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Technical Analysis

Chart patterns and price-action concepts. 17 indexed terms, 34 additional definitions.

Key Concepts

Accumulation/Distribution Line

The Accumulation/Distribution Line is a volume-based indicator that uses the relationship between price and volume to assess whether a security is being accumulated (bought) or distributed (sold) by institutional investors.

Average True Range (ATR)

Average True Range (ATR) measures market volatility by calculating the average range between high and low prices over a specified period, accounting for gaps, and is used for position sizing and stop-loss placement.

Breakdown

A breakdown occurs when price falls below a support level, signaling potential further downside and often triggering stop-loss orders that accelerate the decline.

Consolidation

Consolidation is a period when a security trades within a defined price range without establishing a clear trend direction, representing a balance between buying and selling pressure before the next directional move.

Cup and Handle

The cup and handle is a bullish continuation pattern resembling a teacup on the chart, where a rounded bottom (cup) is followed by a small downward drift (handle) before a breakout to new highs.

Elliott Wave Theory

Elliott Wave Theory is a technical analysis framework that identifies recurring wave patterns in financial markets, proposing that price moves in predictable five-wave impulse and three-wave corrective cycles driven by crowd psychology.

Fibonacci Extension

Fibonacci extension levels are used to estimate potential profit targets beyond the original price move, projecting where price may travel after a retracement completes.

Flag Pattern

A flag pattern is a continuation chart formation where a sharp price move (the flagpole) is followed by a rectangular consolidation (the flag) that slopes against the prior trend before the trend resumes.

Ichimoku Cloud

The Ichimoku Cloud is a comprehensive technical indicator that defines support and resistance, identifies trend direction, gauges momentum, and provides trading signals using five calculated lines and a shaded cloud area.

Moving Average Convergence Divergence (MACD)

MACD is a trend-following momentum indicator that shows the relationship between two exponential moving averages of a security's price, helping traders identify trend direction and strength.

Parabolic SAR

Parabolic SAR (Stop and Reverse) is a trend-following indicator that places dots above or below price to identify potential reversal points, providing trailing stop levels that accelerate as the trend progresses.

Pivot Points

Pivot points are technical analysis levels calculated from the prior period's high, low, and close prices, used primarily by intraday traders to identify potential support, resistance, and turning points.

Relative Strength

Relative strength compares the price performance of one security against another or against a benchmark index, helping traders identify which assets are outperforming or underperforming the broader market.

Trend Line

A trend line is a straight line drawn on a chart connecting two or more price points that serves as a visual guide for identifying the direction and strength of a price trend.

Volume Profile

Volume Profile displays the amount of trading volume that occurred at each price level over a specified period, revealing where the most and least trading activity took place to identify key support, resistance, and value areas.

Volume-Weighted Average Price (VWAP)

VWAP calculates the average price a security has traded at throughout the day, weighted by volume, serving as a benchmark for institutional execution quality and an intraday support/resistance level for traders.

Williams %R

Williams %R is a momentum oscillator that measures overbought and oversold levels on a scale from 0 to -100, similar to the stochastic oscillator but with an inverted scale.

Show 34 additional definitions ▾
Average Directional Index (ADX)
The Average Directional Index (ADX) measures the strength of a trend regardless of its direction, helping traders determine whether a market is trending or range-bound on a scale from 0 to 100.
Bollinger Bands
Bollinger Bands are a volatility indicator consisting of a middle moving average band with two outer bands set at standard deviations above and below, helping traders identify overbought and oversold conditions.
Breakout
A breakout occurs when price moves above a resistance level or below a support level with increased volume, signaling a potential new trend direction and trading opportunity.
Candlestick Patterns
Candlestick patterns are specific formations created by one or more candlesticks on a price chart that traders use to predict future price direction based on the relationship between open, high, low, and close prices.
Death Cross
A death cross is a bearish technical signal that occurs when a shorter-term moving average (typically the 50-day) crosses below a longer-term moving average (typically the 200-day), indicating a potential shift to a long-term downtrend.
Divergence
Divergence in technical analysis occurs when a price trend and an indicator trend move in opposite directions, often warning of a potential reversal or continuation depending on the type of divergence.
Doji
A doji is a candlestick pattern where the opening and closing prices are virtually equal, creating a cross or plus sign shape that signals market indecision and a potential trend reversal.
Double Bottom
A double bottom is a bullish reversal chart pattern that forms when price reaches a support level twice and holds both times, creating a "W" shape that signals a potential end to a downtrend.
Double Top
A double top is a bearish reversal chart pattern that forms when price reaches a resistance level twice and fails to break through, creating an "M" shape that signals the end of an uptrend.
Engulfing Pattern
The engulfing pattern is a two-candle reversal pattern where the second candle's body completely engulfs the first candle's body, signaling a strong shift in momentum from buyers to sellers or vice versa.
Evening Star
The evening star is a three-candle bearish reversal pattern consisting of a large bullish candle, a small-bodied candle, and a large bearish candle, signaling a potential top and shift from buying to selling pressure.
Exponential Moving Average (EMA)
The Exponential Moving Average (EMA) is a type of moving average that places greater weight on the most recent prices, making it more responsive to new price information than the simple moving average.
Fibonacci Retracement
Fibonacci retracement is a technical analysis tool that uses horizontal lines at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) to identify potential support and resistance levels during a pullback.
Gap Trading
Gap trading involves strategies built around price gaps, which occur when a security opens at a significantly different price than its previous close, creating a visible void on the chart.
Golden Cross
A golden cross is a bullish technical signal that occurs when a shorter-term moving average (typically the 50-day) crosses above a longer-term moving average (typically the 200-day), indicating a potential shift to a long-term uptrend.
Hammer Candlestick
The hammer is a bullish reversal candlestick pattern with a small body and a long lower wick that forms at the bottom of a downtrend, signaling that buyers rejected lower prices.
Hanging Man
The hanging man is a bearish reversal candlestick pattern with a small body and long lower wick that forms at the top of an uptrend, warning that selling pressure is beginning to emerge.
Head and Shoulders
The head and shoulders is a reversal chart pattern consisting of three peaks where the middle peak (head) is the highest, flanked by two lower peaks (shoulders), signaling a potential trend change from bullish to bearish.
Momentum
Momentum in trading measures the rate of change in a security's price, helping traders identify the speed and strength of price movements and whether a trend is accelerating or decelerating.
Money Flow Index (MFI)
The Money Flow Index (MFI) is a volume-weighted momentum oscillator that measures buying and selling pressure using both price and volume data, often called the volume-weighted RSI.
Morning Star
The morning star is a three-candle bullish reversal pattern consisting of a large bearish candle, a small-bodied indecision candle, and a large bullish candle, signaling a shift from selling to buying pressure.
Moving Average
A moving average smooths price data by creating a constantly updated average price over a specific time period, helping traders identify trend direction and potential support or resistance levels.
On-Balance Volume (OBV)
On-Balance Volume (OBV) is a cumulative volume indicator that adds volume on up days and subtracts volume on down days, helping traders confirm trends and detect potential reversals through volume-price divergences.
Overbought
Overbought describes a condition where a security has risen rapidly and may be priced above its fair value, as indicated by technical oscillators like RSI reading above 70, suggesting a pullback may be due.
Oversold
Oversold describes a condition where a security has fallen rapidly and may be priced below its fair value, as indicated by technical oscillators like RSI reading below 30, suggesting a bounce may be due.
Pennant Pattern
A pennant is a continuation chart pattern formed by converging trendlines following a sharp price move, resembling a small symmetrical triangle that typically resolves with a breakout in the direction of the preceding trend.
Price Action
Price action is a trading methodology that makes decisions based on the raw movements of price on a chart, without relying on lagging technical indicators, focusing on candlestick patterns, support/resistance, and market structure.
Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions in a security.
Shooting Star
The shooting star is a bearish reversal candlestick pattern with a small body near the low of the candle and a long upper wick, forming at the top of an uptrend to signal potential selling pressure.
Simple Moving Average (SMA)
The Simple Moving Average (SMA) calculates the arithmetic mean of a security's price over a specific number of periods, giving equal weight to each data point in the lookback window.
Stochastic Oscillator
The stochastic oscillator is a momentum indicator that compares a security's closing price to its price range over a specified period, generating overbought and oversold signals on a 0-to-100 scale.
Support and Resistance
Support and resistance are price levels where buying or selling pressure has historically been strong enough to halt or reverse price movement, forming the foundation of technical analysis.
Triangle Pattern
Triangle patterns are chart formations created by converging trendlines that compress price action into an increasingly narrow range, typically resolving with a breakout that continues or reverses the prior trend.
Wedge Pattern
A wedge pattern is a chart formation created by two converging trendlines that slope in the same direction, with rising wedges typically bearish and falling wedges typically bullish.

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