers are still willing to pay more.

A trough that stays above the previous trough, showing that selling pressure is being absorbed at progressively higher levels and supporting the case for an ongoing uptrend.

The interval represented by one bar or candle on a chart, such as daily or weekly; it determines the scale of trends and signals a trader actually sees and acts on.

A technique of checking the same instrument on several time frames, using the higher one to establish trend direction and the lower one to time entries in that direction.

The number of shares or contracts traded during a bar or period, used to gauge the strength of a price move and the level of participation behind it.

The principle that a price move is more trustworthy when accompanied by above-average volume, and that rallies or declines on thin volume are more likely to fail.

A price chart where each bar shows open, high, low, and close, with a thick body between open and close and thin wicks marking the extremes, making sentiment easier to read.

A candlestick whose open and close are nearly equal, producing a very small body and often signaling indecision or a possible turning point after an extended move.

A two-candle formation in which the second real body completely covers the first, suggesting a shift in control from sellers to buyers or the reverse at a turning point.

A reversal formation with three peaks, the middle one highest, joined by a neckline; a decisive close through that line signals a likely change from uptrend to downtrend.

The support or resistance line drawn across the reaction lows or highs of a reversal formation, whose breach confirms the pattern and often serves as a measuring reference.

A reversal pattern where price tests the same resistance twice and fails to break through, with confirmation coming only when the intervening support is broken to the downside.

A chart formation indicating that the prevailing trend is likely to change direction, typically confirmed only after a key support or resistance level is decisively breached.

A formation such as a flag or triangle that represents a pause or consolidation within an existing trend and is expected to resolve in the direction of that trend.

A price move beyond a defined support, resistance, or pattern boundary, ideally on expanding volume, which is treated as a signal that a new directional move has begun.

A move past a key level that quickly reverses back inside the prior range, trapping traders who acted on it and often preceding a sharp move in the opposite direction.

A straight line drawn through successive higher lows in an uptrend or lower highs in a downtrend, used to visualize the trend and to flag its possible weakening.

A pair of roughly parallel trend lines enclosing price action, with the lower line acting as support in an uptrend and the upper line as resistance in a downtrend.

A price area where buying interest has previously been strong enough to halt or reverse a decline, and which is watched as a potential entry or stop placement zone.

A price area where selling has previously overcome buying and stopped an advance, making it a reference point for profit taking, stop placement, or breakout watching.

The tendency of a broken resistance level to act as new support, or a broken support level to act as new resistance, once price has moved decisively through it.

A psychologically significant price such as a whole hundred or thousand, where orders and stops often cluster and where price frequently hesitates or reacts.

An average of closing prices over a rolling window, plotted as a smoothed line that helps identify trend direction and filter out short-term noise in price data.

A moving average that weights recent prices more heavily than older ones, so it turns faster than a simple average and reacts sooner to a change in direction.

A signal generated when a faster moving average crosses above or below a slower one, commonly used to flag the start of a new trend or the end of an old one.

A bullish crossover in which a shorter-term moving average, such as the 50-day, rises above a longer-term average, such as the 200-day, suggesting improving momentum.

A bearish crossover in which a shorter-term moving average falls below a longer-term average, widely watched as evidence that intermediate or longer-term momentum has turned negative.

Bands plotted a set number of standard deviations above and below a moving average, widening when volatility rises and narrowing when it falls, to frame overextended price moves.

An indicator that fluctuates within a bounded range around a midpoint, used to measure momentum and to flag overbought or oversold conditions rather than trend direction.

A momentum oscillator scaled from 0 to 100 that compares average gains with average losses over a set period, with readings above 70 or below 30 often called overbought or oversold.

A situation where price makes a new high or low while a momentum indicator fails to confirm it, hinting that the prevailing move is losing internal strength.

A momentum tool built from the difference between two exponential moving averages, plotted with a signal line and histogram to show shifts in trend strength and direction.

A momentum indicator comparing the latest close with the price range over a set period, oscillating between 0 and 100 and used to time entries within an established trend.

A condition where an oscillator suggests price has risen quickly and may be due for a pause or pullback, though it does not by itself signal a reversal in trend.

A condition where an oscillator suggests price has fallen quickly and may be due for a bounce, which in a strong downtrend is often only a temporary relief rather than a bottom.

The relationship between the amount a trade risks to its stop and the profit targeted if it works, used to judge whether a setup is worth taking before entry.

An order placed to close a position at a specified price to cap loss, ideally set from chart structure such as support or resistance rather than an arbitrary dollar amount.

The process of deciding how many shares or contracts to trade so that a single loss stays within a fixed fraction of capital, linking risk per trade to stop distance.

A series of quick, alternating signals that trigger entries and stops in a narrow range, typically in choppy markets and a key reason to filter signals and control trade frequency.