Amplitude

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DEFINITION of 'Amplitude'

The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).

BREAKING DOWN 'Amplitude'

Amplitude is calculated often in technical analysis. For example, it is the amount of retracement in a price and also the width of a channel in a range-bound market.

Chart pattern analysis says that after a retracement, price will continue to move at least a distance equal to the retracement's amplitude.

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