Absolute Strength Histogram for Comparing Bull and Bear Pressure

Summary

The Absolute Strength Histogram estimates buying and selling pressure by calculating separate bull and bear series, smoothing both, and plotting the absolute difference as a histogram. Its calculation can use RSI-style price changes, a stochastic range measure, or directional movement based on highs and lows. Evaluation length, smoothing length, price source, and moving-average type are configurable. The accompanying example uses weighted smoothing by default.

The notes interpret a rising histogram as stronger buying pressure and a falling one as stronger selling pressure. Color changes are presented as possible entry or exit clues, with confirmation from other indicators recommended. The indicator may help identify emerging trends or shifts in market strength, but the document provides no performance tests or evidence that its signals are profitable. It also cautions that relying on one indicator can produce false signals. The provided implementation is specific to a charting platform, and the description does not define a validated trading rule or specify how to manage risk across markets.

Key ideas

• The indicator compares smoothed estimates of bull and bear pressure.
• Its calculation can use RSI, stochastic, or directional-movement inputs.
• The histogram displays the absolute difference between the two smoothed series.
• Changes in histogram direction or color are proposed as possible signals, subject to confirmation.
• The document gives no performance evidence and warns against relying on the indicator alone.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.