The Price Action Indicator is a study invented by Michael B. Garety and described in his article "Getting Better Directions" in August 1997 issue of "Futures" magazine.
Using OHLC data, this study calculates three values: Intraday Momentum (Close - Open), Late Selling Pressure (Close - Low), and Late Buying Pressure (Close - High). Once the three values are calculated, their sum divided by 2 is the final result.
The output is said to be consistent with candlestick patterns; there are several candlestick patterns which can be represented numerically using values of Price Action Indicator. Low negative values imply that a bearish trend reversal might occur; these values are peculiar to the Shooting Star candlestick pattern. On the contrary, high positive values of the study might signify a bullish reversal; this is consistent with the Hammer candlestick pattern.
||The Price Action Indicator plot.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.