Glossary

See the methodology for how these are used.

Market structure

The pattern of swing highs and lows that defines whether a market is trending up, down, or ranging.

Higher high / higher low (HH/HL)

Successive swings each above the last: the signature of an uptrend.

Lower high / lower low (LH/LL)

Successive swings each below the last: the signature of a downtrend.

Break of structure (BOS)

Price breaking a prior swing in the trend's direction.

Change of character (CHoCH)

The first break against the prevailing trend - an early sign the trend may be shifting.

Area of interest / zone

A price area where the market has reacted before.

Pullback

A move against the trend, back toward a zone or band.

Confluence

Several factors at one price, e.g. a zone and a moving average.

Multi-timeframe (top-down) analysis

Setting bias on higher timeframes (weekly/daily/4H) and refining entries on lower ones (1H/30m).

ATR (Average True Range)

A measure of a stock's typical bar-to-bar range (volatility).

Flag bands

Two stepped bands that trail price. The upper band resets on a close above it, the lower on a close below.

Orange midline

The line between the flag bands, leaning toward the side of the current trend.

MACD histogram

The gap between the MACD line and its signal line. Green above zero, red below.

PPO

MACD expressed as a percent of price, so stocks of any price compare.

ADX

A measure of trend strength, not direction.

Heiken Ashi

Smoothed candles built from averaged prices, used to read runs of up or down bars.

W / double bottom

Two similar lows with a bounce between them.