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Chartology - How to Read Charts, "Bolling-style"

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Looking at patterns in stock charts was once considered a voodoo science, but not anymore. The Admiral defines some charting terms that could help you chart the course to fast money.


The Island Reversal/Island Bottom
This term refers to a chart that has a big gap down, then trading activity, then a gap back up. It generally means there is exhaustion in the selling. The bears are trying to sell and the bulls are taking everything they got, Eric says. The name comes from the idea that one could draw an island between the gaps on the chart.

The Double Top
It is rare for an exact double top to occur, and it usually signifies another attempt at a rally. It happens when a stock goes to a certain price, falls, then tries to run back up to that original high.

Oversold
When a chart shows signs of being oversold, it means there are too many sellers - when an abundance of selling dries up, the bulls come back to buy the stock.


Questions? Comments? fastmoney@cnbc.com


Trader disclosure:
On APR 6, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Bolling Owns (DIS), Gold, Silver
Strazzini Owns (VZ), (YHOO)