Power Candle Indicator
The Power Candle Indicator is a simple but very powerful tool to identify significant moves in the market.
It compares the current candle range to the average range of previous candles and plots the value in a histogram chart, to give traders a quick glance into how strong of a move each candle represents.
There are many ways to use this indicator to support your trading decisions and it is usually best to combine it with other indicators for high quality signals, but generally one may interpret the Power Candle values this way:
- Values < 2: Weak candles. Many of these price changes are just market noise and moves may not be significant.
- Values from 2 to 4: Power candles. Strong, significant price moves. These candles may indicate the beginning or continuation of a trend in the direction they point to.
- Values > 4: Overly strong move. Although it generally defines a significant trend, a short-term correction may occur after these candles.
There are two modes of calculating the candle's value. The default mode uses immediate previous candles to establish the average. The second mode uses the average range of candles from the same period in previous days (example: a H1 candle from 09:00 will use the average range of H1 09:00 candles of previous days to establish the average). These modes can be changed in the input section.
- History: Number of candles already calculated at the start.
- Average_Bars: Number of candles used to calculate the average candle range. 20 candles as default.
- Chart_Type: Draw a histogram (default) or line chart.
- Average_Type: Use previous candles to calculate the average (default), or use candles of the same period from previous days, as explained above (this mode works only for charts below Daily timeframe).