04/01/2022 |
TrendSpider Software Update: Two New Experimental Indicators
Hello everyone, and welcome to a new software update from TrendSpider. In this release, we are introducing two new experimental indicators: the Wick Oscillator and the Pressure & Response indicator. Details after the jump.
In this update, we are releasing two new related experimental indicators designed to identify potential market changes and trends. These indicators are based on pure price action and do not incorporate any other data (such as volume) in their calculations.
Wick Oscillator (Experimental)
The Wick Oscillator is a new, experimental indicator developed by the TrendSpider engineering team. It is displayed as a lower indicator at the bottom of your chart.
This indicator is designed to measure the relative size of the wicks on each candle in an attempt to identify potential market pressure to reverse directions from price action alone. It consists of three separate lines and color shading. This indicator works differently on charts utilizing Raindrop candles vs. traditional candles.
On traditional candle charts, the upper line in the Wick Oscillator calculates the difference between the Open or Close (whichever is higher) and the High. The lower line calculates the difference between the Open or Close (whichever is lower) and the Low. These numbers are then viewed through a rolling window (default value is 5) and used to calculate the Wick Oscillator. The last line, the White Line, is identical to the difference between the Upper and Lower wicks, and is painted in the middle of the chart.
When the Wick Oscillator shows more range on the upper half of the oscillator vs the lower half, this implies selling pressure. This is because the wicks on the upper part of each candle are greater in size than the wicks on the bottom part of each candle. When the reverse is true, the wicks on the bottom half are larger than the wicks on the upper half, it suggests a bullish reversal is possible. The white line can be used as a confirmation for this information, e.g. when the white line favors the bottom of the indicator, it may imply confirmation and the same in reverse.
When the Wick Oscillator is used on a Raindrop chart, the calculation is performed in a slightly different way. Instead of measuring the distance between the Close or Open and the High or Low, it will measure the difference between the High or Low and the Central VWAP on the chart. This provides a different set of signals that we believe are more useful for trading.
Pressure/Response (Experimental)
The Pressure and Response indicator (P/R for short) is very similar to the Wick Oscillator in that it also measures price action by calculating the difference between the High or Low and the Open or Close. This indicator also works differently on Raindrop Charts in the same way that the Wick Oscillator does.
When opening the properties of this indicator you will see inputs for MA Type / MA Length, we find the “wildma” to be particularly interesting when paired with Raindrop Charts but you can choose an array of configurations to suit your specific needs.
*Note We Find The Pressure Release Indicator Most Relevant On Lower Length MA Values*
In the example below of $IBM with Daily period Raindrop Charts, you can see that on December 7th, 2021, the pressure component as illustrated by the green and red bars in the middle of the oscillator flipped from Red to Green. This signals a momentum shift as deep pullback wicks begin to soften and a bottom starts to develop.
From this momentum break, you can see the price of $IBM trail to a new local high over the coming months.
This type of move brings into relevance the second component of this oscillator, the Response line. The Response line is meant to illustrate extremes in momentum represented as a moving average between -1 and +1. +1 would be your bullish wave momentum extreme, and the opposite for the negative values.
Please note, both of these indicators are brand new, do not exist on other platforms, and are considered to be experimental by the TrendSpider team. Happy Trading!
