Buying/Selling Pressure Cycle (PreCy)

16 de mai. de 2023

No lag estimation of the buying/selling pressure for each candle.
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WHY PreCY?

• How much bearish pressure is there behind a group of bullish candles ?
  
• Is this bearish pressure increasing?
  
• When might it overcome the bullish pressure?
  

Those were my questions when I started this indicator. It lead me through the rabbit hole, where I discovered some secrets about the market. So I pushed deeper, and developped it a lot more, in order to understand what is really happening "behind the scene".

There are now 3 ways to read this indicator. It might look complicated at first, but the reward is to be able to anticipate and understand a lot more.
You can show/hide all the plots in the settings. So you can choose the way you prefer to use it.



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FIRST WAY TO READ PreCy : The SIGNAL line
Go in the settings of PreCy, in "DISPLAY", uncheck "The pivot lines of the SIGNAL" and "The CYCLE areas". Make sure "The SIGNAL line" is checked.

The SIGNAL shows an estimation of the buying/selling pressure of each candle, going from 100 (100% bullish candle) to -100 (100% bearish candle). A doji would be shown close to zero.

Formula: Estimated % of buying pressure - Estimated % of selling pressure

• It is a very choppy line in general, but its colors help make sense of it.
  
• When this choppiness alternates between the extremes, then there is not much pressure on each candle, and it's very unpredictable.
  
• When the pressure increases, the SIGNAL's amplitude changes. It "compresses", meaning there is some interest in the market. It can compress by alternating above and below zero, or it can stay above zero (bullish), or below zero (bearish) for a while.
  
• When the SIGNAL becomes linear (in opposition to choppy), there is a lot of pressure, and it is directional. The participants agree for a move in a chosen direction.
  

The trajectory of the SIGNAL can help anticipate when a move is going to happen (directional increase of pressure), or stop (returning to zero) and possibly reverse (crossing zero).


Advanced uses:

• The SIGNAL can make more sense on a specific timeframe, that would be aligned with the frequency of the orders at that moment. So it is a good idea to switch between timeframes until it gets less choppy, and more directional.
  
• It is interesting to follow any regular progression of the SIGNAL, as it can reveal the intentions of the market makers to go in a certain direction discretely. There can be almost no volume and no move in the price action, yet the SIGNAL gets linear and moves away from one extreme, slowly crosses the zeroline, and pushes to the other extreme at the same time as the amplitude of the price action increases drastically.
  

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SECOND WAY TO READ PreCy : The PIVOTS of the SIGNAL line
Go in the settings of PreCy, in "DISPLAY", and uncheck "The CYCLE areas". Make sure "The SIGNAL line" and "The pivot lines of the SIGNAL" are checked.

The PIVOTS help make sense of the apparent chaos of the SIGNAL. They can reveal the overall direction of the choppy moves.
Especially when the 2 PIVOTS lines are parallel and oriented.


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THIRD WAY TO READ PreCy : The CYCLE
Go in the settings of PreCy, in "DISPLAY", and uncheck "The SIGNAL line" and "The pivot lines of the SIGNAL". Make sure "The CYCLE areas" is checked.

The CYCLE is a Moving Average of the SIGNAL in relation to each candle's size.

Formula: 6 periods Moving Average of the SIGNAL * (body of the current candle / 200 periods Moving Average of the candle's bodies)

The result goes from 200 to -200.

The CYCLE shows longer term indications of the pressures of the market.
Analysing the trajectory of the CYCLE can help predict the direction of the price.

• When the CYCLE goes above or below the gray low intensity zone, it signals some interest in the move.
  
• When the CYCLE stays above 100 or below -100, it is a sign of strength in the move.
  
• When it stayed out of the gray low intensity zone, then returns inside it, it is a strong signal of a probable change of behavior.
  

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ALERTS
In the settings, you can pick the alerts you're interested in.

To activate them, right click on the chart (or alt+a), choose "Add alert on Buying/Selling Pressure Cycle (PreCy)" then "Any alert()", then "Create".
Feel free to activate them on different timeframes. The alerts show which timeframe they are from (ex: "TF:15" for the 15 minutes TF).

I have added a lot more conditions to my PreCy, taken from FREMA Trend, for ex. You can do the same with your favorite scripts, to make PreCy more accurate for your style.

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Borrowed scripts:
To estimate the buying and selling pressures, PreCy uses the wicks calculations of "Volume net histogram" by RafaelZioni

To filter the alerts, PreCy uses the calculations of "Amplitude" by Koholintian:

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DO NOT BASE YOUR TRADING DECISIONS ON 1 SINGLE INDICATOR'S SIGNALS.
Always confirm your ideas by other means, like price action and indicators of a different nature.

23 de mai. de 2023

Notas de Lançamento

The CYCLE line is now a gradient, to attract your attention on the high pressures. The corresponding settings have been changed.
The title of the indicator has been shorten.

2 de jun. de 2023

Notas de Lançamento

Improved accuracy for the Cycle.