Breakdown: A price movement through an identified level of support, which is usually followed by heavy volumes and a sharp decline, is defi ned as a ‘breakdown’. Technical traders will short sell the underlying asset when the price of the security breaks below a support level because it is a clear indication that the bears are in control and that additional selling pressure is likely to follow.

Consolidation: Consolidation is the movement of an asset’s price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years. Lengthy periods of consolidation are often known as a base.

Correction: A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset. Its part of health market.

Divergence: Divergence is when the price of an asset and an indicator, index or other related asset move in opposite directions. In technical analysis, traders make transaction
decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the money fl ow index (MFI), are moving in opposite directions. In technical analysis, divergence is considered either positive or negative, both of which are signals of major shifts in the direction of the price. Positive divergence occurs when the price of a security makes a new low while the indicator starts to climb upward. Negative divergence happens when the price of the security makes a new high, but the indicator fails to do the same and instead closes lower than the previous high.

Momentum: Momentum is the rate of acceleration of a security’s price or volume. Moving average: An indicator frequently used in technical analysis showing the average
value of a security’s price over a set period. Moving averages are generally used to measure momentum and define areas of possible support and resistance.

Open interest: Open Interest is the total number of outstanding contracts that are held by market participants at the end of the day. It can also be defined as the total number of futures contracts or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery. Open interest applies primarily to the futures market. Open interest, or the total number of open contracts on a security, is often used to confirm trends and trend reversals for futures and options contracts.

Simple moving average: A simple, or arithmetic moving average that is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react. In general, the 50- and 200-day EMAs are used as signals of long-term trends.

Exponential moving average: A type of moving average that is similar to a simple moving average, except that more weight is given to the latest data. This is also known as “exponentially weighted moving average”.

This type of moving average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are
used to create indicators like the moving average convergence divergence (MACD).

Swing trading: ‘Swing Trading’ is a style of trading that attempts to capture gains in a stock within one to four days.

Uptrend: An uptrend describes the price movement of a fi nancial asset when the overall direction is upward. A formal uptrend is when each successive peak and trough is higher than the ones found earlier in the trend.

Volume: The number of shares or contracts traded in a security or an entire market during a given period of time. It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a seller, then the volume for that period increases by 100 shares based on that transaction

Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made strong price move either up or down
the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more signifi cant the move.

Indicators: Technical Indicator is a result of mathematical calculations based on indications of price and/or volume. The values obtained are used to forecast probable price changes.