In honor of Richard Wyckoff...
I am a math and physics teacher by profession. This is where the two approaches I pursue when looking at the markets stem from:
1) analogy with mechanics,
2) maximum display clarity.
1) Wyckoff's Law of Causa and Effect
Wyckoff is to financial markets what Newton is to physics. He also left several laws from which to describe market dynamics. The law of Causa and Effect states that intense uncertainty (causa) is the cause of a following trend (effect). In physics, we would probably talk about action and reaction or the conversion of potential energy into kinetic energy.
The uncertainty is caused by the trading of the "composite man" (=big money). He used the Point and Figure method to measure uncertainty and estimate the following effect. It was a good method for the days of paper, pencil and ruler, but today I am embarrassed when dot-square graphs are drawn without understanding the essence of the law.
Unlike Point and Figure:
a) I estimate the direction of the future trend - is it accumulation or distribution?
b) On the contrary, I do not estimate the absolute price change in the following trend.
2) What we see
a) Since I create financial robots, I am close to the binary signal.
b) I expressed the degree of uncertainty by price oscillation around the binary level.
c) I always try to mark anticipation of a sell opportunity (bullish trend) in red and buy opportunity (bearish trend) in blue.
Clarity is an advantage for those who trade on multiple charts at the same time.
The indicator needs to be looked at: intense uncertainty leads to a change in market direction after calming down.
The indicator can be traded in multiple periods, so you can look for retracements.
pam65
https://www.mql5.com/en/market/product/109302
On the Law of Causa and Effect
https://stockcharts.com/articles/wyckoff/2018/02/the-law-of-cause-and-effect-in-action.html
Example: Gamestop
https://www.mql5.com/en/charts/18609624/gme-d1-admiral-markets-group-gamestop
