Wick Analysis Chart [LTS]

Wick Analysis Chart - Advanced Price Rejection Visualization

Overview

The Wick Analysis Chart is a specialized oscillator that measures and visualizes price rejection strength by analyzing candle wicks relative to their body sizes. Unlike traditional wick analysis that uses raw price differences, this indicator converts wick measurements into percentage ratios, making them comparable across different instruments, timeframes, and market conditions.

The indicator emphasizes significant price rejections by incorporating volume-weighted calculations with selectable scaling methods (linear, logarithmic, or square root), while filtering out noise through multiple customizable filters including ATR-based volatility filtering, wick size thresholds, and doji detection.

What Makes This Original

This indicator combines several unique analytical approaches not commonly found together:

• Percentage-based wick ratios rather than absolute price measurements, enabling cross-instrument and cross-timeframe comparisons
  
• Volume weighting applied BEFORE filtering to ensure high-volume rejections aren't excluded
  
• Three distinct volume scaling methods (linear, logarithmic, square root) to accommodate different trading styles and prevent chart compression
  
• Multi-layer filtering system combining ATR volatility thresholds, minimum wick size requirements, and doji detection
  
• Intelligent plot ordering that ensures smaller wick components remain visible when displaying both upper and lower wicks simultaneously
  
• Color-coded rejection direction showing bullish rejections (lower wick dominant) versus bearish rejections (upper wick dominant)
  

How It Works

Core Calculation

The indicator calculates wick-to-body ratios as percentages:

• Total Wick % = (Upper Wick + Lower Wick) / Body Size × 100
  
• Upper Wick % = Upper Wick / Body Size × 100
  
• Lower Wick % = Lower Wick / Body Size × 100
  

A 200% total wick value means the combined wicks are twice the size of the candle body, indicating strong price rejection.

Volume Weighting

Volume weighting is applied to emphasize rejections that occur on significant volume. The indicator offers three scaling methods:

Linear Scaling: Direct volume multiplier (2x volume = 2x display value). Best for dramatic emphasis on volume spikes. Suitable for scalping and intraday trading where volume surges signal important levels.

Logarithmic Scaling: Diminishing returns on extreme volume using the formula: multiplier = 1 + log(volume ratio). A 10x volume spike produces only ~3.3x emphasis. Best for preventing chart compression while maintaining volume awareness. Ideal for swing trading and multi-timeframe analysis.

Square Root Scaling: Balanced approach using square root of volume ratio. A 4x volume spike produces 2x emphasis. Provides middle ground between linear and logarithmic. Suitable for most day trading applications.

Filtering System

Three independent filters work together to eliminate noise:

ATR Filter: Removes candles whose total range is below a specified percentage of the Average True Range. This filters out low-volatility consolidation periods, focusing analysis on meaningful price movements.

Wick Size Filter: Removes candles whose volume-weighted wick percentage is below the threshold. This ensures only significant rejections are displayed, even if the candle met the ATR requirement.

Doji Filter: Automatically filters candles where the body is smaller than the specified percentage of total range. Doji candles produce extreme wick ratios that can skew the chart scale.

Calculation Flow

1. Calculate base wick-to-body percentages
2. Apply volume weighting using selected scaling method
3. Check ATR filter (if enabled)
4. Check wick size filter using volume-weighted values (if enabled)
5. Check doji filter
6. Display final values if all filters pass

How To Use

Display Configuration

Total Wick Value: Shows combined upper and lower wick size. Color indicates rejection direction - green when lower wick dominates (buyers rejected downside), red when upper wick dominates (sellers rejected upside).

Upper Wick Value: Isolated upper wick measurement. Useful for identifying supply zones and resistance rejection.

Lower Wick Value: Isolated lower wick measurement. Useful for identifying demand zones and support rejection.

When both upper and lower wicks are displayed simultaneously, the indicator automatically plots them in size order so the smaller value remains visible.

Volume Weighting Setup

Enable volume weighting and select your preferred scaling method based on trading style:

• Linear: Maximum emphasis on volume, accepts potential chart compression
  
• Logarithmic: Minimal chart compression, subtle volume emphasis
  
• Square Root: Balanced approach for most applications
  

Adjust Volume Average Length based on your timeframe (shorter for intraday, longer for swing trading).

Filter Configuration

ATR Filter: Start with 80% to focus on above-average volatility moves. Increase to 100%+ for only the most volatile candles, or decrease to 60-70% to include more data.

Wick Size Filter: Start with 50% to show wicks at least half the body size. Increase to 75-100% for only the most significant rejections, or decrease to 25% for more sensitivity.

Doji Threshold: Default 5% works well for most markets. Increase for markets with frequent small-bodied candles.

Reference Levels

100% Line (Equilibrium): Represents 1:1 wick-to-body ratio. Values above this line indicate wicks larger than the body.

Extreme Level: User-defined threshold for alerts. Default 500% means wicks are 5x the body size. Adjust based on your instrument and filter settings with volume weighting enabled.

Trading Applications

Identifying Key Levels: Large wick percentages with high volume often mark important support/resistance levels where significant orders absorbed price movement.

Trend Exhaustion: Increasing wick percentages at trend extremes, especially with declining volume weighting, can signal momentum loss.

Breakout Validation: Breakout candles with small wicks (low percentage values) suggest conviction, while large wicks suggest rejection and potential false breakouts.

Session Analysis: Compare wick percentages across different trading sessions to identify when the most significant rejections occur.

Mean Reversion Setups: Extreme wick percentages above your threshold level, particularly when colored green (bullish rejection) at support or red (bearish rejection) at resistance, can signal high-probability reversal zones.

Alerts

The indicator includes an alert condition that triggers when the total wick value exceeds the extreme level. Configure the extreme level based on your backtesting to match your instrument's characteristics and filter settings.

Settings Summary

Display Options

• Show Total/Upper/Lower Wick Value: Toggle visibility
  
• Color selections for bullish/bearish total wicks and upper/lower components
  

Volume Weighting

• Apply Volume Weighting: Enable/disable volume emphasis
  
• Volume Average Length: Period for volume SMA comparison (default: 20)
  
• Volume Scaling Method: Linear/Logarithmic/Square Root
  

ATR Filter

• Apply ATR Filter: Enable/disable volatility-based filtering
  
• ATR Length: Period for ATR calculation (default: 14)
  
• Filter Percent: Minimum candle range as % of ATR (default: 80%)
  

Wick Size Filter

• Apply Wick Size Filter: Enable/disable wick size threshold
  
• Minimum Wick %: Minimum volume-weighted wick percentage (default: 50%)
  

Advanced

• Doji Threshold: Body size as % of range for doji detection (default: 5%)
  

Reference Levels

• Show Reference Levels: Toggle horizontal reference lines
  
• Extreme Level: Threshold for extreme wick values and alerts (default: 500%)