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Glossary — P
Pennant
A continuation pattern similar to a flag but with converging trendlines, forming a small symmetrical triangle after a sharp move (flagpole). Breakout resumes the prior trend direction.
Piercing Line
A bullish two-candle reversal pattern where a bearish candle is followed by a bullish candle that opens below the prior low but closes above the midpoint of the first candle's body.
Pin Bar
A candle with a very small body and a long shadow (wick) extending in one direction. A bullish pin bar has a long lower wick (similar to hammer); a bearish pin bar has a long upper wick (similar to shooting star).
Pivot Point
A calculated price level based on the previous period's high, low, and close, used to determine potential support and resistance levels. Day traders use pivot points for intraday directional bias.
Position Sizing
Determining how many shares, lots, or contracts to trade based on account size, risk tolerance, and stop loss distance. Critical for surviving losing streaks and compounding gains.
Power of Three (PO3)
An ICT/SMC concept describing the three phases of institutional price delivery: accumulation, manipulation (stop hunt), and distribution (expansion). Each session or candle often follows this cycle.
Price Action
A trading methodology that analyzes raw price movement on charts without relying on lagging indicators. Price action traders read candles, patterns, support/resistance, and market structure directly.
Pullback
A temporary price movement against the prevailing trend. Pullbacks in uptrends are buying opportunities; pullbacks in downtrends are shorting opportunities. Distinguished from reversals by their smaller size and shorter duration.
Paper Umbrella
A generic term for candlesticks with a small body at the top and a long lower shadow, encompassing both hammers (bullish, at bottoms) and hanging men (bearish, at tops).
Position Trading
A long-term trading style that holds positions for weeks to months, capturing major trend moves. Position traders use weekly/monthly charts and wider stops than swing or day traders.
Pipe Pattern
A two-candle reversal pattern consisting of two long-shadowed candles (like hammers or hanging men) side by side. Pipe bottoms are bullish; pipe tops are bearish.