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Candlestick: A price chart that displays the high, low, open, and close for a security each day over a specified period of time.
There are many trading strategies based upon patterns in candlestick charting.
Chaikin Oscillator: An oscillator created by subtracting a 10-day EMA from a 3-day EMA of the accumulation/distribution line.
This indicator is named after its creator, Marc Chaikin.
Chande Momentum Oscillator: A technical momentum indicator invented by the technical analyst Tushar Chande. It is created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period. This oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator because it is range bounded (+100 and -100).
The instrument is deemed to be overbought when the momentum oscillator is above +50 and oversold when it is below -50. Many technical traders add a nine-period moving average to this oscillator to act as a signal line. Bullish signals are generated when the oscillator crosses above the signal, and bearish signals are generated when the oscillator crosses down through the signal.
Channel: The system of intermediaries between the producers, suppliers, consumers, etcetera, for the movement of a good or service.
The technical range between support and resistance levels that an instruments price has traded in for a specific period of time.
There are different types and flavors of channels. Examples are sale channels, distribution channels, Internet channels, and so forth.
A breakout of a technical channel is seen as a bullish (on an upward breakout) or bearish signal (on a downward breakout).
Chartered Market Technician - CMT: A professional designation given by the Market Technicians Association (MTA) to financial professionals who prove their proficiency in technical analysis.
To be granted the designation, a candidate must pass three examination levels and agree to be bound by the MTA code of ethics. Also, to register for the CMT program, an individual must be a paying member of the MTA.
Chartist: Another name for a technical analyst. This is a person who uses charts to identify patterns that can suggest future activity.
Chartists use technical analysis for just about any type of financial security, especially stocks and commodities.
Chikou Span: A component of the Ichimoku Kinko Hyo indicator that is created by plotting recent price movement 26-periods behind the latest closing price. The number of periods used to lag the Chikou span is customizable so that transaction signals are generated more or less frequently.
Also known as the "lagging span".
The trend is deemed to be upward when the Chikou span is located above the closing prices and downward when the indicator is located below them. Many traders watch for the Chikou span to cross below the closing prices as a signal that the price of the asset is getting exhausted and is likely to experience a pullback.
Choppy Market: A condition whereby prices swing up and down considerably but with no resulting overall price movement in either direction.
The term is derived from the phrase choppy seas, where a boat will move a lot but not over any large distance as waves prevent it from moving any meaningful distance. The DJIA, for example, may start a six-month period at 11,500 and over the six months move all over the 11,000 to 12,000 range but end the period at around 11,500.
Climax: Following a protracted period of selling or buying, a point wherein market trends are retarded or discontinued.
At a selling climax, the market is characterized by a trend reversal whereby the market begins to buy and prices rise. For a buying climax, the opposite occurs, and the market begins to sell, resulting in lower prices. The climax is merely the highest point of selling or buying and can be followed by many trend reversals.
Commodity Channel Index - CCI: An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold. The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. It is computed with the following formula:
CCI = Price - MA
0.015xD
The CCI has seen substantial growth in popularity amongst technical investors; today's traders often use the indicator to determine cyclical trends in not only commodities, but also equities and currencies.
The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset's price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.
Commodity Selection Index - CSI: A technical momentum indicator that attempts to identify which commodities are the most suitable for short-term trading. The larger the CSI value, the stronger is the trend and volatility characteristics associated with the asset. This indicator should only be used by traders who can handle large amounts of volatility as it indicates strong trending, but reversals are always possible.
Short-term traders know that the key to making money is movement, which is the reason that they mainly focus on the highly volatile assets. This index attempts to lessen the amount of risk taken, and make it easier to trade by incorporating trend characteristics. Some traders will only trade the commodity with the highest CSI value, while others will make transaction signals when they see a sharp increase in this value.
Consolidation: In technical analysis, 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.
The levels of resistance and support within the consolidation are created through the upper and lower bounds of an instruments price. Once the price of the asset breaks through the identified areas of support or resistance, volatility quickly increases and so does the opportunity for short-term traders to generate a profit.
Coppock Curve A long-term price momentum indicator used primarily to recognize major bottoms in the market. It is calculated as a 10-month weighted moving average of the sum of the 14-month rate of change and the 11-month rate of change for the index.
Also known as the "Coppock Guide".
The Coppock formula was introduced in Barron's in 1962 by Edwin Sedgwick Coppock.
A buy signal is formed when there is an upturn in the curve after an extreme low in the curve. A sell signal is formed when there is a higher peak in prices but a lower peak in the Coppock curve. These are the basic signals, more signals and interpretations are seen at more advanced levels.
Count A trend analysis using point and figure charts to estimate the vertical movement of prices.
Count calculations are based upon past sideways price movements and are used to gauge the probability that a price target will be reached. This is used by traders to ascertain whether certain positions are profitable.
Countertrend Strategy A trading strategy where an investor attempts to make small gains through a series of trades against the current trend. It is also known as "counter-trend trading".
Contrarian investors perform counter-trend trading strategies - purchasing when prices are low and selling when they're high. The investor receives smaller gains since the full market swing is not recognized.
Many counter-trend investors use momentum indicators to determine the best times to execute their trades.
Crossover The point on a chart when an instrument and an indicator intersect. Crossovers are used by technical analysts to aid in forecasting the future movements in the price of an instrument. In most technical analysis models, a crossover is a signal to either buy or sell.
An example of a crossover would be when the instrument line breaks through its 25-day moving average which may be a signal to buy the instrument. Some of the indicators that use crossovers are "moving average" and "Bollinger bands".
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