DrArifMokhtar

AM Consolidation Breakout

This indicator is developed to detect consolidation phase (or trading range) in stocks market - whether it is an active consolidation or previously broken consolidation.

Once consolidation is detected, Upper Boundary Line and Lower Boundary Line will be displayed on the chart to indicate the trading range.

If the consolidation continues, both lines will be extended as long as it needs until price breakout out from the consolidation (or breakdown towards the lower prices). If there is a breakout upside, the indicator will display a label to notify users which candle is the Breakout Candle and it will remains until next breakout.

The intention of the development of this indicator is to help users to detect consolidation phase and then use relevant strategy, for example - buying during accumulation phase.

What is unique about this indicator?

- It uses Buy up and Sell down volumes as consolidation criteria. If both Buy Up and Sell Down Volumes shows decreasing trend, it indicates the market is consolidating. Decreasing in both Buy Up and Sell Down Volumes confirmed the consolidation phase is taking place.

- Users can specify the size of the consolidation or Trading Range Size such as 10% or 20%. This helps to define the consolidation price range.

- Users can select consolidation period from 1 hour until 12 months.

- Users can select the Time Frame for Volume Calculation and apply Volume Smoothing (if used in lower TF such as 5M).

- The default setting is to find consolidation phase in Time Frame 5 Minutes with consolidation period of 4 Hours (this will converted into equivalent number of bars back required to define the Upper Limit and Lower Limit of the consolidation price range. Therefore, the total consolidation period can be more than 4 Hours. However, this should not be problem since we are only interested when price is still trading within the consolidation so we can prepare for low price entry, before a breakout could occur.

Hope this helps.



For those who usually trade in 1H Time Frame, I found the following setting are nice to capture consolidation period.
Consolidation Period : 1 Week
Trading Range Size: 10%
Chart Time Frame : 1H
VPSA Time Frame: TF1H(5min)
Volume Smoothing: 20



Thank you.
Release Notes: Revised default setting to Time Frame 1H.

Consolidation Period : 1 Week
Trading Range Size: 10%
Chart Time Frame : 1H
VPSA Time Frame: TF1H (5min)
Volume Smoothing: 20
Release Notes: Added Notification Label for Active Consolidation.

Added Alert When Price Breakout from Consolidation.
Release Notes: Updated for Extended Trading Range Line.
Release Notes: Revised.

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