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Bid-Ask Percent Pendulum to verify Bottoms?


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 Regis767 
Palmdale, California
 
Experience: Intermediate
Platform: Amp Futures
Trading: Futures
Posts: 12 since Oct 2021
Thanks Given: 20
Thanks Received: 15

I developed a technique to watch swings in the Bid vs Ask Percentages and see if there was some kind of pendulum move, where if it went too far one way, it would swing the other way or at least signal a reversal was going to happen. It was tough to visualize, but I created an Excel Chart that would better show the swings between the Buyers and the Sellers.

I split this in the middle at a 50% line. Above the 50% is a strengthening, below is weakening. But what was more interesting was the actual Bottoming out of the trend. When either the Buy or Sell Trend bottomed out and then started to strengthen it gave a possible verification that the trend would continue.

Here are two examples from today, trading CBOT Corn. I use a two minute interval, as five minutes was too long and one minute was too short, but two minutes was about right. I update the Excel Chart as I go along and it has an automatic 50% centering feature, so the trend line stays centered.

Looking at the 0844 AM example, note that the Buy Line (green) bottoms out at 0.243 at 0844 right at the start of the downtrend, then while the downtrend is continuing the Buy Percent increases to 0.2975 at 0846, even while the Candle drops a full point. Then at 0848 you get a good looking candle that might signal a reversal, but... the Buy Percent has now increased to 0.4138 along with the 234 Buys in the Number Bar are indicators that might signal a strong reversal in the trend and make a good entry point.

Compare the Candlestick and the Excel Sheet for 0844 AM and also 1216 was exactly the same. I'll be back tomorrow afternoon to answer any questions or entertain thoughts on this. Just something I'm trying out. Thanks for reading.



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 gdplus1 
Chicago
 
Experience: Intermediate
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Here is a good thread on footprint:


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