My recent discovery in terms of trading learning materials is "YTC Price Action Trader" book. It contains numerous invaluable clues, which I couldn't find anywhere else.
One YTC chapter covers Candle Sentiment analysis. Watching where 'close' of the candle happens can give early hints about future market action. Most of time you get those hints before the indicators provide it.
So there are two ways to look at candles:
1. Close Sentiment This is single-candle analysis. Divide entire range of a candle (low to high) into 3 equal parts. The candle is: - "High Close" - if 'close' is in the upper 1/3 - "Mid Close" - if 'close' is in the middle 1/3 - "Low Close" - if 'close' is in the lower 1/3 This is illustrated by the blue plot on "YTC Candlestick Sentiment" indicator.
2. Close Comparison Compare position of 'close' with entire range of the previous candle. The candle is: - Bull Candle - if 'close' is above 'high' of the previous candle - Range Candle - if 'close' is between 'high' and 'low' of the previous candle - Bear Candle - if 'close' is below 'low' of the previous candle This is illustrated by the background on "YTC Candlestick Sentiment" indicator.
What can you do with this? It gives very good and early reversal hints. Mid/ranging signals should be considered "no signals" - in other words: market will continue in the same direction.
This indicator should be used as confirmation to other signals (as a standalone YTC Candlestick Sentiment produces too many reversal signals).
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This is just beautiful, Makes the most difficult task alot easier , Thank you for working this out <3
adelaskarimoradaali
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Great stuff ,Ueah I have read his book, and basically My strategy is based on his book , do you have MT4 version of this sentiment indicator ? It would be great to have it on MT4
Peter_O
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@adelaskarimoradaali, no I don't have MT4 version of any indicator. I do all calculations on TradingView and execute in MT4 via TradingConnector.
thatoneguy86
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Is there anyway this can be converted to a candle paint bar study? Something like, Close above last candle on the mid to upper 1/3 = bright green. Close above last candle on low dark green. Obviously flip to red to below closes. Neutral close vs last would be grey not sure if you can do much beyond that for neutral.
TraderSteff
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Hi
you mean the book of Lance Beggs ?
Peter_O
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@steffentom, Yes, I like it a lot. Have you read it? Feel free to share your thoughts.
capissimo
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@Peter_O, this looks different:
range = H - L
part = range / 3
mid1 = H - part // mid bound 1
mid2 = H - part * 2 // mid bound 2
hc = C < H and C > mid1 // high close
mc = C < mid1 and C > mid2 // mid close
lc = C < mid2 and C > L // low close
csent = hc ? 1 : mc ? 0 : lc ? -1 : na // candle sentiment