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Price Action Indicator

what is price action indicator?

This is a kind of trading technique that utilizes the skill of the trader to analyze the share market and plan their stock trading methods based on the actual movement of price on a chart instead of analyzing any sort of lagging indicator involved.

Price action is a kind of trading technique that makes use of the skill of the trader to analyze the share market and design their stock trading methods based on the actual movement of price on a chart.

The most frequently used ones are the candlestick patterns that helps the trader visualize the price movement pattern and make representation.

Harami is the most commonly used one in the equity market. It has a pattern of crosses and these crosses are arranged in a wave-like pattern.A price action indicator is basically a method that generates a chart that provides traders with a buy/sell signal. The traders decide when to buy or sell stocks with a maximum profit.

Types of price action indicators

The candlestick pattern is the most common one. This pattern has many components to it and each component represents different aspects:

Inside and outside bars: These represent great breakout patterns

Down shaved bars: These represent the selling pressure

Up shaved bars: These represent the buying pressure

Pin bars: These represent great reversal patterns

In order to generate a pattern, the formula required is: {(C – O) + (C – H) + (C – L)} / 2 : Here, (C – O) is the intraday momentum, (C – H) is the late buying pressure, and (C – L) is the late selling pressure. This formula can be proven by just constructing an ideal limit down and limit up situations in various bond futures and future contracts.

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