A volatility-driven candle indicator that highlights significant price movements by comparing candle body size to market volatility using Average True Range (ATR).
Explore complementary indicator rolesHow it works
The indicator calculates the Average True Range (ATR) over a 14-period window to establish a baseline for market volatility. It then measures each candle's body size and compares it against a multiple of the ATR to determine if the candle represents a significant price movement.
When a candle's body exceeds the predefined volatility threshold, it is classified as either a bullish or bearish volatility-driven candle. Bullish candles, where the close price is higher than the open price, are marked in blue, while bearish candles, where the close price is lower than the open price, are marked in orange.
Why it may be useful
This indicator helps traders quickly identify potential trend reversals and significant price movements by visually highlighting candles that demonstrate substantial volatility. By using the Average True Range as a dynamic reference point, the signal provides context about price action relative to recent market conditions.
The color-coded labeling and background shading make it easy for traders to spot meaningful candles at a glance, reducing the cognitive load of manually analyzing price charts and providing immediate insights into market dynamics.
When to explore it
The volatility-driven candle indicator is most effective in markets with moderate to high volatility, where price movements are more pronounced and significant. It works particularly well in liquid markets like forex, stocks, and cryptocurrencies that experience frequent and substantial price fluctuations.
Traders should use this indicator in conjunction with other technical analysis tools to confirm signals and validate potential trading opportunities. It is especially useful for identifying potential entry and exit points during periods of increased market uncertainty or when looking for momentum shifts.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
