Loading patterns...
Glossary — D
Dark Cloud Cover
A bearish two-candle reversal pattern where a large bearish candle opens above the prior bullish candle's high and closes below its midpoint, signaling a shift from buying to selling.
Dead Cat Bounce
A temporary recovery in a declining asset's price, followed by a continuation of the downtrend. The bounce creates a false sense of reversal before sellers regain control.
Deliberation
A bearish three-candle pattern similar to an advance block, where the third bullish candle is a small star or spinning top after two strong bullish candles, signaling indecision at the top.
Descending Triangle
A bearish chart pattern formed by a flat support line and a falling resistance line, indicating sellers are becoming more aggressive. Breakdown below support confirms the pattern.
Diamond Pattern
A rare chart pattern that forms when a broadening formation transitions into a symmetrical triangle, creating a diamond shape. Diamond tops are bearish; diamond bottoms are bullish.
Distribution
A phase where institutional investors quietly sell large positions without crashing the price. Identified by sideways action at highs with increasing volume on down moves.
Divergence
A discrepancy between price action and an indicator's reading. Regular divergence signals potential reversals; hidden divergence signals trend continuation.
Doji
A candlestick where the open and close prices are virtually identical, creating a cross or plus shape. Represents indecision between buyers and sellers. The type of doji depends on shadow lengths.
Double Bottom
A bullish reversal chart pattern where price tests a support level twice, forming a 'W' shape. The pattern is confirmed when price breaks above the peak between the two lows.
Double Top
A bearish reversal chart pattern where price tests a resistance level twice, forming an 'M' shape. Confirmed when price breaks below the trough between the two peaks.
Downtrend
A sustained decline in price characterized by a series of lower highs and lower lows. Bearish patterns are most reliable when they appear within a confirmed downtrend.
Dragonfly Doji
A doji with a long lower shadow and virtually no upper shadow, where the open, close, and high are at or near the same price. A bullish signal when found at support, showing rejection of lower prices.
Drawdown
The peak-to-trough decline in account equity before a new high is reached. Maximum drawdown measures the worst-case capital decline and is a key metric for evaluating trading strategies.
Day Trading
A trading style where all positions are opened and closed within the same trading day. Day traders rely on intraday charts, fast execution, and tight risk management.
Death Cross
A bearish signal that occurs when a shorter-term moving average (typically 50-day) crosses below a longer-term moving average (typically 200-day). The opposite of a golden cross.
Discipline
The ability to follow a trading plan consistently, executing entries and exits as planned regardless of emotions. Discipline is widely considered the single most important trait for trading success.
Demand Zone
A price area where buying pressure (demand) exceeds selling pressure, causing price to rally. In SMC, demand zones are identified around previous strong up-moves and act as support areas.