Market Structure & Price Theory Flashcards

The 'measured move' technique estimates a price target by:

Answer: Projecting the height of a prior price swing from the breakout point

The measured move projects that the next price leg will approximate the length of the initial leg, providing a target by adding that distance to the breakout point.

In technical analysis, what does 'confluence' refer to?

Answer: Multiple independent technical signals pointing to the same price level or outcome

Confluence occurs when several independent technical factors — such as a Fibonacci level, moving average, and trendline — align at the same price zone, increasing its significance.

Which of the following describes a 'secular trend' in technical analysis?

Answer: A very long-term trend spanning years to decades

A secular trend is a long-term directional move lasting many years, driven by fundamental shifts in demographics, economics, or technology, within which cyclical trends occur.

What is the significance of a 'pivot point' in technical trading?

Answer: It is a calculated price level used to identify potential support and resistance for the current session

Pivot points are calculated using the prior session's high, low, and close to derive key intraday support and resistance levels widely used by short-term traders.

In the context of trend analysis, what is an 'internal trendline'?

Answer: A trendline drawn through the interior of price action, ignoring extreme highs/lows

An internal trendline is drawn through the densest cluster of price action rather than the extreme highs or lows, often providing more durable dynamic support/resistance.

What is the primary characteristic of a 'line chart' that differentiates it from other chart types?

Answer: It plots only the closing price for each period

A line chart connects only the closing prices of each period, making it the simplest chart type and often used to view long-term trends without intrabar noise.