Reading price action, indicators, and chart patterns.
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A doji is a candle whose open and close are almost equal, leaving little or no body — a snapshot of indecision, where buyers and sellers finished a period in balance. This article first explains candlestick anatomy (body, wicks, open/close/high/low), then covers the doji and its variants (long-legged, dragonfly, gravestone), what they mean, why context and confirmation are everything, and why a single candle describes one period's tug-of-war rather than predicting the next.
A moving average smooths price by averaging it over a rolling window, turning a jagged chart into a cleaner line that reveals trend direction. This article explains the simple and exponential moving average and how they differ, the common 20/50/200 periods, how moving averages are used (trend direction, dynamic support and resistance, and crossovers like the golden and death cross), the inescapable lag that comes with smoothing, and why a crossover describes the past rather than predicting the future.
Resistance is the mirror image of support: a price area where rising prices have repeatedly tended to stall and turn back down, because selling interest keeps emerging there. This article explains why resistance forms (profit-taking, trapped buyers wanting to break even, round numbers, prior lows), the polarity principle where broken resistance becomes support, how to gauge a level's strength, and why — like support — resistance describes behaviour rather than predicting it.
Support is a price area where falling prices have repeatedly tended to stop and turn back up, because buying interest keeps emerging there. This article explains why support forms (memory, resting orders, round numbers, prior highs flipping role), why it is a zone rather than a precise line, how to judge its significance, what it means when support gives way — and, crucially, why support describes past behaviour and is never a guarantee.
A trendline is sloping support or resistance: a straight line drawn along a market's rising lows (an uptrend line, acting as dynamic support) or falling highs (a downtrend line, acting as dynamic resistance). This article explains how trendlines are drawn and confirmed, why two points define a line but a third validates it, what slope and steepness signal, how parallel lines form channels, and the discipline needed to avoid drawing the lines you wish were there.
Volume — the number of shares or contracts traded in a period — is the conviction behind price. This article explains why volume matters, how it confirms trends and breakouts, what rising versus falling volume signals, volume spikes and climaxes, volume divergence, and the foundational principle that price moves on strong volume are more trustworthy than moves on thin volume.
The Accumulation/Distribution (A/D) Line is a cumulative volume-flow line that, unlike OBV, weights each bar by where price closed within its range. This article explains how it is built, how its direction reveals accumulation versus distribution, how it differs from OBV (close-within-range vs up/down) and from Chaikin Money Flow (cumulative line vs windowed oscillator), and how A/D divergence warns when volume flow disagrees with price.
The Directional Movement Index (DMI) and Average Directional Index (ADX) are Wilder's tools for measuring trend direction and, crucially, trend strength. This article explains the +DI and -DI lines (which side is winning), the ADX line (how strong the trend is, regardless of direction), the conventional 25/20 thresholds for trending versus ranging, how DI crossovers signal direction, and how to use ADX as a filter rather than a standalone signal.
Anchored VWAP is the volume-weighted average price calculated from a specific anchor point you choose — a major high or low, an earnings date, an IPO — rather than resetting each session. This article explains how it represents the average price paid since a key event, why it acts as dynamic support and resistance, how being above or below it signals who is in profit, and where to anchor it for the most meaningful read.
The Aroon indicator measures how recently price made its highest high and lowest low over a period, using two lines — Aroon Up and Aroon Down — on a 0-100 scale. This article explains how a high Aroon Up signals a fresh uptrend, how crossovers flag trend changes, how both lines being low marks consolidation, and how Aroon differs from ADX by emphasising the timing of new extremes rather than raw trend strength.
ATR — the Average True Range — measures volatility as a single number: the average size of a market's recent price range, including gaps. This article explains 'true range' and why it captures more than the high-minus-low, how ATR is averaged over a lookback, what a rising or falling ATR tells you, and how ATR is used to gauge what counts as a 'normal move' and to scale stops and position size to volatility. It stresses that ATR measures size, never direction.
The Awesome Oscillator (AO) measures market momentum as the gap between a fast and a slow moving average of the median price, plotted as a histogram around zero. This article explains its construction, the colour-coded bars, the zero-line cross, and its signature signals — the twin peaks and the saucer — plus how it compares to MACD and the usual caution that momentum tools confirm rather than predict.
Bollinger Bands wrap a moving average in an envelope set a number of standard deviations above and below it, so the bands widen when volatility rises and contract when it falls. This article explains how the bands are built, what the width tells you (the 'squeeze' and expansion), why touching a band is not overbought or oversold, and how the bands describe volatility and relative price — never predict direction. It is explicit that 'walking the band' is normal in strong trends.
Break of structure (BOS) and change of character (CHOCH) are how 'smart money' market-structure traders read trend continuation and reversal. This article explains a BOS as a swing break in the direction of the trend (continuation), a CHOCH as the first swing break against the trend (potential reversal), the overlapping terminology (MSB), internal versus external structure, and how to read the framework honestly — as a lens, not a guarantee.
The strategy of entering as price breaks out of a defined range or level: what makes a breakout, the role of consolidation and volume, how to enter and place stops, the difference between trading the break and the retest, and how to handle the ever-present risk of the false breakout.
A breakout is the moment price moves decisively beyond a support or resistance area or a trendline, resolving a period of balance. This article explains what counts as a breakout (a close through the zone, not a passing wick), the role of volume and the retest, why broken levels flip role by polarity, and — crucially — the false breakout: why price so often pokes through a level and snaps straight back, and why a breakout is an event to observe rather than an instruction to act.
Chaikin Money Flow (CMF) measures buying versus selling pressure over a period by combining where each bar closes within its range with its volume. This article explains the money-flow multiplier, why a close near the high signals accumulation and near the low distribution, how CMF oscillates around zero (above = buying pressure, below = selling), how it differs from OBV, and how to read zero-line crosses and divergence.
The Commodity Channel Index (CCI) measures how far price has deviated from its statistical average, on an unbounded scale where roughly ±100 contains most movement. This article explains how CCI is read, why readings beyond +100 and -100 signal strength rather than just overbought/oversold, the zero-line and extreme-zone interpretations, divergence, and the fact that — despite its name — it works on any market, not just commodities.
Why the strongest trade setups are those where several independent signals agree: what confluence is, common sources (levels, moving averages, Fibonacci, trendlines, timeframes), why independent confirmation raises probability, how confluence sharpens entries and stops, and the danger of manufacturing false confluence.
The cup and handle is a bullish pattern: a rounded 'U' base (the cup) of gradual accumulation, followed by a small downward drift near the rim (the handle), then a breakout to new highs. This article explains the anatomy, why the rounded shape and a shallow handle matter, the volume signature, the measured-move target, the inverse (bearish) version, and what separates a high-quality cup and handle from a sloppy one.
Donchian Channels plot the highest high and lowest low over a lookback period, framing price between its recent extremes. This article explains their simple construction, how a push to the upper band marks an N-period breakout (the basis of the famous Turtle trend-following system), how the lower band and midline serve as trailing stops and bias, how they differ from volatility bands like Bollinger and Keltner, and their strength in trends and weakness in ranges.
Double tops and bottoms are among the simplest, most reliable reversal patterns: two failed attempts at the same level. This article explains the double top (the 'M' — two equal peaks failing at resistance, confirmed by breaking the middle low) and the double bottom (the 'W' — two equal troughs holding at support, confirmed by breaking the middle high), their triple-top/bottom cousins, the volume tell, the measured-move target, and why confirmation matters.
An engulfing pattern is a two-candle pattern in which the second candle's body completely engulfs the first's, marking a decisive one-period shift of control. This article explains the bullish engulfing (after a decline) and bearish engulfing (after a rally), the takeover story each tells, why an engulfing carries more weight than a single candle, the role of context and volume, and why — like every candlestick pattern — it describes a shift rather than predicting one.
Why breakouts fail and how to trade the failure: what a false breakout is, the liquidity and stop-hunt psychology that drives it, the classic 'bull trap' and 'bear trap', how to avoid being trapped, and how a failed breakout becomes one of the highest-probability reversal signals when traded deliberately.
Flags and pennants are short continuation patterns — brief pauses after a sharp move (the 'flagpole') that resolve in the direction of the original trend. This article explains the flagpole, the small counter-trend flag channel, the small symmetrical pennant, why they are continuation rather than reversal patterns, the tell-tale collapse and surge in volume, and how to trade the breakout with a flagpole-height target.
A hammer is a single candle with a small body near the top and a long lower wick, appearing after a decline — a picture of sellers driving price down within the period and buyers rejecting those lows to close back near the open. This article explains the hammer's anatomy and the tug-of-war it records, the importance of its downtrend context, its relatives (the hanging man and inverted hammer), and why a hammer is a description needing confirmation, not a reversal signal on its own.
The head and shoulders is the best-known reversal pattern: three peaks with a higher middle (the head) flanked by two lower shoulders, joined by a neckline whose break signals a trend reversal. This article explains its anatomy, the all-important neckline and confirmation, the inverse (bottoming) version, the volume signature, the measured-move target, and the discipline of waiting for the neckline break.
Keltner Channels are volatility bands built around a moving average using the Average True Range. This article explains their construction (an EMA with ATR-multiple bands), how they differ from Bollinger Bands (ATR vs standard deviation), how to read them for trend, pullbacks and breakouts, and the famous 'squeeze' where Bollinger Bands contract inside the Keltner Channels to signal a coming volatility expansion.
In market-structure trading, 'liquidity' means the resting orders — mostly stop-losses — that pool just beyond obvious swing highs and lows, and that price is drawn toward. This article explains buy-side and sell-side liquidity, why equal highs and lows are magnets, the liquidity sweep (or stop hunt) where price spikes through a level to trigger orders then reverses, internal versus external liquidity, and how this framing relates to the classic false breakout.
MACD (Moving Average Convergence Divergence) is a momentum and trend indicator built from two moving averages. This article explains its three parts — the MACD line (the gap between a fast and slow EMA), the signal line, and the histogram — and how they are read: the zero line, signal-line crossovers, and MACD divergence. Because it is built from moving averages, MACD inherits their lag, so it is framed throughout as a descriptive lens on momentum, not a forecasting signal.
The strategy that bets stretched prices snap back toward an average: the statistical intuition behind reversion, the tools used to measure 'stretched' (Bollinger Bands, RSI, distance from a moving average), how mean reversion contrasts with trend following, and why defined risk is non-negotiable when trading against a move.
The Momentum indicator and Rate of Change (ROC) are the simplest momentum tools: they compare the current price to the price a set number of bars ago to measure the speed of price change. This article explains both (Momentum as a difference, ROC as a percentage), how to read the zero line and divergence, why accelerating versus decelerating momentum matters, and how these primitives underpin more elaborate oscillators.
The Money Flow Index (MFI) is often called a volume-weighted RSI: a 0-100 oscillator that folds volume into a momentum reading. This article explains how MFI uses the typical price and volume to measure money flowing in versus out, the 80/20 overbought/oversold zones, how it differs from RSI (volume) and from Chaikin Money Flow (construction), divergence, and the same trend caveat that extremes can persist.
How to analyse the same market across several timeframes to trade with context: the top-down approach of using a higher timeframe for direction, an intermediate one for the setup, and a lower one for entry timing, why aligning timeframes stacks the odds, and the pitfalls of timeframe conflict.
On-Balance Volume (OBV) is a cumulative running total of volume that adds volume on up-close days and subtracts it on down-close days, turning volume into a single trend line. This article explains how OBV is built, why its direction (not its absolute value) is what matters, how a rising OBV confirms accumulation and a falling OBV distribution, how OBV divergence warns that a price move lacks volume support, and the idea that volume can lead price.
The Parabolic SAR (stop and reverse) plots a trailing series of dots above or below price that follow a trend and flip when it reverses. This article explains how the dots mark trend direction, act as a dynamic trailing stop, accelerate as a trend extends, and signal an exit or reversal when price crosses them — plus its key weakness of whipsawing in sideways markets and why it pairs well with a trend filter like ADX.
A channel is price moving between two parallel trendlines — a trend with guard rails. This article explains ascending, descending and horizontal channels, how to draw them from two touchpoints plus a parallel line, the two ways traders use them (trading the bounces within, and trading the breakout beyond), why the breakout direction and channel slope matter, and the discipline of not forcing parallel lines that aren't there.
How to enter a trend at a lower-risk point: what a pullback is, why trends move in waves rather than straight lines, how a retest confirms a broken level has flipped role, where to enter and place stops, and how to tell a healthy pullback from the start of a reversal.
A rectangle is a trading range: price bouncing between horizontal support and resistance, going nowhere while buyers and sellers reach a stand-off. This article explains the range as a box, the two ways to trade it (fading the edges within, and trading the breakout beyond), why a rectangle can resolve as either a continuation or a reversal, the role of volume, the measured-move target, and the false breakouts that ranges are notorious for.
A reversal is a genuine change in a market's prevailing direction — an uptrend becoming a downtrend, or vice versa. This article defines a trend structurally (higher highs and higher lows, or lower highs and lower lows), shows how a reversal is the breaking of that sequence, and tackles the hardest problem in all of price action: telling a real reversal from an ordinary pullback. It closes on why reversals are only ever confirmed in hindsight, and why 'catching' them is where so many go wrong.
How to turn chart structure into a disciplined risk framework: using support and resistance to place logical stops and targets, calculating the risk/reward ratio and thinking in R-multiples, the maths linking win rate to required risk/reward, and why the setup — not the prediction — determines whether a trade is worth taking.
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and size of recent price changes on a 0–100 scale. This article explains what RSI actually measures, the meaning (and frequent misuse) of the 70/30 overbought and oversold thresholds, the centreline at 50, and RSI divergence — where momentum and price disagree. It is emphatic that overbought is not a sell instruction and oversold is not a buy one: in strong trends RSI can stay pinned at an extreme for a long time.
A shooting star is the mirror of the hammer: a single candle with a small body near the bottom and a long upper wick, appearing after a rally — a picture of buyers driving price up within the period and sellers rejecting those highs to close back near the open. This article covers its anatomy and story, why its uptrend context matters, how it relates to the inverted hammer and gravestone doji, and why, like every candle, it describes one period and needs confirmation.
The Stochastic Oscillator measures where price closes within its recent high-low range, on a 0-100 scale, to flag momentum and overbought/oversold conditions. This article explains the %K and %D lines, the 80/20 zones, signal-line crossovers, divergence, the difference between fast and slow stochastics, the more sensitive Stochastic RSI, and the crucial point that 'overbought' can stay overbought in a strong trend.
Supertrend is a popular ATR-based trend-following indicator: a single line that sits below price and turns green in an uptrend, flips above price and turns red in a downtrend, and acts as a built-in trailing stop. This article explains how it is built from ATR bands, how to read its colour and flips for trend and entries, the role of the ATR multiplier and period settings, and its shared weakness with other trend tools — whipsawing in ranges.
Swing highs and swing lows are the building blocks of market structure: the pivot points where price turns. This article explains how to identify them (a swing high has lower highs on both sides; a swing low has higher lows on both sides), how the sequence of swings defines an uptrend or downtrend, why they are the reference points for break-of-structure, liquidity and support/resistance, and why their identification depends on timeframe and lookback.
The strategy of trading in the direction of the prevailing trend: why 'the trend is your friend', how to identify and grade a trend, the tools trend-followers use, the discipline of letting winners run and cutting losers, and the trade-off of many small losses for occasional large gains.
Triangles are consolidation patterns where price coils between two converging trendlines. This article explains the three types — ascending (flat highs, rising lows), descending (flat lows, falling highs) and symmetrical (both converging) — what each implies about the balance of buyers and sellers, how to trade the breakout with volume confirmation and a measured-move target, and how to avoid the false breakouts that trap the impatient.
VWAP — the Volume-Weighted Average Price — is the average price at which something has traded over a period, weighted by how much volume traded at each price. This article explains what VWAP measures and how it differs from an ordinary moving average, why it resets each session, how it is used as a benchmark of the 'average price paid' and as a reference for whether price is rich or cheap relative to the day, and why — like every indicator — it describes participation rather than predicting direction.
Wedges are converging patterns whose two trendlines slope the same way — and whose bias runs against that slope. This article explains the rising wedge (higher highs and higher lows that resolve bearishly) and the falling wedge (lower highs and lower lows that resolve bullishly), why fading momentum inside a tilted coil flips the expected direction, how wedges differ from triangles, and how to trade the breakout with volume and a target.
Williams %R is a momentum oscillator that measures where price closes relative to its recent high-low range, on an inverted -100 to 0 scale. This article explains how to read it (above -20 overbought, below -80 oversold), how it relates to the Stochastic Oscillator, how it is used for overbought/oversold, momentum failures and divergence, and the same essential caveat that an extreme reading can persist in a strong trend.
A broadening formation — the 'megaphone' — is the opposite of a triangle: diverging trendlines, an expanding range of higher highs and lower lows, and rising volatility. This article explains its anatomy, why it signals an unstable, emotional market (and often appears near tops as distribution), why it is one of the hardest patterns to trade, and the cautious ways experienced traders approach it.
The foundation of modern technical analysis: Charles Dow's six tenets, the three trends and three phases of a market move, why the averages must confirm one another, the role of volume, and how a trend is assumed to continue until it decisively reverses.
Ralph Nelson Elliott's theory that crowd psychology moves markets in repeating, fractal wave patterns: the five-wave impulse and three-wave correction, the three unbreakable rules, the fractal nesting of waves within waves, and the Fibonacci relationships that govern their proportions.
An evening star is the mirror of the morning star: a three-candle topping pattern — a large up candle, a small-bodied 'star' of indecision, then a large down candle closing well into the first candle's body. This article explains its three-act story of buying, exhaustion, then selling, what makes one convincing, and — as the closing article of the Technical Analysis domain — reinforces the principle that runs through all of candlestick reading: patterns describe shifts of control, they never predict them.
A fair value gap (FVG), or imbalance, is a three-candle pattern where a fast move leaves a gap the market often returns to 'fill'. This article explains how an FVG forms (the wicks of the first and third candles failing to overlap), why it represents an inefficiency between buyers and sellers, how price tends to rebalance it, the difference from a classical price gap, and how traders use FVGs as both targets and support/resistance zones — with honest caveats.
W.D. Gann's geometric approach to markets: the idea that price and time are linked, Gann angles and the 1×1 line, the Gann fan, the squaring of price and time, and Gann's emphasis on time cycles — presented with a clear-eyed account of why the method is as controversial as it is influential.
Fibonacci-based reversal patterns that use precise price ratios to define a Potential Reversal Zone: the five-point XABCD structure, the family of named patterns (Gartley, Bat, Butterfly, Crab), the ratios that distinguish them, and how to trade the PRZ with defined risk.
The Ichimoku Cloud is a complete trend-following framework that layers five lines onto a chart to show trend, support and resistance, and momentum 'at a glance'. This article breaks down its five components — the conversion and base lines, the two leading spans that form the cloud, and the lagging span — explains how the cloud's position, thickness and colour are read, and weighs its all-in-one strength against its complexity and lag. As always, it is framed as a descriptive system, not a signal generator.
Why markets move in repeating cycles: the four phases of accumulation, markup, distribution and markdown, the emotional cycle of crowd sentiment from despondency to euphoria, how market cycles relate to the economic cycle and sector rotation, and the difference between secular and cyclical trends.
A morning star is a three-candle bottoming pattern: a large down candle, then a small-bodied 'star' of indecision, then a large up candle closing well into the first candle's body. This article explains the three-act story it tells — strong selling, exhaustion, strong buying — how it is read, why the middle star and the depth of the third candle matter, and why, like every candlestick pattern, it describes a shift of control across three periods rather than predicting a reversal.
An order block is the last opposing candle (or zone) before a strong move that breaks structure — read as the footprint of large orders, and a zone price often returns to before continuing. This article explains bullish and bearish order blocks, what makes a high-quality one, mitigation (price returning to the zone to close earlier positions), how order blocks relate to classical supply and demand zones, and how to use them with confirmation rather than blind faith.
Premium and discount apply 'buy low, sell high' to a defined price range. This article explains the dealing range (swing low to swing high), the 50% equilibrium that divides it, why the upper half is 'premium' (favour selling) and the lower half 'discount' (favour buying), how the optimal-trade-entry zone refines this with Fibonacci, how it combines with structure and order blocks, and why the choice of range is the subjective part to get right.
Standard deviation measures how widely price disperses around its average, and historical (realised) volatility annualises that into the standard way of quoting how much an asset has actually moved. This article explains both, how they underpin Bollinger Bands and risk sizing, the difference between historical and implied volatility, and the crucial idea that volatility tends to mean-revert and cluster — so low volatility tends to precede high, and vice versa.
The Ultimate Oscillator blends three different timeframes of buying pressure into one 0-100 momentum reading, specifically to reduce the false signals that single-period oscillators produce. This article explains why combining short, medium and long lookbacks gives steadier readings, how to read its overbought/oversold zones, and its signature multi-condition divergence signal that aims to be more reliable than a basic oscillator divergence.
Volume Profile shows how much volume traded at each price level, rather than over time — revealing where the market spent its activity. This article explains the Point of Control, the Value Area, High and Low Volume Nodes, how these act as support, resistance and fast-move zones, and the main variants (session, visible-range and fixed-range volume profiles) and how traders use them to read where price is likely to stall or accelerate.
A naturally occurring five-wave reversal pattern popularised by Bill Wolfe: how the five points form inside a channel, the rules that validate the pattern, the 1-to-4 line that projects the price target, the 'sweet zone' entry at point 5, and how Wolfe Waves compare to Elliott and harmonic patterns.
Richard Wyckoff's framework for reading the intentions of large operators: the Composite Man, the four-phase market cycle of accumulation, markup, distribution and markdown, the three laws of supply/demand, cause/effect and effort/result, and the classic accumulation and distribution schematics.