Price Convergence from Up-Candle and Down-Candle Contributions

Summary

This oscillator divides cumulative OHLC4 contributions from up candles and down candles by the corresponding total OHLC4 contribution, then expresses each share as a percentage. It can calculate over the entire available history or over a rolling window whose length the user chooses. The two plotted series represent the up-candle and down-candle shares, with a reference line at 50.

The author describes sustained behavior around that midpoint as a sign of price discovery, but the document provides no formal definition, validation, or test results for that interpretation. The measure weights candles by their average OHLC price rather than volume, and its up/down classifications use close relative to open. The two series can both count candles that close unchanged because the conditions use inclusive comparisons. It is therefore a descriptive price-based indicator, not a demonstrated probability forecast.

Key ideas

• The indicator compares cumulative OHLC4 from up candles with cumulative OHLC4 from down candles.
• It expresses each side as a percentage of total OHLC4 over full history or a chosen rolling range.
• A reference line at 50 marks the midpoint used in the author’s interpretation of convergence.
• The calculation is price-weighted and does not use trading volume.
• The document provides no empirical validation that the readings predict future price movement.

Tags

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