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Glossary — B
Backtesting
Testing a trading strategy on historical data to evaluate how it would have performed in the past. Backtesting chart patterns helps quantify win rate, average gain, and maximum drawdown.
Bearish
Expecting or indicating a decline in price. A bearish pattern suggests selling pressure is dominant and price is likely to fall.
Bearish Divergence
When price makes a higher high but an indicator (like RSI or MACD) makes a lower high, suggesting momentum is weakening despite rising prices. Often precedes a reversal down.
Belt Hold
A single candlestick pattern where the candle opens at its extreme (high or low) and moves strongly in one direction. A bullish belt hold opens at the low; a bearish belt hold opens at the high.
Bid
The highest price a buyer is willing to pay for an asset. Market sell orders are filled at the bid price. The bid-ask spread reflects market liquidity.
Blow-Off Top
A sharp and rapid price increase followed by an equally sharp decline, driven by extreme buying euphoria and subsequent panic selling. Often the climax of a speculative bubble.
Body (Real Body)
The thick part of a candlestick between the open and close prices. A filled/red body means the close was lower than the open (bearish); a hollow/green body means close was higher (bullish).
Bollinger Bands
A volatility indicator consisting of a moving average with upper and lower bands set 2 standard deviations away. Price touching the bands can signal overbought/oversold conditions.
Breakaway Gap
A price gap that occurs at the start of a new trend, breaking through a consolidation or pattern boundary. Breakaway gaps usually have high volume and are rarely filled.
Breakdown
When price falls below a support level or the lower boundary of a pattern with conviction, typically on increased volume. The bearish equivalent of a breakout.
Breakout
When price moves above a resistance level or below a support level with conviction, typically accompanied by increased volume. Signals the start of a new directional move.
Broadening Formation
A chart pattern where price makes higher highs and lower lows, creating an expanding or megaphone shape. Indicates increasing volatility and disagreement between buyers and sellers.
Bull Trap
A false upside breakout that lures buyers in before reversing sharply lower. Price breaks above resistance, triggers buy orders, then falls back below, trapping longs.
Bear Trap
A false downside breakdown that lures sellers in before reversing sharply higher. Price breaks below support, triggers sell orders, then rebounds back above, trapping shorts.
Bullish
Expecting or indicating a rise in price. A bullish pattern suggests buying pressure is dominant and price is likely to rise.
Bullish Divergence
When price makes a lower low but an indicator (like RSI or MACD) makes a higher low, suggesting selling momentum is weakening. Often precedes a reversal to the upside.
Buy the Dip
A strategy of purchasing an asset after a price decline within an overall uptrend, anticipating the pullback is temporary and price will resume higher.
Break of Structure (BOS)
In Smart Money Concepts, when price breaks a previous swing high (in an uptrend) or swing low (in a downtrend), confirming the continuation of the current trend.
Bear Market
A sustained decline of 20% or more from recent highs, typically lasting months to years. Bear markets feature persistent lower highs and lower lows with periodic relief rallies that fail.
Bull Market
A sustained rise of 20% or more from recent lows, typically lasting months to years. Bull markets feature persistent higher highs and higher lows and are the best environment for bullish patterns.