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Qstick
Indicator
Description
The
Qstick indicator was developed by Tushar Chande.
Qstick provides a way to quantify
candlesticks. The
distance between the open and close prices lies at
the heart of candlestick charting.
For those unfamiliar with candlestick
charting, the body of a candlestick is black if
today’s close is less than the open; it is white
if today’s close is greater than the open.
A majority of white candlesticks over a
specified range is considered bullish.
Whereas a majority of black candlesticks
over a specified range is considered bearish.
The
Qstick indicator is simply a moving average of the
difference between open and close prices.
For
more information on the Qstick indicator, refer to
the book The New Technical Trader by Tushar
Chande and Stanley Kroll.
Interpretation
Qstick
values below zero indicate a majority of black
candlesticks (over the time periods specified) and
therefore a bearish bias for the security.
Values above zero indicate a majority of
white candlesticks (over the time periods
specified) and therefore a bullish bias for the
security.
There
are several ways
to trade the Qstick indicator:
Crossovers:
Buy when the indicator crosses above zero.
Sell when it crosses below zero.
Extreme
Levels: Buy
when the Qstick indicator is at an extremely low
level and turning up.
Sell when the Qstick indicator is at an
extremely high level and turning down.
You may even want to plot a short-term
moving average on the Qstick to serve as a trigger
line.
Divergences:
Buy when the Qstick is moving up and prices
are moving down. Sell
when the Qstick is moving down and prices are
moving up. You
may want to consider waiting for the price to
confirm the new direction before placing the
trade. |
