Momentum Candle

The Momentum Candle indicator identifies high-conviction price movements by comparing the current candle's body size against a historical average to highlight significant buying and selling pressure.

Usage

The indicator classifies candles into different categories based on their body range (the absolute difference between open and close) relative to a 15-period simple moving average (SMA) of body ranges.

• Super Momentum Candles: When a candle's body is more than 50% larger than the average, it is highlighted with solid colors. These represent strong institutional interest and can be used to confirm breakouts or reversals at support and resistance levels.
• Above Average Candles: Candles larger than the average but less than the 50% threshold are shown with semi-transparent colors. These indicate steady trend participation.
• Below Average Candles: These are displayed with a neutral, faded color. A series of these candles often indicates market consolidation or a range-bound environment, helping traders avoid false entries.

Traders can use "Solid" candles at swing lows or retracement levels to identify high-probability trend continuation entries with favorable risk-to-reward ratios.

Details

The script calculates the bodyRange by taking the absolute value of close - open. It then determines an avgBody using a 15-period SMA. The logic focuses specifically on the candle body rather than the full wick-to-wick range, as the body more accurately reflects the final commitment of market participants during the period.

The indicator provides both a histogram (column plot) at the bottom of the chart to visualize relative momentum and optional bar coloring on the price chart for immediate visual feedback.

Settings

• Show Body Signal: Toggles the bar coloring on the main price chart. When enabled, candles that meet the "Solid Body" (Super Momentum) criteria will change color.
• Average Body: While not an input in the current version, the underlying calculation uses a 15-period SMA to define the baseline for "normal" volatility.

FAQ

How do I use the Momentum Candle to find reversals?

Look for a "Solid" momentum candle (highlighted in bright green or red) forming at established support or resistance levels. This often indicates a sharp change in sentiment and the start of a new move.

What do the faded bars represent?

Faded or neutral-colored bars represent price action that is below the average body size. This typically suggests a lack of conviction or a period of accumulation/distribution where a clear trend has not yet emerged.

How can I access this tool?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.