Double Bottoms are reversal patterns and often seem to be one of the most common (together with double top patterns) patterns for currency trading. Double Bottoms patterns are identified by two consecutive low prices of the same depth with a moderate pull back up in between (neckline peak).
The head-and-shoulders pattern is one of the most popular chart patterns in technical analysis and indicates that a reversal is likely to happen after the pattern has been completed.
A cup-and-handle chart pattern resembles a cup of coffee. These are bullish continuation patterns where the growth has paused momentarily, it trades down and then continues its upward pattern. This pattern must always be at least 5 weeks long and can last up to a year. Click on this post to learn more.
The Collar Option Strategy is designed to limit the downside risk of a held underlying security. It can be performed by holding a long position in a security, while simultaneously going long a Put and shorting a Call. Read this article to read details of the strategy and to see a profit/loss example.
The body of the candlestick chart is the most basic building block for a candlestick chart. Read this article to learn more!
A point on a candle stick chart representing a specific time period (a day, an hour, a minute, etc) in which the underlying stock price has moved. Candlesticks will have a body and usually two wicks – one on each end.
The Resistance Line is a point or range in a chart that caps an increase in the price of a stock or index over a period of time.
Falling Knife is a phrase used for a stock where the price has dropped significantly in a short period of time. A falling knife security can rebound, or it can lose all of its value where the shares become worthless. Trying to catch a “falling knife” right as it rebounds is dangerous!
An inverted dead cat bounce will occur when a company discloses news that will send the stock soaring by 5% to 20% or perhaps even higher.
A trading term called a dead cat bounce is used to when a stock is in a severe decline and has a sharp bounce off the lows. It occurs due to the huge amount of short interest in the market. This bounce will be short lived and followed up by heavy selling which will break the prior price low.