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Indecision

Volatility patterns / quantifytools- Overview Volatility patterns detect various forms of indecisive price action, on a larger scale as a compressed range and on a smaller scale as indecision candles. Indecisive and volatility suppressing price action can be thought of as a spring being pressed down. The more suppression, the more tension is built and eventually released as a spike or series of spikes in volatility. Each volatility pattern is assigned an influence period, during which average and peak relative volatility is recorded and stored to volatility metrics. - Patterns The following scenarios are qualified as indecision candles: inside candles, indecision engulfing candles and volatility shifts. By default, each indecision candle is considered a valid pattern only when another indecision candle has taken place within 3 periods, e.g. prior inside candle + indecision engulfing candle = valid volatility pattern. This measurement is taken to filter noise by looking for multiple hints of pending volatility, rather than just one. Level of tolerated noise can be changed via input menu by using sensitivity setting, by default set to 2. Sensitivity at 1: Any single indecision candle is considered a valid pattern Sensitivity at 2: 2 indecision candles within 3 bars is considered a valid pattern Sensitivity at 3: 2 indecision candles within 2 bars (consecutive) is considered a valid pattern The following scenarios are qualified as range patterns: series of lower highs/higher lows and series of low volatility pivots. A pivot is defined by highest/lowest point in price, by default within 2 periods back and 2 periods forward. When 4 pivots with qualities mentioned above are found, a box indicating compressed range will appear. Both required pivots and pivot definition can be adjusted via input menu. - Influence time and metrics By default, influence time for each volatility pattern is set to 6 candles, a period for which spike(s) in volatility is expected. For each influence period, average relative volatility (volatility relative to volatility SMA 20) and peak relative volatility is recorded and stored to volatility metrics. All metrics used in calculations are visible in "Data Window "tab. Average and peak volatility during influence period will vary depending on chart, timeframe and chosen settings. Tweaking the settings might result in an improvement and is worth experimenting with. - Visuals By default, indecision candles are visualized as yellow lines and range patterns as orange boxes. Influence time periods are respectively visualized as colored candle borders, applied as long as influence time period is active. All colors are fully customizable via input menu. - Practical guide Volatility patterns depict moments of equal strength from both bulls and bears. While this equilibrium is in place, price is stagnant and compresses until either side initiates volatility, releasing the built up tension. On top of hedging and playing the volatility using volatility based instruments, some other methods can be applied to take advantage of the somewhat tricky areas of indecision. Example #1: Trading volatility Volatility is not a bad thing from a trading perspective, but can actually be fertile ground for executing trade setups. Trading volatility influence periods from higher timeframes on lower timeframes gives greater resolution to work with and opportunities to take advantage of the wild swings created. Example #2: Finding bias for patterns Points of confluence where it anyway makes sense to favor one side over the other can be used for establishing bias for indecisive price action as well. At face value, it makes sense to expect bearish reactions at range highs and bullish reactions at range low, for which volatility patterns can provide a catalyst. Example #3: Betting on initiation direction Betting on direction of the first volatile move can easily go against you, but if risk/reward is able to compensate for the poor win rate, it's a valid idea to consider and explore.
Pine Script™ indikatörü
quantifytools tarafından
5
Indecision Indicator [CHE]"In times of great uncertainty, indecision is often the wisest course of action." Introduction: The Indecision Indicator is a custom script for use in Trading View. The script is designed to help traders determine potential reversal points in financial markets, by displaying different levels of indecision or rejection. Glossary: Indecision: Indicates a situation where the market is uncertain and can move in either direction. Rejection: Indicates a situation where the market has rejected a certain price level and is likely to move in the opposite direction. Totalwick: The total length of the upper and lower shadows on a candlestick chart. MACD: Moving Average Convergence Divergence, a popular momentum indicator. Inputs: Rejection: Allows the user to choose between the different types of indecision to display, including Indecision, Rejection, Totalwick, All, and MACD. Indecision Length: The number of candles used to calculate the indecision level. Length: The length of the Moving Average used to smooth the indecision or rejection levels. Trigger Length: The number of candles used to calculate the trigger line, which is used to indicate potential reversal points. Output: The script calculates the lower and upper rejection levels, as well as the indecision level, and displays them as lines on the chart. The lines are color-coded to indicate whether the market is in a state of indecision or rejection, and whether it is likely to move up or down. Best regards Chervolino
Pine Script™ indikatörü
chervolino tarafından