Price Action Toolkit Indicator Guide
The Price Action Toolkit created by Flux Charts identifies the concepts used by Price Action Traders. The Price Action Toolkit finds price action patterns or characteristics in a set of candlestick formations that can be used to predict future stock movements.
Flux Charts Price Action Toolkit Identifies:
Premium and Discount Zones
Volume Imbalances
MTF Highs and Lows
Fair Value Gaps
Fair Value Gaps (FVG) are market imbalances which are formed after three consecutive candles, where the first two candle wicks fail to overlap each other. The range between the wicks of the first and third candle create a Fair Value Gap.
Settings:
FVG Volumetric Info
If toggled, the buying versus selling pressure of the Fair Value Gap will be shown. The total volume of the FVG will also be displayed.
FVG Zone Invalidation
The Zone Invalidation setting allows traders to choose how FVGs are invalidated. You can choose between a candle close or a candle wick.
Zone Filtering
The Zone Filtering setting allows traders to choose how Fair Value Gaps are detected. You can choose between using the Average Range or a Volume Threshold.
Average Range: If the middle candle of the FVG is not sufficiently larger than the other candles, that will not be considered a zone.
Volume Threshold: Zones are filtered by how much larger their formation volume is compared to the average volume.
Volume Threshold %
The percentage by which the formation volume of the FVG has to increase for it to appear on the chart. This input is only taken into account when Zone Filtering is set to 'Volume Threshold'.
Detection Method
Same type: All candles for a bullish FVG must be green. All candles for a bearish FVG must be red.
All: Any type of candle is acceptable in the formation of an FVG
Detection Sensitivity
This will affect the size of the zones identified. A low sensitivity will result in only large zones appearing. A High sensitivity will result in mixed zone sizes.
Inversion Fair Value Gaps
Inversion Fair Value Gaps (IFVG) are formed when an FVG is invalidated. An invalidated bullish FVG will lead to a bearish IFVG, while an invalidated bearish FVG will lead to a bullish IFVG.
Settings:
IFVG Volumetric Info
Enabling the Volumetric Info will show you the total amount of volume in an IFVG zone.
IFVG Zone Invalidation
The Zone Invalidation setting allows traders to choose how IFVGs are invalidated. You can choose between a candle close or a candle wick.
Order Blocks
Order Blocks (OB) are areas where there’s an outstanding amount of buy or sell orders, causing large reactions in the market when price reaches these areas. These zones can be used as potential areas
Settings:
OB Volumetric Info
The Volumetric Info setting controls the Order Block rendering. If enabled, you will be able to see the total amount of volume inside of an order block, buyers vs sellers ratio, and a percentage ratio. If we’re looking at a bullish order block, the percentage will show you the ratio of bearish volume to bullish volume in that zone. And if we’re looking at a bearish order block, the percentage will show you the ratio of bullish volume to bearish volume in that zone. Thus, a lower percentage would signify a stronger order block.
OB Zone Invalidation
The Zone Invalidation setting allows traders to choose how Order Blocks are invalidated on their charts. You can choose between a candle close or a candle wick.
OB Swing Length
The swing length setting determines the number of candles used to identify swing highs and lows when forming order blocks. Smaller values will result in detecting smaller and potentially more order blocks, while larger values will identify fewer but more significant order blocks.
Zone Count
The Zone Count setting determines the number of order block zones that are displayed on your chart. You can choose between High, Medium, and Low. Selecting "High" will display the most zones, while "Low" will show fewer, more recent zones.
Breaker Blocks
Breaker Blocks (BB) are formed when an Order Block is invalidated. An invalidated bullish OB will lead to a bearish Breaker Block, while an invalidated bearish OB will lead to a bullish Breaker Block.
Settings:
BB Volumetric Info
Enabling the Volumetric Info will show you the total amount of volume in a Breaker Block zone.
BB Zone Invalidation
The Zone Invalidation setting allows traders to choose how Breaker Blocks are invalidated. You can choose between a candle close or a candle wick.
Liquidity Grabs
A liquidity grab is when the market quickly moves to a price level where many buy or sell orders are placed, triggering those orders. This often causes a quick reversal in the market. Liquidity Grabs can be used as a sign of a market reversal incoming.
Settings:
Pivot Length
The Pivot Length setting determines the number of candles used to identify pivot points, which are local highs or lows in the price. A longer pivot length will capture more significant price swings and filter out smaller fluctuations, while a shorter pivot length will detect more frequent but smaller pivots.
Wick-Body Ratio
The Wick-Body Ratio setting defines the proportion between the size of a candle's wick and the body. A higher ratio indicates that the wick is relatively long compared to the body, which might suggest a stronger liquidity grab. This setting helps filter out candles with insignificant wicks or bodies.
Market Structures
The Price Action Toolkit automatically detects and displays real time market structure on your chart.
Break of Structure
A Break of Structure (BOS) occurs when price breaks a previous high or low in an uptrend or downtrend, suggesting the trend will continue.
Change of Character
Change of Character (CHoCH) is formed when a recent high or low is broken during an uptrend or downtrend. A CHoCH indicates a potential market reversal or change in trend.
Change of Character Plus
A Change of Character Plus (CHoCH+) is formed when a recent high or low is broken during an uptrend or downtrend, but before this occurs, price fails to make a lower low or higher high, resulting in a stronger confirmation of a price reversal to occur.
Settings
Swing Length
The swing length setting determines the number of candles used to identify swing highs and lows which are used to determine current market structures. A lower value will result in more frequent market structures detections.
CHoCH Candle Coloring
When enabled, candle colors will follow the market structure trend. If a bullish CHoCH was just detected, candles will be green. If a bearish CHoCH was just detected, candles will be red.
ChoCH+ Candle Coloring
When enabled, candle colors will follow the market structure trend. If a bullish CHoCH+ was just detected, candles will be green. If a bearish CHoCH+ was just detected, candles will be red.
Equal Highs & Lows
Equal Highs (EQH) and Equal Lows (EQL) are formed when price reaches a pivot point and rejects it. EQH and EQL can be indicative of a market reversal.
Settings
ATR Multiplier
The ATR Multiplier determines the maximum difference between two highs or two lows. Lower values have greater accuracy but are less common.
Buyside & Sellside Liquidity
Buyside Liquidity (BSL) and Sellside Liquidity (SSL) are levels in the market where smart money traders have their stop losses. BSL is an area on the chart where short sellers have stop losses, and SSL is the area where traders in long positions have set stop losses.
Settings
Zone Width
This setting adjusts the width of the BSL and SSL zones relative to price. Increasing to a higher value will increase the size of the zones.
Premium & Discount Zones
Premium & Discount zones highlight three specific price areas, one upper area (premium), one central area (equilibrium), and one lower area (discount). These zones allow you to see if you're taking a trade in a discounted area or a premium area. You should aim to open trades when price is in a discount zone.
Volume Imbalances
This is the difference between buy and sell volume compared to the total volume. Areas with high buy volume are bullish, areas with high sell volume are bearish.
Settings
Gap Size
This setting determines the gap size that is required for a volume imbalance to be detected. Higher values will result in fewer volume imbalances detected.
Disable Overnight Gaps
This setting will hide gaps that occur during the transition in price from the previous day's close to market open.
MTF Highs & Lows
The maximum and minimum value price reached in a day, week, month, etc can be used as key levels for trading opportunities. The Price Action Toolkit is able to draw the highs and lows of:
The previous day
The previous week
The previous month
The pre-market session
Multi-Time Frame Features
The price action toolkit can plot Fair Value Gaps (FVG), Inversion Fair Value Gaps (IFVG), Order Blocks (OB), Breaker Blocks (BB), and liquidity grabs on up to 3 different timeframes at once.
Zones that overlap will be merged into one zone with brighter hue. Two overlapping zones can be interpreted as a particularly strong order block.
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