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.