buy sell pressurebuy sell pressure indicator
Every stock /indices /chart is unique in nature. there will always be some kind of buyers and sellers present in these equities/stocks. due to their inherent buying and selling nature, these stocks also develop a pattern. such patterns are not always visible directly on the chart but we can calculate buying and selling pressure for these stocks individually . if we plot a graph on chart , we can easily see when stock is getting and when it is showing strength.
The logic for calculating buying and selling pressure is given below-
buying pressure= 14 days ema of {close- low(1)}
selling pressure= 14 days ema of {high(1)- close}
low (1) indicates 1 day ago candle's low price
high(1) indicates 1 day ago candle's high price
close= recent candle's close price
how to read chart :-
whenever buying pressure line (green color) crosses the selling pressure line (red color)stock will show strength and will go up. if the red line starts to cross the green line then we may see prices go down. so one can book profit here.
there is a unique zero line which is blue in color. it will act as a supreme buy and sell zone. if the green line touches or somehow goes below the zero line(blue line), stock will see strong buying pressure . if the red line (selling pressure line) goes below the zero line, the stock will witness strong selling pressure.
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