Bounce Strength Indicator (BSI) shows the strength of bounce according to the Wyckoff method.
After a move higher, the stock moves into a flat consolidation with a clear support level. Chartists should watch action closely as prices approach support level. A high volume surge off support, also known as a springboard, is the first sign that the bigger uptrend is set to continue and a consolidation breakout is imminent.
How to measure the strength of bounce?
Strength of bounce up from lows:
(close - low ) * ( ceiling - low ) / range spread
Strength of bounce down from highs:
(high - close) * ( high - floor ) / range spread
My measuring method means the following:
This idea is simple, but it can become a leading indicator of the range breakout. It will work only within range.
Originally this indicator has been written in MQL4 and was first published in the Code Base on 04.02.2016.
Figure 1. The BSI indicator
Translated from Russian by MetaQuotes Software Corp.
Original code: https://www.mql5.com/ru/code/14808
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