Crypto & Technical Analysis Glossary
Clear definitions of 61+ trading terms — from candlestick patterns to indicators and risk management concepts.
A
ATR (Average True Range)
A volatility indicator that measures the average range between high and low prices over a set period. Used to set stop losses and gauge market volatility. Higher ATR = more volatile market.
Ask Price
The lowest price a seller is willing to accept for an asset. Also called the 'offer price'. The difference between ask and bid is the spread.
All-Time High (ATH)
The highest price an asset has ever traded at. Breaking an ATH is a strong bullish signal as there is no overhead resistance.
B
Bearish
A market condition or outlook where prices are expected to decline. A bearish candle closes lower than it opened (red candle).
Bearish Engulfing
A two-candle reversal pattern where a large red candle completely engulfs the previous green candle. Signals a potential trend reversal from bullish to bearish.
Bid Price
The highest price a buyer is willing to pay for an asset. The spread between bid and ask is the broker's profit.
Bollinger Bands
A volatility indicator consisting of a 20-period SMA with upper and lower bands set 2 standard deviations away. Price touching the upper band = overbought; lower band = oversold.
Break-even
The point at which a trade neither profits nor loses. In trading, moving your stop loss to the entry price creates a break-even trade.
Breakout
When price moves beyond a defined support or resistance level with increased volume. A confirmed breakout suggests continuation in the breakout direction.
Bull Flag
A continuation pattern consisting of a sharp price rise (flagpole) followed by a slight downward consolidation (flag). Signals continuation of the uptrend.
Bullish
A market condition or outlook where prices are expected to rise. A bullish candle closes higher than it opened (green candle).
Bullish Engulfing
A two-candle reversal pattern where a large green candle completely engulfs the previous red candle. Signals a potential reversal from bearish to bullish.
C
Candlestick
A chart element showing the open, high, low, and close price for a given time period. The body shows open-to-close range; wicks show high and low extremes.
Consolidation
A period where price moves sideways within a defined range, neither trending up nor down. Often precedes a significant breakout.
Cup and Handle
A bullish continuation pattern shaped like a tea cup. The cup forms a rounded bottom, followed by a smaller pullback (handle) before a breakout upward.
D
Dead Cat Bounce
A temporary price recovery in a downtrend that is followed by a continuation of the decline. Not a true reversal.
Divergence
When price and an indicator (like RSI or MACD) move in opposite directions. Bullish divergence: price makes lower lows but indicator makes higher lows. Bearish divergence is the opposite.
Doji
A candlestick with a very small body where open and close are nearly equal. Signals indecision in the market. Most significant at the top or bottom of a trend.
Double Bottom
A bullish reversal pattern forming a 'W' shape. Price tests a support level twice and fails to break lower, signalling a potential upward reversal.
Double Top
A bearish reversal pattern forming an 'M' shape. Price tests a resistance level twice and fails to break higher, signalling a potential downward reversal.
Drawdown
The percentage decline from a portfolio's peak value to its lowest point. A 20% drawdown means your account fell 20% from its highest value.
E
EMA (Exponential Moving Average)
A moving average that gives more weight to recent prices, making it more responsive to new information than a simple moving average (SMA). Common periods: 9, 21, 50, 200.
Evening Star
A three-candle bearish reversal pattern: a large bullish candle, a small-bodied candle (gap up), and a large bearish candle. Signals a top reversal.
Entry Point
The price at which a trader opens a position. A good entry point is typically at a key support/resistance level or after a pattern confirmation.
F
Fibonacci Retracement
A technical tool using horizontal lines at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) to identify potential support and resistance levels during pullbacks.
False Breakout
When price briefly moves beyond a support or resistance level but quickly reverses back. Often traps traders who entered on the breakout.
FOMO (Fear of Missing Out)
The emotional impulse to enter a trade because price is moving rapidly. One of the most common causes of poor trade entries.
G
Gap
A space on a chart where no trading occurred, caused by price jumping between two sessions. Gaps often act as support or resistance and tend to be 'filled' eventually.
Golden Cross
A bullish signal when the 50-day SMA crosses above the 200-day SMA. Widely watched by institutional traders as a long-term bullish indicator.
H
Hammer
A bullish reversal candlestick with a small body at the top and a long lower wick (at least 2x the body). Forms at the bottom of a downtrend, signalling potential reversal.
Head and Shoulders
A bearish reversal pattern with three peaks — a higher middle peak (head) flanked by two lower peaks (shoulders). Breaking the neckline confirms the reversal.
Higher High / Higher Low
The structure of an uptrend. Each successive peak is higher than the last (higher high), and each pullback stops above the previous low (higher low).
I
Indicator
A mathematical calculation based on price and/or volume data, plotted on a chart to help identify trends, momentum, and potential reversals. Examples: RSI, MACD, Bollinger Bands.
Inside Bar
A candlestick whose high and low are within the range of the previous candle. Signals consolidation and often precedes a breakout.
L
Liquidity
How easily an asset can be bought or sold without affecting its price. High liquidity = tight spreads and easy execution. Low liquidity = wider spreads and slippage.
Long
Buying an asset with the expectation that its price will rise. 'Going long' means you profit when price increases.
Lower High / Lower Low
The structure of a downtrend. Each successive peak is lower than the last (lower high), and each bounce fails to hold above the previous low (lower low).
M
MACD (Moving Average Convergence Divergence)
A momentum indicator showing the relationship between two EMAs (typically 12 and 26 period). The signal line (9-period EMA of MACD) generates buy/sell signals on crossovers.
Morning Star
A three-candle bullish reversal pattern: a large bearish candle, a small-bodied candle (gap down), and a large bullish candle. Signals a bottom reversal.
Moving Average
A line on a chart calculated by averaging price over a set number of periods. Smooths out price action to identify trends. Types: SMA, EMA, WMA.
O
Overbought
A condition where an asset's price has risen too quickly and may be due for a pullback. RSI above 70 is commonly used as an overbought signal.
Oversold
A condition where an asset's price has fallen too quickly and may be due for a bounce. RSI below 30 is commonly used as an oversold signal.
P
Pattern
A recognisable formation on a price chart that has historically preceded a particular price move. Patterns are divided into reversal and continuation types.
Pennant
A continuation pattern similar to a bull flag but with converging trendlines forming a symmetrical triangle. Signals continuation after a sharp move.
Position Size
The amount of capital allocated to a single trade. Calculated based on account size, risk percentage, and stop loss distance.
Price Action
Trading based purely on the movement of price on a chart, without relying on indicators. Focuses on candlestick patterns, support/resistance, and trend structure.
R
Resistance
A price level where selling pressure is historically strong enough to prevent further price increases. Price often reverses or consolidates at resistance.
Risk/Reward Ratio
The ratio of potential loss (risk) to potential gain (reward) on a trade. A 1:2 ratio means you risk $1 to potentially gain $2. Minimum recommended: 1:2.
RSI (Relative Strength Index)
A momentum oscillator ranging from 0 to 100. Above 70 = overbought; below 30 = oversold. Divergence between RSI and price is a powerful reversal signal.
S
Shooting Star
A bearish reversal candlestick with a small body at the bottom and a long upper wick. Forms at the top of an uptrend, signalling potential reversal.
SMA (Simple Moving Average)
The average closing price over a set number of periods, giving equal weight to all periods. Common periods: 50, 100, 200.
Stop Loss
A pre-set order to exit a trade at a specified price to limit losses. Essential for risk management. Should be placed at a logical technical level, not an arbitrary number.
Support
A price level where buying pressure is historically strong enough to prevent further price declines. Price often bounces or consolidates at support.
Swing High / Swing Low
A swing high is a peak surrounded by lower highs on both sides. A swing low is a trough surrounded by higher lows. Used to identify trend structure.
T
Take Profit
A pre-set order to close a trade at a specified price to lock in gains. Should be placed at a logical technical level such as resistance or a Fibonacci extension.
Trend
The general direction of price movement over time. An uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows.
Trendline
A straight line connecting a series of highs (downtrend) or lows (uptrend). A break of a trendline can signal a trend reversal.
V
Volume
The number of units traded in a given period. Rising volume confirms price moves; falling volume suggests weakness. Volume spikes often mark reversals.
VWAP (Volume Weighted Average Price)
The average price weighted by volume throughout the trading day. Used by institutional traders as a benchmark. Price above VWAP = bullish; below VWAP = bearish.
W
Wick / Shadow
The thin lines above and below a candlestick body showing the high and low extremes. Long wicks indicate rejection of price levels.
Win Rate
The percentage of trades that are profitable. A 50% win rate with a 1:2 R/R ratio is profitable. A higher R/R ratio allows profitability at lower win rates.