Written by:
Patrick Mikula CTA
Mikula Forecasting Company
www.MikulaForecasting.com
support@MikulaForecasting.com
Copyright © 2008 by Patrick Mikula All Rights Reserved
A very good way to study market cycles that is often overlooked is to study volatility. MarketWarrior has several indicators that make unique volatility calculations. One is the indicator “MA Total Shadow”. On a candlestick price bar there are three parts, the Top Shadow and the Body and the Bottom Shadow. The picture of the candlestick below shows these three parts. The top Shadow and the Bottom Shadow together make the Total Shadow value. This indicator calculates a moving average of the Total Shoadow value.
Candlestick
The chart below shows the stock for Check Point Software Technology symbol CHKP. In the subchart the indicator “MA Total Shadow” is added. I have circled four different tops on the MA Total Shadow indicator and drawn a arrow to the corresponding top or bottom in the stock price. It is very common for tops and bottoms in the Total Shadow value to give an indication that the market is forming a change in trend.
MA Total Shadow
