Every time a market closes up for consecutive days, in most cases, traders get excited. This is because of the notion that the market cannot continue having an upward streak for a prolonged period. Generally, it is always known that having an upward streak will eventually lead to a down tread and vice versa.
With this concept, consecutive up/down days form the basis of many stock scans and market strategy research. Traders want to understand if there is an edge in buying after consecutive down days or selling after consecutive up days, which explains the foundation of the Consecutive Up/Down Strategy.
What is the Consecutive Up or Down Indicator Series?
The consecutive Up or Down indicator is a technical analysis indicator that signals whenever an up or down value is detected and calculates the number of consecutive bars a specific vector closed above the previous value, and the consecutive number of consecutive bars closed below its value. The indicator displays the number of consecutive up/down movements on the same line. Whenever the indicator returns a positive value, this indicates that it’s an automatic up movement. Consequently, if the values are negative, then it’s a down movement. (Click this link to check when the next NFP is scheduled).
Features of the Consecutive Up/Down Strategy
1. Uses trends at any time frame
2. Uses current and previous close
3. Uses consecutive bars
4. Checks for an asset increased or decreased in price.Consecutive Up/Down Strategy Indicator |Indicator Series Click To Tweet
How the Consecutive Up or Down Indicator Series Works
Whenever an X number of consecutive bars in the current close is greater than the previous one, the indicator enters long. Consequently, if the Y number of consecutive bars in the current close is lower than the previous one, the indicator enters short.
Using the setting, a trader can manage the X and Y inputs by just click of a button. The strategy is overlaid on the chart, which gives the user a chance to work with desired inputs. Also, with the setting wheel at the top left region of the chart, you can change the variants.
Uses of Consecutive Up or Down Indicator Series
The Consecutive Up or Down indicator series was designed essentially for trends. The indicator can be applied at any timeframe as it is dependent on the values assigned to the Consecutive Bars Up and Consecutive Bars Down.
The strategy has a default option of having three consecutive bars up and three consecutive bars down. This implies that the strategy will go long or short whenever three consecutive bars are above or below the previous bar close.
Application of Consecutive Up or Down Indicator Series
To detect periods with high uncertainty.
To search for a period with low uncertainty
In conclusion, the consecutive up/Down strategy is one of the most common technical trading indicators that can guide a trader on when to enter a trade. For more trading insights, subscribe to tradingview.com and join other traders in the discussion.