CONFIRMATION

9 May 2016 By PDSNET

A charting pattern giving credibility to a formation which has taken place.  Typically, it is advised to wait for at least three days which consist of data points confirming the trend or formation taking place. Confirmation can also include the indication by at least two indices, in the case of Dow theory, the industrials and the transportation, which corroborate a market trend or a turning point. In technical analysis, this term is also used where two or more different indicators give a buy signal or sell signal thus increasing confidence in the correctness of the signal. The opposite of a confirmation is a non-confirmation where two indicators give opposite signals. The problem with this idea is that there are so many different line indicators that there will always be indicators which show confirmation and non-confirmation of a particular signal. You need to choose, maybe three or four indicators which you like and become an expert in them. Then you will get a feel for when they are confirming a particular pattern.



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