Technical Analysis Terms that everyone should know about

Support -The area where a stock that has been declining is likely to stabilize and then bounce off and move higher (at least temporarily). It's like a floor.

Resistance -The zone where a rallying stock is likely to run into trouble (at least temporarily) and then be turned back. The more times the given resistance area is tested, and again the longer the time period involved, the more important the bullish signal.

Trading Range. The neutral zone in the ongoing battle between buyers and sellers. When a stock is in an uptrend, the buying army is obviously stronger than the selling side and rising prices result. A downtrend is the flip side of the coin, where the selling side...

Breakout. When the price of a stock moves above the top of its resistance zone. Two hints to always remember are: (1) the longer the time spent below the resistance, the more significant is the eventual breakout; and (2) the greater the expansion of volume on the breakout..

Trend line. If you take a ruler and connect any two lows on a given chart, you've drawn a trend line. However, there is a big difference between a trend line and a significant trend line! A significant trend line will be touched at least three times.

Relative Strength. How a given stock (or group) acts in relation to the overall market. For instance, if stock XYZ rallies 10 percent while the market moves ahead 20 percent, that's poor relative strength even though the stock has advanced. On the other hand, if stock XYZ..

... is much more powerful than the buyers. But in a trading range, the two sides are equal in strength and the battle rages between the support zone) and the resistance area.

Breakdown. The mirror image of breakout, as the price of a stock moves below the bottom of the support zone

Throwback. After a stock breaks out of its trading range and advances, there is usually at least one profit-taking correction that brings the price of the stock back close to the initial breakout point.

Downtrend. A series of lower peaks and lower bottoms on a given stock.