Chart glossary
The patterns and terms you hear on Instagram and YouTube: what they are, how to spot them on a chart, and where they most often mislead. Every term's page has a chart puzzle; try what you read right there.
Candles
- Doji candleA candle whose open and close are nearly the same, leaving a razor-thin body; it shows buyers and sellers fought to a draw in that period.
- Hammer candleA candle with a small body at the top and a lower wick at least twice the body; at the bottom of a decline it shows selling was bought back.
- Engulfing candleA two-candle pattern where the second candle's body completely covers the opposite-coloured body before it; it shows control changing hands.
- Candle wickA wick is the thin line above or below a candle's body; it marks prices reached during the candle that were pushed back.
Chart patterns
- Double bottom patternA reversal pattern where price makes two lows in the same area and then closes above the peak between them; it shows the decline has found buyers.
- Head and shoulders patternA three-peak pattern with the middle peak highest; a close through the neckline signals the uptrend's structure has broken and turned down.
- Flag patternA short, shallow, orderly pullback after a sharp move; it shows the trend pausing for breath and often wanting to continue the same way.
- Triangle patternA structure where price coils between two converging lines; it shows the two sides balancing out and a breakout getting closer.
- Wedge patternA wedge is two lines sloping the same way and converging; it can show a trend losing speed and setting up to turn.
- Price channelA channel is price moving between two parallel lines at the same slope; its edges show where pullbacks in the trend tend to end.
- Cup and handleA cup and handle is a rounded bottom that climbs back to the old high, then makes a short, shallow pullback (the handle) before trying to break it.
Levels, trend and volume
- Support and resistanceSupport is where falling price finds buyers and stops; resistance is where rising price meets sellers. Both are zones, not exact lines.
- TrendlineA line joining the rising lows of an uptrend or the falling highs of a downtrend; it shows the trend's slope and where pullbacks may end.
- Fibonacci retracementRatios (38.2%, 50%, 61.8%) measuring how much of a move has been given back; used to mark zones where a pullback might end.
- VolumeVolume is the amount traded during a candle; it shows how much participation sits behind a price move.
- Price gapA gap is when price opens outside the previous candle's range, leaving a stretch on the chart where nothing traded.