Plain-language definitions for the language used on this page.
- Market cycle
- Every market moves through four repeating phases.
- Prices rarely move in a straight line. They base out (Stage 1), trend up (Stage 2), top out (Stage 3) and trend down (Stage 4), then start again. Knowing which phase you are in tells you whether buying, holding or waiting is the lower-risk choice.
- Stage 1 · Accumulation
- The decline has stopped and a base is forming.
- Price moves sideways after a fall, the long-term trend line flattens, and patient buyers quietly absorb supply. Risk is lower than in a downtrend but the uptrend is not proven yet — scale in gradually rather than committing everything.
- Stage 2 · Markup
- A confirmed uptrend — the easiest place to own an asset.
- Price is above a rising 40-week trend line and making higher highs and higher lows. Historically most of the gains in a cycle happen here. Buy pullbacks toward the trend rather than sharp spikes away from it.
- Stage 3 · Distribution (seeking a top)
- Momentum is stalling near the highs — a top is being built.
- Rallies stop making meaningful new highs, the trend line flattens and momentum readings cool while price stays elevated. Larger holders sell into strength here. Not the time to add size; hold quality, or take some profit.
- Stage 4 · Markdown
- A confirmed downtrend — cheap prices keep getting cheaper.
- Price sits below a falling 40-week trend line and makes lower highs and lower lows. Most of the damage in a cycle happens in Stage 4. Bargains here are usually premature; wait for a base (Stage 1) before committing.
- Bottoming / basing
- Still in a downtrend, but price has lifted off the low.
- The market is trying to carve out a bottom: sellers look exhausted, price is off the 52-week low and short-term momentum has turned up, while the long-term trend is still down. Small tranches only until the trend actually turns.
- Topping
- The market is working on a high, not a launchpad.
- Price is stretched above its long-term trend with overbought momentum, and the trend line is flattening. Tops take time and can grind higher — the point is that new money is being put in at the worst risk-to-reward part of the cycle.
- Bias (bullish / bearish / neutral)
- The direction the weight of evidence currently favours.
- Bullish means trend, momentum and location all point up. Bearish means they point down. Neutral means they disagree — typically in a top or a base, where waiting is usually the best position.
- Buy
- Lower-risk part of the cycle to be putting money in.
- The long-term trend is rising, price is above it and not yet stretched. You can commit a full planned tranche here, ideally into a pullback rather than a spike.
- Accumulate
- Buy in small pieces over time, not all at once.
- The setup is improving but unproven — a base or an early bottom. Split your intended amount into 3–4 tranches spread over weeks or months, so a further fall lowers your average price instead of hurting you.
- Hold
- Keep what you own, don't chase at these levels.
- The trend is intact but price has run far from its trend line, so the odds of a near-term pullback are high. Keep existing positions and put new money to work closer to the 30-week average.
- Hold / trim
- Consider taking some profit into strength.
- Distribution signals are showing. Holding quality for the dividend is fine, but selling a slice of an oversized position into strength reduces the damage if the cycle turns.
- Avoid / wait
- The cycle is working against you here.
- A falling long-term trend with price beneath it. Any purchase is fighting the dominant trend. Wait for the decline to stop and a base to form before buying.
- Half-cycle high / low
- The highest and lowest point of the last six months.
- A cycle has an outer swing (roughly a year) and an inner, half-cycle swing (roughly six months). The half-cycle high is the peak of the most recent inner swing and acts as the level a rally must clear to keep the trend alive; the half-cycle low is the trough that must hold. Breaking the half-cycle low while the yearly trend is still up is often the first sign a top is forming; reclaiming the half-cycle high from below is often the first sign a bottom is in.
- Half-cycle midpoint
- The middle of the six-month range.
- Above it, buyers control the inner swing and price is in the expensive half of the range; below it, sellers do and price is in the cheaper half. Useful as a quick fair-value line for deciding whether you are buying at a discount.
- 52-week high / low
- The highest and lowest weekly close of the past year.
- The boundaries of the current annual cycle. Near the high in a rising trend is strength; deeply below the high with a falling trend is Stage 4. How far off the low tells you how much of a recovery has already happened.
- 40-week trend line
- The 40-week average price — the line that defines the trend.
- Roughly a 200-day moving average. Above a rising line is an uptrend; below a falling line is a downtrend. The percentage shown is how far price is stretched from it — beyond about +20% moves are usually extended.
- 30-week average
- The typical pullback support inside an uptrend.
- In healthy Stage 2 trends, dips tend to find buyers near the 30-week average, which makes it a practical place to add rather than buying spikes.
- Weekly RSI (14)
- A 0–100 momentum gauge on the weekly chart.
- Above ~68 means momentum is stretched (overbought) and pullbacks are common. Below ~38 means sellers are exhausted (oversold). RSI measures speed, not direction — it can stay high all the way up a strong trend.
- Momentum (3m / 6m / 12m)
- How much price has moved over each look-back window.
- Positive and improving across all three windows is what a real uptrend looks like. Positive 12-month with negative 3-month is often an early warning that a top is forming.
- Signal confidence
- How cleanly the evidence agrees.
- Higher when the trend direction, price location and momentum all point the same way, and when the trend has a clear slope. Low confidence means the market is transitioning — usually a reason to wait.
- Order block
- The candle a big move launched from.
- The last opposite-direction candle before an outsized impulse. It marks the price area where large orders were filled. Price often returns there before continuing, which makes it a practical place to rest a limit order.
- Demand zone
- A price band below the market where buyers stepped in hard.
- Left behind by a strong up-move. If price returns, buyers may defend it again — the level to rest a buy limit, with the stop just below the zone.
- Supply zone
- A price band above the market where sellers took control.
- Left behind by a strong down-move. On a return, sellers may reload — a place to take profit if you are long, or to fade a rally.
- Fresh vs tested
- Whether price has already come back into the zone.
- Fresh zones have not been revisited since forming, so the unfilled orders are likely still there — they react most reliably. Tested (mitigated) zones have already been traded through once and are weaker.
- Strength (× ATR)
- How violent the move away from the zone was.
- Measured in Average True Range multiples. A 2× ATR displacement means the impulse candle was twice the size of a typical bar — bigger displacement usually means a more significant zone.
- ATR (Average True Range)
- The average distance price travels in one bar.
- A volatility yardstick. Stops are placed a fraction of an ATR beyond a zone so normal noise does not knock you out, and position size should be set from that stop distance.
- Premium / discount / equilibrium
- Where price sits in its recent range.
- 0% is the range low (discount, better for buying), 100% is the range high (premium, better for selling), and the middle is equilibrium. Buying at a discount and selling at a premium is what keeps risk-to-reward on your side.
- Market structure
- The sequence of swing highs and lows.
- Higher highs and higher lows is an uptrend, lower highs and lower lows a downtrend, anything else is ranging. Trades taken with structure need less to go right.
- Entry (limit order)
- The price you instruct your platform to trade at.
- Set at the edge of the zone so you are filled only if price comes to you. This avoids chasing and defines your risk before you are in the trade.
- Stop loss
- The price where the idea is wrong and you exit.
- Placed half an ATR beyond the far side of the zone. If price closes through it, the level failed — the loss is capped and you look for the next setup.
- Target 1 / Target 2
- Where the move logically runs into opposition.
- Target 1 is the near edge of the opposing zone, target 2 the far edge. A common approach is to take part of the position off at target 1 and move the stop to break even.
- R multiple (risk-to-reward)
- Reward measured in units of your risk.
- 1R is the distance from entry to stop. A 3R target means you stand to gain three times what you risk, so the idea can be wrong more often than right and still make money. Below about 1.5R a setup is rarely worth taking.
