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.

RELATED TERMS
  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Market Indicators

    A series of technical indicators used by traders to predict the ...
  3. Technical Indicator

    Any class of metrics whose value is derived from generic price ...
  4. Hybrid Indicator

    A technical indicator that combines core elements of chart analysis ...
  5. Unique Indicator

    A technical indicator that can be developed using only core elements ...
  6. Ease Of Movement

    A technical momentum indicator that is used to illustrate the ...
Related Articles
  1. Technical Indicators

    Using Technical Indicators To Develop Trading Strategies

    Unfortunately, there is no perfect investment strategy that will guarantee success, but you can find the indicators and strategies that will work best for your position.
  2. Forex Education

    How To Build A Trading Indicator

    Wondering how people like Elliott and Gann built their famous trading tools? Learn the basics of constructing an indicator.
  3. Forex Education

    Introduction to Types of Trading: Technical Traders

    Learn about the different traders and explore in detail the broader approach that looks to the past to predict the future.
  4. Trading Strategies

    Profit Without Predicting The Market

    Traders who try to predict the future can actually harm their trading options.
  5. Active Trading

    Using Trading Indicators Effectively

    Select multiple indicators, avoid information overload and optimize indicators to effectively use technical analysis tools.
  6. Active Trading Fundamentals

    What The Market Open Tells You

    The first few moments of trading provide a lot of information. If a trader analyzes this information, it can give a lot of insight into the market's moves for the day.
  7. Trading Strategies

    Introduction To Momentum Trading

    This trading style offers major profit potential thanks to the powerful way in which momentum can drive a stock.
  8. Active Trading

    Moving Averages: How To Use Them

    By Casey Murphy, Senior Analyst ChartAdvisor.com Some of the primary functions of a moving average are to identify trends and reversals, measure the strength of an asset's momentum and determine ...
  9. Insurance

    Exploring Oscillators and Indicators: Introduction

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Technical analysis is broken into two main categories, chart patterns and indicators. Indicators are essentially calculations ...
  10. Forex Education

    10 Forex Misconceptions

    The currency markets are full of myths that can harm a trader's chances at success.
RELATED FAQS
  1. What technical indicators can be used to confirm the tendency of a stock?

    Find out what signal confirmation is and some common strategies used to confirm trading signals concerning the tendency of ... Read Answer >>
  2. How do traders identify confirmation of prices on a chart?

    Learn about some of the crucial tools that traders can use to confirm their price movements on a chart before entering or ... Read Answer >>
  3. What are leading, lagging and coincident indicators? What are they for?

    An indicator is anything that can be used to predict future financial or economic trends. For example, the social and economic ... Read Answer >>
  4. Why is it important for traders and investors to follow market indicators?

    Learn about market indicators such as the Advance/Decline Index and market breadth. Discover why these indicators are so ... Read Answer >>
  5. Can technical analysis be called a self-fulfilling prophecy?

    This has been a topic of much controversy since the invention of technical analysis, and it remains a very heated debate. ... Read Answer >>
  6. What are the best technical indicators that complement the Relative Strength Index ...

    Learn some of the best additional technical indicators that can be used along with the relative strength index to anticipate ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center