When the worth shoots (up or down), it creates an out of the range tall candlestick.
Many traders realize this fact, but the most challenge is that once you check out the charts how does one tell when the candle is tall enough and when not.
The solution came with this interesting indicator that mixes almost like Bollinger bands algorithm and Candle Length Volatility.
Red histogram: the length of the candle in pips.
Bands: the average of the candle length with standard deviation.
- Yellow band: reading above it suggests that a candle is taller than usual, and it's the time to Take profit. (Also, don't open any new trades there).
- Blue band: reading close to it - an active trend.
- Pink band: reading below it - ranging market. (Crossing the pink line from below - beginning of a trend).
You can use this indicator for exits/TPs on any time-frame for any sort of trading: from scalping on 1-5 min to position trading on 1-4 hour or daily charts.
The width (deviation) of the bands are often changed to enhance sensitivity of the indicator.
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