Confirmation On A Chart


DEFINITION of 'Confirmation On A Chart'

An indicator or chart pattern that provides evidence that the initial trading alert in question is indicative of an actual trading opportunity. Traders look to other technical indicators to confirm their expected prediction so that they can have as many technical factors working in their favor as possible. This increases the probability of making a highly successful trade.

BREAKING DOWN 'Confirmation On A Chart'

For example, a trader who witnesses a short-term moving average cross above a longer-term moving average would predict that the upward momentum over the coming weeks is likely to increase. Before this trader decides to place an order for the security he or she may want to look to other indicators as confirmation of the initial prediction. This chart confirmation is used to increase the conviction of the trader, and it generally becomes more influential when three or more indicators are predicting the same type of movement.

  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  3. Rectangles

    A technical trading pattern in which a security's value ranges ...
  4. Technical Analysis of Stocks and ...

    The academic study of historical chart patterns and trends of ...
  5. Confirmation

    1. The occurrence of two or more indicators corresponding with ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following ...
Related Articles
  1. Active Trading Fundamentals

    3 Things Investors Can Learn From Traders

    By incorporating some of the best practices of top traders, investors can greatly improve portfolio returns.
  2. Trading Strategies

    Basics Of Technical Analysis

    Learn how chartists analyze the price movements of the market. We'll introduce you to the most important concepts in this approach.
  3. Charts & Patterns

    Analyzing Chart Patterns

    Learn how to evaluate a stock with a few easy-to-identify patterns.
  4. Active Trading Fundamentals

    Gauging Support And Resistance With Price By Volume

    This straightforward histogram can help you analyze the buying and selling interest in a stock.
  5. Chart Advisor

    4 European Stocks to Consider Buying

    European companies, listed on US exchanges, that are providing buying opportunities right now.
  6. Chart Advisor

    ChartAdvisor for October 2 2015

    Weekly technical summary of the major U.S. indexes.
  7. Investing

    How Diversifying Can Help You Manage Market Mayhem

    The recent market volatility, while not unexpected, has certainly been hard for any investor to digest.
  8. Technical Indicators

    Why MACD Divergence Is an Unreliable Signal

    MACD divergence is a popular method for predicting reversals, but unfortunately it isn't very accurate. Learn the weaknesses of indicator divergence.
  9. Chart Advisor

    Weakness In Biotech Will Likely Continue

    You can breathe easy with your biotech holdings--assuming you aren't counting on them to make you rich.
  10. Chart Advisor

    Expecting a Big Breakout In These 4 Stocks

    These stocks are tightly wound following big moves, and upon breakout more big moves could ensue.
  1. What are the best technical indicators to complement Weighted Alpha?

    Weighted alpha isn't necessarily meant to complement other technical indicators; instead, it helps technical investors and ... Read Full Answer >>
  2. What are the best technical indicators to complement the Uptick Volume?

    In technical analysis, uptick volume is almost always used in conjunction with downtick volume to measure net volume or the ... Read Full Answer >>
  3. What are the differences between Relative Strength Index (RSI) & Stochastic Oscillator?

    Both the relative strength index (RSI) and stochastic oscillator are price momentum oscillators that are used to forecast ... Read Full Answer >>
  4. How do I implement a forex strategy when spotting a Pennant Pattern?

    The pennant pattern is a relatively reliable continuation signal. Though similar to the forex triangle pattern, the pennant ... Read Full Answer >>
  5. What are the best technical indicators to complement On-Balance Volume (OBV)?

    The concept of confirmation -- whether with a price chart or preferably another technical indicator – should be of paramount ... Read Full Answer >>
  6. What is a common strategy traders implement when using On-Balance Volume (OBV)?

    When you apply the On-Balance Volume, or OBV, indicator to a security's price chart, you measure the positive and negative ... Read Full Answer >>
  7. What technical indicators can be used to confirm the tendency of a stock?

    Traders are taught to look for confirmation about potential trading opportunities before executing any transactions. Almost ... Read Full Answer >>
  8. How are Hammer patterns interpreted by analysts and traders?

    The hammer is a common candlestick pattern that signals the reversal of a bearish trend. It comprises a single candlestick ... Read Full Answer >>
  9. How effective is creating trade entries after spotting a Harami Cross pattern?

    Because this pattern is relatively common, entering a trade following a harami cross can have mixed results. The harami cross ... Read Full Answer >>
  10. How are descending tops interpreted by traders and technical analysts?

    Descending tops are among the most commonly occurring stock market indicators and are the inverse of the ascending tops pattern. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  3. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  4. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  5. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!