Technical Analysis: The study of supply/demand relationships, investor psychology, monetary changes, and the study of price and volume movements of the market as a whole, and individual stocks in particular, in order to determine the probability of direction and degree of future price movement. Whereas fundamental analysis is concerned with the company (and its sales, earnings, products, management etc.), technical analysis is concerned only with the stock of the company (i.e., the changes in the supply/demand relationship for the stock in the market place).
Testing: Consolidation with expectation that a support (or resistance) level will hold.
Theoretical Value: The worth of an option or future, calculated by considering (1) the difference between the option’s or future’s exercise price and the price of the underlying asset (stock, commodity, currency or index) (2) the time value of money and (3) the volatility of the instrument on which the option is based. Also called “Underlying Value.”
Ticks: Net of upticks minus downticks.
Tick Volume: Similar to on-balance volume except that the base is not a time period but an individual transaction; e.g., for any one day the net tick volume is computed by subtracting the total volume that occurred on downticks from the total volume that occurred on upticks.
Top: Period of distribution.
Trading Index: The ratio of the advance/decline ratio to the upside/downside volume ratio. The index is favorable or overbought when significantly less than 1.00. Extremes are noted below 0.50 and greater than 2.00.
Trading Range: Upper and lower boundaries of a stock’s or index’s price range. Normally, a neutral or horizontal trend is implied.
Trend Channel: Two parallel trendlines that contain between them all or virtually all of the price movement data.
Trendline: Line that connects two or more points on a chart and represents the slope of movement.