In technical analysis, a price trend characterized by a sharp fall, then a sharp rise, then a second sharp fall, and finally a second sharp rise. It is called a W formation because the series of rises and falls vaguely looks like the letter W. Technical analysts may consider a W formation a buy signal if the second sharp rises outpaces the two previous price highs.
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In technical analysis, a chart formation caused by a sharp decline, a sharp upward movement, and then a second sharp decline and sharp upward movement. The resultant chart pattern is similar to the letter W. In general, if the second upward movement surpasses each of the two previous high points, the W formation is a bullish sign.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.