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How it works

The indicator first defines specific criteria for bull and bear bars based on candle close position and body relationship. A bull bar is a green candle closing above 75% of its range without body overlap with the previous candle, while a bear bar is a red candle closing below 75% of its range with similar non-overlapping body conditions.

To signal increasing strength, the indicator looks for two consecutive bull or bear bars where the candle ranges are expanding compared to the previous five bars. This creates an upward or downward arrow signaling potential momentum shift, allowing traders to identify early signs of potential breakout or trend change.

Why it may be useful

The indicator provides traders with a unique perspective on market momentum by highlighting subtle changes in price action that might precede significant trend movements. By focusing on consecutive candle ranges and their relative strengths, it offers insights beyond traditional trend indicators, helping traders anticipate potential breakouts or reversals.

Its selective triggering mechanism means that signals are not frequent, which can increase their reliability and reduce false positives. Traders can use this information to make more informed decisions about market entry and exit points, potentially improving their overall trading strategy and risk management.

When to explore it

The indicator works best in markets with clear trending behavior, where traders want to identify early signs of potential momentum shifts. It is particularly useful for short to medium-term trading strategies that require quick recognition of emerging trend changes or potential breakout scenarios.

Traders should use this indicator in conjunction with other technical analysis tools and consider the broader market context. It is most effective when applied to timeframes that allow for meaningful candle range comparisons, such as intraday and daily charts, and when used alongside trend confirmation indicators.

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