The trading glossary, explained simply.
Clear definitions of the chart patterns, candlesticks, indicators and concepts behind every setup — what each one is, how it works, and how the StockSetups scanner uses it.
Chart Patterns
Ascending Triangle
A bullish continuation pattern where price makes higher lows under a flat horizontal resistance line, coiling toward an upside breakout.
Bull Flag
A short consolidation that slopes gently against a sharp prior advance, typically resolving with a continuation higher.
Cup and Handle
A bullish base shaped like a rounded 'cup' followed by a smaller pullback 'handle', signaling a potential breakout to new highs.
Double Bottom
A bullish reversal pattern shaped like a 'W', where price tests a support level twice and fails to break lower before turning up.
Flat Base
A tight, sideways consolidation in a narrow price range after an advance — a quiet base from which a stock can launch its next leg up.
Head and Shoulders
A reversal pattern with three peaks — a higher middle peak (head) between two lower peaks (shoulders) — that warns of a possible top.
Symmetrical Triangle
A consolidation of lower highs and higher lows converging to a point, where a breakout in either direction resolves the squeeze.
Candlestick Patterns
Bullish Engulfing
A two-candle reversal where a large up candle completely engulfs the prior down candle's body — a sign momentum flipped to buyers.
Doji
A candle that opens and closes at nearly the same price, forming a cross — a sign of indecision and a possible turning point.
Hammer
A single candle with a small body and a long lower wick, signaling that buyers rejected lower prices — a potential bullish reversal.
Shooting Star
A single candle with a small body and long upper wick after a rally — a bearish signal that buyers were rejected at higher prices.
Indicators
ADX (Average Directional Index)
A 0–100 gauge of trend strength — not direction — where readings above ~25 suggest a trend worth trading and below ~20 a choppy range.
ATR (Average True Range)
A volatility measure of how much a stock typically moves per period — used to size positions and set stops proportional to the stock's normal range.
Bollinger Bands
A moving average wrapped in bands set a number of standard deviations away — they widen in volatile markets and squeeze tight in quiet ones.
MACD
A trend-and-momentum indicator built from two moving averages, with a signal line and histogram that highlight shifts in momentum.
Moving Average
A line that smooths price over a chosen lookback (e.g. 50 or 200 days) to reveal the underlying trend and act as dynamic support or resistance.
Relative Strength (RS)
How a stock is performing versus a benchmark like the S&P 500 — leaders outperform the index, laggards trail it.
RSI (Relative Strength Index)
A momentum oscillator from 0–100 that measures the speed of recent gains vs losses — above 70 is often 'overbought', below 30 'oversold'.
VWAP (Volume-Weighted Average Price)
The average price weighted by volume over a session — a benchmark big traders use to judge whether they're buying or selling at a good price.
Concepts
Breakout
When price pushes decisively through a defined level of resistance (or support), often on rising volume, signaling a potential new move.
Float
The number of a company's shares actually available to trade — a low float can fuel sharp, fast moves because supply is scarce.
Gap
An empty space on the chart where price opens sharply higher or lower than the prior close, usually driven by news or a catalyst.
Relative Volume (RVOL)
Today's trading volume compared to the stock's normal volume — a 3x RVOL means three times the usual activity, flagging unusual interest.
Short Interest
The share of a stock's float sold short — when a heavily shorted stock rises, short sellers buying to cover can fuel a 'short squeeze'.
Support and Resistance
Price levels where buying (support) or selling (resistance) has repeatedly emerged — the structural floors and ceilings of a chart.
Trend
The general direction price is moving — an uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows.
See the terms on real charts.
StockSetups scans ~12,300 US stocks and ETFs after every close and sorts every setup into four long-only lanes — with the patterns, indicators and levels drawn for you.
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