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I have taken the definition from Jack Schwager's book on Technical Analysis. A thrust bar is a bar that closes above the prior bars highs or below prior bars low. This indicates a shift in the perceived value for on ongoing auction.
The idea is to divide price action into trending and range bound areas. The range bound areas reflect the testing of the boundaries of the current value area. After some testing price breaks out and establishes current market price outside the old value area, which is the beginning of a trend.
The thrust bars are a simple way of showing these movements. The thrust bars are shown in the first chart, white bars are thrust bars up, yellow bars are thrust bars down.
Auction Bars
Currently I do not use these thrust bars without plotting the ranges that they produce. Also I have eliminated all thrust bars which close within the range created by the last prior auction bar.
The question was how to trade these bars. There are two ways of trading them
- as breakouts (first auction bar after a longer range bound period)
- as S/R lines (boundaries of the ranges)
The auction bars are shown in the second chart (lime and red, white bars are dojis and yellow bars are potential reversal bars)
Thanks a bunch Fat Tails. In your second chart, is the auction bar at (2) also a thrust bar since it breaks out of the range? Also, I could not find the Alpha indicator on this forum, is that public or available somewhere?
