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You state "Climax churn bar: A bar which is both a climax and a churn bar."
Just wondered how can a bar be both, i.e. qualifying as wide range and at the same time as narrow range? Thanks
Fat Tails
Berlin, Europe
Legendary Market Wizard
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
Posts: 9,888 since Mar 2010
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Of course it cannot .....
But you can read the answer from the definitions. For a climax churn bar you need both
-> volume x range is largest of last N bars
-> volume / range is largest of last N bars
This can be achieved if you have an average range bar with very high volume. In that case the product from volume and range is high because volume is high, and the ratio from volume and range is high, because volume is high.
The wide range works in favor of the climax and against the churn bar. The narrow range works in favor of the churn bar, but against the climax bar.
Usually climax churn bars have a wider range which includes stopping volume at one end. If you draw a price volume distribution you would get a p-shaped (for an upclose) or a b-shaped distribution (for a downclose).
Thank you very much for your reply FT. I won't pretend I understand what you are saying . Main thing is that it's a great indicator which I find very useful and many thanks for it and for your explanations.
Another question please if you be so kind. Which variable in your code is assigned the current spread/range (i.e. narrow, wide or average). Reason I am asking is I want to display the current spread/range on my chart so I know what the spread/range is even if no volume bars (climax, churn etc) are identified. Hope I am making sense?
Many thanks
Dan
Fat Tails
Berlin, Europe
Legendary Market Wizard
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
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If you want to display the range of a bar you can simply apply the Range indicator to your chart.
Thanks for the reply FT. Does this range indicator (in NT I assume) you refer too the same thing as below (definition of spread per VSA principles)? I would have thought it refers to just the difference between the open and close of a bar?
The price spread is the difference between the highest and lowest trading points reached during the
timeframe you are looking at, which may be weekly, daily, hourly, or whatever other timeframe you
choose.
Ok, I think I understand what you are saying. Thanks
Fat Tails
Berlin, Europe
Legendary Market Wizard
Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker: Interactive Brokers
Trading: Keyboard
Posts: 9,888 since Mar 2010
Thanks Given: 4,242
Thanks Received: 27,103
The range of a bar is equivalent to the spread of the period covered by that bar. The formula for the range is simply the high minus the low of the bar. That is what is used by the BetterVolume indicator.