Technical Analysis
Price and volume carry information, and reading them is what technical analysis does.
As the deepest category on the site, its explainers span chart types from candlesticks to Heikin-Ashi, trend structure, support and resistance, breakouts and false breakouts, and the difference between a retracement and a reversal, then momentum and trend indicators, volatility bands, volume tools, and the classic chart patterns.
Investing With Purpose treats technicals as a framework for probability and risk, never a crystal ball.
The aim is to read a chart, structure sensible entries and exits, and understand the short-term price action that fundamentals alone will not explain.
It is the most thoroughly covered subject in the library.
A candlestick chart plots the open, high, low, and close for each period as a single shape that looks like a candle…
A bar chart, often called an OHLC bar chart, plots the open, high, low, and close for each period as a vertical line…
A line chart connects the closing prices of each period with a continuous line. It is the simplest chart style in…
A trend is the general direction a market is moving over a chosen timeframe. Almost every other tool in technical…
Support and resistance are the price zones where buyers or sellers have repeatedly stepped in. They form the backbone…
A breakout is a decisive move through a prior support or resistance level, usually accompanied by rising volume.…
A false breakout happens when price pokes beyond a support or resistance level, fails to follow through, and quickly…
A retracement is a temporary pullback inside an ongoing trend. A reversal is the trend itself changing direction.…
Consolidation is a period when price oscillates within a defined range instead of trending. It reflects a temporary…
A moving average smooths a price series into a single line that updates each bar. It is the most basic tool in…
RSI is a momentum indicator that tells you how stretched a stock's recent gains are relative to its recent losses. It…
The golden cross and the death cross are the two most famous moving average crossover signals. Both rely on the 50-day…
A doji is a candlestick with almost no body, meaning the open and close for the period were nearly equal. It is the…
The hammer candle pattern is a single bar that suggests a falling market is about to turn back up. It prints after a…
The hanging man candle pattern is a single bar that warns a rally may be ending. Its shape is identical to the hammer,…
The inverted hammer pattern is a single candlestick that hints at a bullish reversal after a downtrend. It has a small…
The shooting star candle pattern is a single bar that warns a rally may be exhausted. It has a small real body at the…
This doji types overview walks through the five common variants of the doji candlestick. Each shows indecision in a…
The long-legged doji is a candlestick with a very small body and long upper and lower shadows of similar length. It…
The dragonfly doji is a candlestick that looks like the letter T. Open, high, and close print at essentially the same…
The gravestone doji is a candlestick shaped like an upside down T. Open, low, and close print at essentially the same…
The four-price doji is the rarest doji variant. Open, high, low, and close all print at exactly the same level, so the…
The spinning top candle is a bar with a small real body roughly centered between long upper and lower shadows. It tells…
A marubozu candle is a candlestick with no upper or lower shadow. The open and close sit at the extreme high and low of…
The three white soldiers pattern is a bullish reversal signal made of three long green candles in a row. Each bar opens…
The three black crows pattern is a bearish reversal signal built from three long red candles in a row. Each bar opens…
The evening star pattern is a three-candle bearish reversal that appears at the top of an uptrend. A long green candle,…
The morning star pattern is a three-candle bullish reversal that appears at the bottom of a downtrend. A long red…
Dark cloud cover is a two-candle bearish reversal pattern that prints after an uptrend. A long green candle is followed…
The piercing line pattern is a two-candle bullish reversal that prints after a downtrend. A long red candle is followed…
The bullish harami pattern is a two-bar reversal in which a small green candle's body sits entirely inside the body of…
Heikin-Ashi is a Japanese charting technique that smooths standard candlesticks by averaging recent prices. The result…
Multi-timeframe analysis is the practice of looking at the same security on two or three different chart intervals…
A price gap is an area on a chart where no trading occurred, created when one bar opens meaningfully away from the…
The Stochastic Oscillator is a momentum indicator that compares where a stock closed to the high-low range of its…
Stochastic RSI, often written StochRSI, is a momentum oscillator that applies the Stochastic formula to the values of…
The Average Directional Index, usually written ADX, measures how strong a trend is without telling you which direction…
Williams %R is a momentum oscillator that shows where the current close sits inside the recent high-to-low range. It…
Rate of Change is the plain momentum indicator: it measures the percentage change in price over a fixed lookback.…
The Commodity Channel Index measures how far the current typical price has strayed from its recent average, scaled so…
MACD, short for Moving Average Convergence Divergence, is a momentum and trend indicator built from two exponential…
Bollinger Bands wrap a moving average in a pair of volatility-based envelopes. They show at a glance whether a stock is…
Donchian Channels plot the highest high and lowest low over a fixed lookback window. They are the simplest way to…
Historical volatility measures how much an asset's returns have actually varied over a past window, expressed as an…
On-Balance Volume is a running total of volume that adds each day's volume when price closes up and subtracts it when…
VWAP is the average price a security has traded at during the session, with each price weighted by the volume that…
The Accumulation/Distribution Line is a cumulative volume indicator that weights each day's volume by where the close…
Volume Profile is a horizontal histogram plotted on a price chart that shows how much volume traded at each price level…
The Money Flow Index is a momentum oscillator that works like the Relative Strength Index but with volume baked into…
The head and shoulders is a reversal chart pattern that signals a prior uptrend may be giving way to a downtrend. It…
ATR is a volatility indicator that tells you how much an asset typically moves in a single period. It is a magnitude…
Flags and pennants are short consolidation patterns that appear after a sharp, high-volume move. They are treated as…
Keltner Channels are a volatility envelope that wraps a moving average in bands built from Average True Range instead…
The cup and handle is a bullish continuation pattern popularized by William O'Neil. It shows a stock digesting a prior…
Wedges are consolidation patterns where price is squeezed between two converging trendlines that lean in the same…
The hammer and the hanging man are the same shape: a small body at the top of the range with a long lower shadow and…
An engulfing pattern is a two-candle reversal signal in which the second candle's real body completely swallows the…
The morning star and evening star are three-candle reversal patterns that mark potential turning points at the end of…
A shooting star is a single-candle bearish reversal pattern that appears after an uptrend. It has a small body at the…
The Ichimoku Cloud is a Japanese charting system that combines trend, momentum, and support and resistance into one…
Double tops and double bottoms are reversal patterns shaped like the letters M and W. They mark places where price…
Dow Theory is the original framework of modern technical analysis. It was built from a series of editorials that…
Triangles are consolidation patterns that form when a price range narrows between two converging trendlines. They…
Point and Figure (P&F) is a charting style that strips time and volume off the chart and plots only price, using…
Renko is a Japanese charting style that ignores time and volume and plots only price movement in fixed-size blocks…
Fibonacci retracement is a charting tool that marks likely pullback zones inside an existing trend using ratios drawn…
A pivot point is a predetermined price level derived from the prior period's high, low, and close that acts as a…
The SMA simple moving average is the most basic smoothing tool in technical analysis. It takes the last N closing…
The EMA exponential moving average gives more weight to recent prices and less to older ones. It tracks price faster…
The WMA weighted moving average is the middle ground between a simple moving average and an exponential one. It applies…
The **rate of change percent ROC** is a pure momentum oscillator that measures the percentage price change between…
The **absolute price oscillator**, or APO, is a momentum indicator that plots the raw difference between two…
The **percentage price oscillator PPO** is a momentum indicator that plots the difference between two exponential…
**Floor pivot points classic**, often just called pivots, are a set of seven horizontal price levels calculated from…
**Camarilla pivot points** are an intraday support and resistance system that builds eight levels around the prior…
**Woodie pivot points** are a pivot variant developed by trader Ken Woodie that gives the previous session's closing…
**DeMark pivot points** are a conditional pivot system developed by Tom DeMark in his work on market timing and…
**Fibonacci pivot points** keep the classic central pivot formula but replace the floor-style support and resistance…
The bullish engulfing pattern is a two-bar bullish reversal in which a green candle's real body completely covers the…
The bearish engulfing pattern is a two-bar bearish reversal in which a red candle's real body completely covers the…
The **bearish harami pattern** is a two-candle reversal signal that prints at the top of an uptrend. A long bullish…
The **three inside up** is a three-candle bullish reversal pattern that builds on a bullish harami by adding a…
The **three inside down** is a three-candle bearish reversal pattern that confirms a bearish harami with a lower third…
The **abandoned baby bullish** pattern is a rare three-candle reversal that prints at the end of a downtrend. A long…
The **abandoned baby bearish** pattern is a rare three-candle reversal that prints at the top of an uptrend. A long…
The **kicker candle pattern** is a two-bar reversal built from two opposing marubozu candles separated by a gap. It…
The **belt hold pattern** is a single-candle reversal that prints with no shadow on one side of a long body. The…
The **tweezer tops pattern** is a two-candle bearish reversal in which two consecutive candles print identical or…
The **tweezer bottoms pattern** is a two-candle bullish reversal in which two consecutive candles print identical or…
The **stick sandwich pattern** is a rare three-candle formation where two same-colored candles sandwich a smaller,…
The separating lines pattern is a two-candle continuation signal in which a counter-trend candle is followed by a…
The thrusting candle pattern is a two-bar bearish continuation in a downtrend. A buyer push that opens with a gap down…
The in-neck candle pattern is a two-bar bearish continuation. A green candle opens with a gap down inside a downtrend,…
The on-neck candle pattern is a two-bar bearish continuation in a downtrend. A long red candle is followed by a short…
The three line strike pattern is a four-candle formation where three candles in one direction are wiped out by a single…
The mat hold pattern is a five-candle bullish continuation formation. A long green candle is followed by a small…
Rising three methods is a five-candle bullish continuation pattern from classical Japanese candlestick theory. One long…
Falling three methods is a five-candle bearish continuation pattern. One long red candle is followed by three small…
The dumpling top pattern is a multi-candle bearish reversal that forms at the peak of an uptrend. It is the candlestick…
The fry pan bottom pattern is a multi-candle bullish reversal that forms at the end of a downtrend. It is the…
The ascending triangle pattern is a bullish continuation formation built from a flat horizontal resistance line above…
The descending triangle pattern is the mirror image of the ascending version. A flat horizontal line at the bottom…
The symmetric triangle pattern, also called a coil, is a sideways consolidation with two converging trendlines that…
The bull flag pattern is a short consolidation that follows a sharp rally and usually resolves with another leg higher.…
The bear flag pattern is the bearish mirror of the bull flag. A near vertical decline is followed by a tight upward…
The bull pennant pattern is a small symmetric triangle that forms after a sharp rally and usually resolves with another…
The bear pennant pattern is the bearish version of the bull pennant. A near vertical decline is followed by a small…
The rising wedge pattern is a narrowing price formation made of two upward sloping trendlines, where the lower support…
The falling wedge pattern is the bullish mirror of the rising wedge. Two downward sloping trendlines converge as price…
Rectangle pattern trading uses two horizontal lines, one drawn through a series of comparable highs and one through…
An ascending channel is a rising price corridor bounded by two parallel trendlines that both slope upward. Price drifts…
A descending channel is a falling price corridor bounded by two parallel trendlines that both slope downward. Price…
A broadening formation is a chart pattern where price swings get wider over time, tracing two trendlines that diverge…
A megaphone pattern is a broadening formation where each rally makes a higher high and each pullback cuts to a lower…
A diamond top pattern is a bearish reversal that forms at the end of an uptrend. Price first broadens into wider…
A diamond bottom pattern is a bullish reversal that forms at the end of a downtrend. Price first broadens into wider…
A double top pattern is a bearish reversal made of two peaks at roughly the same level, separated by a valley. It only…
A double bottom pattern is a bullish reversal that forms when price falls to a low, rebounds, then drops a second time…
A triple top pattern is a bearish reversal that forms when price reaches the same high three times and fails to break…
A triple bottom pattern is a bullish reversal that forms when price falls to the same low three times, holds each time,…
A rounded top pattern is a slow, dome-shaped formation where price rises, levels off, and gradually curves over into a…
A rounded bottom saucer is a slow, bowl-shaped reversal where price declines, flattens at a low, and gradually curves…
An island reversal pattern is a cluster of price bars set apart from the rest of the chart by a gap on each side. The…
A V-bottom reversal is a sharp turn where price drops in a steep, near straight line, hits a low, and rebounds almost…
A V-top reversal is a sharp turn where price rises in a steep, near straight line, peaks, and drops almost as quickly.…
A measured move pattern is a three-part formation where a strong trend move is followed by a partial pullback and then…
An ABC correction pattern is a three-wave move that runs against the prevailing trend. It is the simplest corrective…
The cup without handle pattern is a bowl-shaped consolidation that breaks out directly from the right rim, skipping the…
The inverse cup and handle is the upside-down, bearish version of the familiar cup pattern. Price forms a rounded dome…
The catapult pattern point and figure setup stacks two breakouts in the same direction, separated by a small pullback…
A dead cat bounce is a short, sharp rally that interrupts a steep decline before price resumes falling and makes new…
The gap and go pattern is a day trading setup that targets a stock gapping open on fresh news, then breaking its…
The island cluster pattern is a reversal where several days of trading sit isolated from the rest of the chart by a gap…
A horn top pattern is two tall upward price spikes separated by a single bar, forming after an uptrend and warning of a…
A horn bottom pattern is two tall downward price spikes separated by a single bar, forming near the end of a downtrend…
Elliott Wave Theory is a framework that claims markets move in repeating patterns of five waves in the direction of the…
Elliott Wave theory says markets move in repeating five-wave advances followed by three-wave corrections, at every…
Gann theory is a framework, attributed to W.D. Gann (1878 to 1955), that ties price and time together using fixed…
The Wyckoff method is a price-and-volume framework, developed by Richard D. Wyckoff in the 1920s and 1930s, that reads…
A point and figure (P&F) chart plots price changes as columns of Xs (rising prices) and Os (falling prices), ignoring…
A Renko chart plots a sequence of equally sized bricks that print only when price moves by a chosen threshold. The name…
A Kagi chart is a Japanese price chart that draws vertical lines whose thickness changes when price breaks a prior high…
Ichimoku Kinko Hyo is a Japanese trend-following system, developed by journalist Goichi Hosoda and published in 1969,…
Fibonacci retracement maps a recent price swing onto fixed ratios drawn from the Fibonacci sequence and uses those…
Harmonic patterns are five-point chart structures defined by specific Fibonacci ratios between their legs. The…
A volume profile, also called volume-by-price, plots horizontal bars showing how much trading volume occurred at each…
The HMA Hull moving average is a smoothing line designed by Australian trader Alan Hull in 2005. It uses a nested chain…
The ALMA Arnaud Legoux moving average is a Gaussian-weighted smoother published by Arnaud Legoux and Dimitrios…
The KAMA Kaufman adaptive moving average is a smoothing line that speeds up in trends and slows down in chop. Perry…
The T3 moving average is a low-lag smoother published by Tim Tillson in the January 1998 issue of Technical Analysis of…
The DEMA double exponential moving average is a lag-reducing smoother published by Patrick Mulloy in the January 1994…
The TEMA triple exponential moving average extends Patrick Mulloy's DEMA construction by adding a third smoothing…
The VIDYA variable index dynamic average is an adaptive moving average designed by Tushar Chande and first published in…
The **ZLEMA zero lag exponential moving average** is a variation of the EMA that subtracts older price data from the…
The **VWMA volume weighted moving average** is a moving average that multiplies each closing price by its bar volume…
The **MAMA FAMA MESA adaptive moving average** is a two-line trend tool from John Ehlers that varies its smoothing…
The **displaced moving average** is any moving average that has been shifted forward or backward on the chart by a…
The **Tillson T3 moving average** is a smoothed indicator built by chaining three generalized double exponential moving…
The **stochastic oscillator** measures where today's close sits inside the recent high-low range, on a scale from 0 to…
The choice of **fast vs slow stochastic** is really a choice about how much smoothing to apply to George Lane's…
The **Williams %R indicator**, developed by Larry Williams in 1973, is a momentum oscillator that measures the close…
The **ultimate oscillator**, developed by Larry Williams in 1976, blends momentum across short, medium, and long…
The **detrended price oscillator DPO** subtracts a displaced moving average from past price so that the longer trend…
The **awesome oscillator** is a momentum histogram from Bill Williams that subtracts a 34-period simple moving average…
The **accelerator oscillator** is a Bill Williams indicator that measures the change in momentum itself, sitting one…
The **schaff trend cycle**, or STC, is a hybrid momentum indicator developed by Doug Schaff in the 1990s. It runs a…
The **KST indicator**, short for Know Sure Thing, is a momentum oscillator developed by Martin Pring. It adds together…
The **TRIX oscillator** is a momentum indicator that measures the percent rate of change of a triple-smoothed…
The **stochastic RSI** is an oscillator that applies the stochastic formula to the RSI line instead of to price. Tushar…
The **Connors RSI** is a short-term momentum oscillator developed by Larry Connors that combines three components: a…
The **Chande momentum oscillator**, or CMO, is a momentum indicator developed by Tushar Chande and published in his…
The **Fisher transform indicator** is a momentum tool created by John Ehlers and described in his MESA Software paper…
The **cyber cycle indicator**, published by John Ehlers in his 2004 book Cybernetic Analysis for Stocks and Futures,…
The **Chande forecast oscillator**, developed by Tushar Chande, compares each closing price to the value that an…
The **mass index Donald Dorsey** designed in 1992 watches how the daily high-low range expands and contracts. The…
The **VWAP volume weighted average price** is the average price at which a security has traded during a session,…
The **anchored VWAP** is a volume-weighted average price that starts from a bar the chartist chooses rather than from…
The **accumulation distribution line**, created by Marc Chaikin, is a cumulative volume-flow indicator that tries to…
The **Chaikin money flow** indicator, or CMF, is a volume-weighted oscillator that sums money flow volume over a fixed…
The **Chaikin oscillator** applies the MACD formula to the Accumulation/Distribution Line. Marc Chaikin built it to…
The **Klinger volume oscillator** is a money-flow indicator published by Stephen Klinger in the December 1997 issue of…
The **Elder force index** is a volume-weighted momentum oscillator introduced by Dr. Alexander Elder in his 1993 book…
The **ease of movement** indicator, developed by Richard W. Arms Jr., is a volume-based oscillator that measures how…
The **OBV on balance volume** indicator is a cumulative volume line developed by Joseph Granville and published in his…
The **volume flow indicator VFI** is a money-flow oscillator built by Markos Katsanos and published in the June 2004…
The **negative volume index NVI** tracks price changes only on days when volume falls compared to the prior day. Paul…
The **positive volume index PVI** is a cumulative line that updates only on days when volume rises compared to the…
The **price volume trend PVT** is a cumulative volume line that updates every bar by a fraction of that bar's volume,…
The **cumulative volume delta CVD** is an order-flow line that sums the difference between aggressive buy volume and…
The **volume zone oscillator** is a normalized volume momentum line developed by Walid Khalil and David Steckler and…
The **standard deviation channel** plots a linear regression line through price and adds parallel bands set at a fixed…
The **Keltner channels indicator** plots an exponential moving average with parallel bands set above and below at a…
The **Donchian channels indicator** plots the highest high and the lowest low over a fixed lookback window, with a…
The **chandelier exit stop**, developed by Chuck LeBeau and popularized in Alexander Elder's books, hangs a trailing…
The **Bollinger %B indicator**, introduced by John Bollinger, normalizes a price within its Bollinger Bands so that the…
The **Bollinger bandwidth** indicator measures the gap between the upper and lower Bollinger Bands normalized by the…
The **ATR trailing stop** sets an exit level a fixed multiple of Average True Range below the running highest price for…
The **volatility stop indicator**, introduced by J. Welles Wilder in his 1978 book New Concepts in Technical Trading…
The **TTM squeeze momentum indicator**, introduced by John Carter of Trade the Markets, fires when Bollinger Bands…
The **historical volatility cone** is a chart that plots the historical range of realized volatility across different…
The Garman-Klass volatility estimator uses the daily open, high, low, and close to measure realised variance with far…
The Yang-Zhang volatility estimator combines overnight return variance, opening drift, and the intraday Rogers-Satchell…
Parkinson volatility estimates daily variance using only the high and low of each bar. The physicist Michael Parkinson…
Rogers-Satchell volatility is an OHLC variance estimator that stays unbiased even when the underlying asset has a…
Z-score volatility bands convert price into a standardised distance from a moving mean, expressed in units of rolling…
The Coppock curve indicator is a long-horizon momentum oscillator designed to flag the start of new bull markets in…
The McClellan oscillator is a market breadth indicator built from the difference between two exponential moving…
The McClellan Summation Index is a long-horizon market breadth indicator built by adding up the McClellan oscillator…
The Arms Index, often called TRIN for Short-Term Trading Index, is a breadth indicator that blends the advance-decline…
The advance decline line is a cumulative breadth indicator that adds each day's net advances to a running total. By…
The **advance decline volume** indicator measures market breadth by comparing the trading volume in stocks that closed…
The **bullish percent index BPI** is a market breadth indicator that reports the percentage of stocks in a given…
The **high low index** is a smoothed market breadth gauge that compares the number of stocks hitting new 52-week highs…
The **new highs new lows breadth** statistics report, for each trading day, how many stocks in a given universe printed…
The **percent above moving average** breadth indicator reports the share of stocks in a given index that are currently…
The head and shoulders pattern is a three-peak bearish reversal that forms at the top of an uptrend. A left shoulder, a…
An inverse head and shoulders is a three-trough bullish reversal that forms at the bottom of a downtrend. A left…
A complex head and shoulders is a reversal pattern that looks like a standard head and shoulders but carries extra…
An Elliott impulse wave is the five-wave structure that carries price in the direction of the larger trend. It is the…
An Elliott corrective wave is the move that pushes against the larger trend, usually unfolding in three sub-waves…