Using Candle Wick Imbalance to Flag Possible Trend Reversals

Summary

The Tail_Bar indicator compares the upper and lower shadows of each price bar and plots their difference as a histogram around a zero line. The description presents a longer lower shadow relative to the upper shadow as one side of the comparison and says the bar’s direction reflects which shadow is longer. The size of the plotted value represents the gap between the two shadows; larger gaps are interpreted as stronger evidence of a possible reversal or trend ending. A run of large bars pointing in the same direction is described as a more noticeable signal.

The indicator is framed as a way to visualize a struggle between buyers and sellers, similar to the interpretation of star candlestick patterns. The document says it was first implemented in MQL4 and published in 2014, but gives no test results, signal thresholds, market or timeframe guidance, or rules for entering and exiting trades. Its prose contains an apparent inconsistency about which shadow length maps to the negative side, so the precise sign convention should be checked in the implementation before use.

Key ideas

• The indicator plots the difference between the upper and lower candle shadows as a histogram.
• The histogram’s sign indicates which shadow is longer, while its amplitude measures the size of the difference.
• Large shadow imbalances are proposed as possible signs of reversal or trend exhaustion.
• Several consecutive large bars in one direction are described as a more visible signal.
• The document supplies no performance testing or trading rules, and its prose is unclear about the sign convention.

Tags

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