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The Strat Indicator — Understanding Price Action
A Primer on the Strat Indicator
Price action analysis is the biggest part of technical analysis and is led by candlestick analysis. Generally, your aim is to use the current information to infer a price direction which is not the easiest task to do. This article discusses the Strat indicator, a price action technique based on labelling candlesticks.
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Introduction to Candlestick Charts
Candlestick charts are among the most famous ways to analyze the time series visually. They contain more information than a simple line chart and have more visual interpretability than bar charts.
A candlestick is a box-shaped chronological element composed of OHLC data which helps determining the trend but also gives more information on volatility and market psychology.
- A bullish candlestick is generally green (or white) and occurs whenever the close price is higher than the open price.
- A bearish candlestick is generally red (or black) and occurs whenever the close price is lower than the open price.
The next chart shows a candlestick chart on EURUSD. The time frame used is hourly. What can you say about the trend seen?
