Candle Temperature Indicator - Clear Scalping Levels
Greetings, ladies and gentlemen, Forex traders!
As you know, the market is subject to the same physical laws as the rest of the world around us. “Cooling down”, the price ceases to form natural barriers, as a result of which the course does not feel strong resistance when moving in either direction. “Warming up”, the price forms a solid emphasis, which is already much more difficult to overcome.
Some time ago, the idea was ripe to create a special indicator based on these premises that would display real-time cold and hot price flows. Especially for readers of tradelikeapro.ru we present a working indicator concept for displaying the “temperature” of a candle.
Currency pairs: any
Timeframe: any, better than M1
Trading Time: European and American Sessions
Indicator Type: Tick Volumes
Recommended DC: Alpari, Roboforex, Exness
It is no secret that horizontal levels play an important role in market analysis. One way or another, almost any trading system takes levels into account, even if the main signal is supplied by some technical indicator or with the help of a fundamental component.
The indicator itself shows on the chart at which levels the largest tick volume was observed. In the predefined spectra, yellow indicates the highest temperature. That is, the closer to yellow, the greater the value of the tick volume at a particular price level.
The indicator is ideal for scalping strategies where traditional “wide” levels are not so appropriate. A short-term key level can form during one candle. In this case, repeated confirmation of the level only amplifies the signal.
By default, tick volume is taken from the minute timeframe, but you can specify any other TF. The indicator also has several display settings for more convenient perception of information.
In general, the indicator does not require adjustment as such, since the calculation algorithm is fundamentally very simple. However, there are several parameters that can affect the visual display of temperature.
- MaxMinVolume_AllCandles - this parameter affects the way the maximum volume is calculated. “True” - the maximum values of volumes are calculated based on all the candles involved in the rendering (SumBars). Please note that this parameter is only suitable for analyzing volumes in history, since when a new bar appears, the old values will be recounted. “False” - the maximum volume value is calculated on the basis of a separate bar. Past indicator values are not redrawn;
- CandleShadow - display temperature only on candle shadows. Useful for analyzing rebounds from levels;
- CandleBody - display temperature only on the bodies of candles. Useful for analyzing breakdowns of levels;
- BullSpectrum - choice of the spectrum of bullish candles;
- BearSpectrum - selection of the spectrum of bear candles (you can choose one spectrum for candles of any type);
- DrawSize - candle cell size (in pips);
- VolumeTf - initial timeframe for calculations. To obtain a more accurate result, it is desirable to leave the smallest possible TF (minute);
- SumBars - the number of candles to display on the chart.
In fact, how to interpret the signals given by the indicator - you can determine for yourself. The main thing to understand is the peculiarity of the analysis of tick volumes. Using the indicator, you can determine at what levels the trading was most active. Naturally, how much currency was actually traded cannot be determined.
First of all, pay attention to the accumulation of volumes at specific price levels. The more repetitions, the stronger the level in question.
Also, try not to think out for yourself, focusing only on the yellow shade of the candle. At times, the price moves evenly, as a result of which volumes do not accumulate at a specific level.
The main advantage of the indicator is its versatility and clear short-term signals. In fact, the signals can be used both to determine new levels, and to confirm the breakdown of old ones. In the example below, we see how the price “warms up” for a while under the resistance level, and then overcomes it without delay.
In conclusion, I would like to clarify one point: you should not take the indicator values as an accurate signal to action. The indicator can be a wonderful assistant in everyday trading, specifically, to simplify the identification of key levels and, especially, for scalping. However, entry into the transaction should be supported by other signals.