Inside days, outside days and borderline days are signs of uncertainty in a trend.
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The OHLC data is used for performing technical analysis of price movement over a unit of time 1 day, 1 hour etc. We have already seen How OHLC data is used to calculate pivot points which traders use to identify key areas where reversal of price movement is possible, using which they can ideate their investment strategy.
Let us download sample tick by tick data. Pepperstone that provides free historical tick data for various currency pairs. This data is more than sufficient for our analysis. The data that we downloaded will look like this: Steps In Python As you can see the data is without any header.
We will include the header and accomplish the required task programmatically. As we saw earlier, the data is without a header. If today's close is lower than yesterday's close - the bar is colored red. If today's close is equal to yesterday's close - the bar is colored the same as yesterday. Interpreting Bar Charts Your first step in interpreting a bar chart is to identify the direction of the trend. Identifying the Trend The trend is determined in accordance with Dow theory. When does a Trend Start and End?
When is a Trend Uncertain? Inside days have a lower high and a higher low when compared to the preceding bar. Outside days have both a higher high and a lower low than the previous day. Borderline days are similar to inside or outside days - except that there is an equal high or equal low. Expanding and Contracting Ranges Expanding ranges in an up trend signal increasing eagerness from buyers and increasing eagerness from sellers in a down trend.
Closing Price Compared to the Range The range is the distance between the high and the low on a bar. Closing price at the top of the bar signals that buyers have control. If they are committed they will buy into the close of the market, with less profit-taking, and move price towards the high for the day. Closing price at the bottom of the bar indicates that sellers have control. If they are committed they will sell into the close and move price towards the low for the day. If neither party is committed then price is likely to close towards the middle of the range as profit-taking retraces part of the gains or losses for the day.
Closing Price Relative to Opening Price The daily opening price tends to reflect the view of smaller buyers and sellers. Visit the main overall explanation for Technical analysis that is translated into many languages.
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Breakout Dead cat bounce Dow theory Elliott wave principle Market trend.