Price action analysis is interesting, but have you ever wondered; can it be done with the help of an indicator? If embraced the original theory, then the answer is clearly negative. Price action analyzes the candle formation, so there are no technical indicators that need to be used, because the price itself is the indicator.
But in fact, it actually brings its own difficulties for traders who are not used to reading candle signals by naked eye. Especially if you are a beginner trader, it would be difficult to identify certain candle patterns from the price chart as a whole. Things like that can indeed be trained, but while you learn to recognize the candle pattern, the help of the price action marker indicator will certainly make it easier for your observations.
One custom indicator with the function is the Price Action Indicator developed by Peter Eskander, one of the hosts of the MQL5 forum. The appearance is not much different from the detector doji we've discussed before. The difference, signal Price Action Indicators can display more colorful stems because it not only indicates a candle pattern only.
The Price Action indicator displays the bars that appear in the sub-window, parallel to the appearance of certain candle patterns. Basically, this indicator displays signals for patterns:
To distinguish signals from the candle patterns that appear, you can recognize them through the color of the stem. Here's an example of how it looks on the chart:
- Pin Bar (Up & Down)
- Inside Bar (Up & Down)
- Engulfing Bar (Up & Down)
Stem color description:
If you look further, it appears that the stems that appear not the same length. According to the developer, the length of the signal signifies the strength of the price action, where the longer the bar looks, the more valid the signal is also a candle pattern. There is no provision for a specific time frame or pair for this indicator. Like the characteristics of price action analysis in general, this custom indicator can also be used on any time frame and pair.
- Bright green: Pin bar up
- Red: Pin bar down
- Blue: Inside the bar up
- Orange: Inside the bar down
- Dark Green: Engulfing up
- Pink: Engulfing down