Measuring Wyckoff Range Bounce Strength as a Breakout Signal

Summary

This document presents a bounce-strength indicator for assessing buying or selling pressure while price trades inside a range. The proposed measure relates the close’s position within the bar’s high-low spread to its distance from the range boundary: upward strength is measured from the range low, while downward strength is measured from the range high. The indicator displays separate positive and negative histograms, plus a middle line representing their average difference.

The underlying interpretation is that a stronger move away from support suggests more buying pressure, while a stronger retreat from the upper boundary suggests more selling pressure. In a Wyckoff-style consolidation, a high-volume rebound from support is described as a possible sign that the broader uptrend may resume and a breakout may follow. The indicator is explicitly intended only for range conditions. The document offers no tested formula validation, signal thresholds, examples, or performance data, so the breakout interpretation should be treated as a hypothesis rather than a demonstrated predictive result.

Key ideas

• The indicator estimates upward and downward bounce strength within a defined trading range.
• Upward strength reflects the close’s rise from the range low relative to the bar spread.
• Downward strength reflects the close’s retreat from the range high relative to the bar spread.
• Separate histograms show directional strength, while a center line summarizes their difference.
• The proposed breakout use is limited to range conditions and is not supported by performance evidence.

Tags

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