Pressure Lines
Last updated
Last updated
The Pressure Indicator is a quick reaction indicator meaning it will show in real time the movements in the market.
We can break the indicator down and how to use in a few ways.
First, if you are using the "Traditional" color scheme your white Pressure line can be used and identified as a Bullish Indicator. Your Blue pressure line can be used and identified as a Bearish Indicator. We must break down a few important things to fully understand the utility of the pressure lines and how to completely recognize what their movements mean.
Let's pretend the Panel is split in half at the "0.00" value on the Y-Axis.
If Both lines are in the upper half of your Panel (Above 0.00) the Pressure lines are indicating an overall Bullish Pressure of the Market.
if Both lines are in the bottom half of your Panel (Below 0.00) the Pressure lines are indicating an overall Bearish Pressure of the Market.
Something to ALWAYS keep in mind is the direction both lines are pointing. If they are pointing up that of course means there is more Bullish/Buying Pressure, if they are pointed sideways that can indicate we are in now strong pressured direction which signals we are in ranging market, lastly if the lines are pointing down we have Bearish/Selling Pressure.
It is still important to understand that you still need to trade when there is volatility in the market. Refer to the "Best Times to Trade" help doc to know when the best times are to trade for your market. The Pressure lines will help you read sideways markets which as safe practice you should stay out of unless you area already in a profitable trade.
It is very important to pay attention to what color of Pressure line is on top!
We need to not only understand and watch for the previous principles above like, Placement and Direction of the Pressure Lines but just as important we need to understand how the lines are reacting with one another. As previously stated, if you are using the "Traditional" color Scheme there is a White Line that can be used to indicate Buying (Long) Pressure and the Blue Line that can be used to indicate Selling (Shorting) Pressure.
If the White line is Above the Blue line and both lines are pointed up that means there is strong Buying Pressure and we can normally see strong movements when this occurs.
Now, you can't have a change of pressure lines being on top without a "Cross". "Crosses" occur when the pressure lines converge into one another. Converging is also referred to as a "pinching" movement until the lines completely cross.
Below are highlighted examples where we see converging pressure lines that cross and the help us understand the pressure movements of the market.
If we then take the Crosses from the Pressure lines we can see that the movements in the market followed what the Pressure lines were indicating. When there was a Strong Buy Pressure Cross (Both lines pointing up with the White line on top of the Blue line) we can see we had a movement up. We can see that when we saw the lines converging after a movement up and the Blue line crossed on top of the White line and both lines were pointed down (a cross down) we had a pullback!
