Real author:
fxborg
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:
- The greater the rise from lower position, the stronger the buying pressure.
- The greater the fall from higher position, the stronger the selling pressure.
This idea is simple, but it can become a leading indicator of the range breakout. It will work only within range.
Display:
- plus histogram — shows the bounce strength up from lows;
- minus histogram — shows the bounce strength down from highs;
- middle line — average of difference between plus/minus.
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
