Reading Candle Sentiment from Pivot Level Changes
Summary
This indicator compares pivot, first resistance, and first support calculated from each candle’s high, low, and close with the corresponding levels from the prior candle. Higher resistance and support are interpreted as bullish; lower levels as bearish. When resistance rises as support falls, the candle is classified as an outside pivot, associated with greater volatility. When resistance falls as support rises, it is an inside pivot, associated with indecision. The pivot’s direction helps distinguish which side may have had a slight edge in the latter cases.
The displayed histogram uses green and red for rising and falling pivots, and blue for outside or inside patterns; its height and position encode the indicator’s classifications. The author suggests that repeated blue readings may signal sideways action before a possible breakout. These are visual interpretations rather than tested predictive results: the document provides no performance data, trading rules, or risk controls. It also says the indicator can be applied across markets and timeframes, but does not validate that claim or specify how to handle equal levels and other unclassified cases.
Key ideas
- Compare each candle’s pivot, resistance, and support with the prior candle’s corresponding levels.
- Rising resistance and support are interpreted as bullish, while falling levels are interpreted as bearish.
- Outside pivots indicate expanding levels and are associated with volatility or indecision.
- Inside pivots indicate contracting levels and are also associated with indecision.
- Repeated blue classifications may suggest sideways trading before a possible breakout, but the document provides no performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.