But prices evoke emotion. It's the double whammy that makes processing functions (signals) so attractive.
Lots of technical analysis uses price as an input into a function with the goal of normalizing output or analyzing it for a specific time period. I like to use log returns, that is, the logarithm of returns over a specific period, as it's arguably one of the most objective signals of all time.
Why log returns? This article here explains it rather well and I don't want to plagiarize:
quantivity.wordpress.../21/why-log-returns/
In this chart is @balipour 's awesome work. The signal is called "Moments" and you can use it to calculate log returns and use it in conjunction with other information. Props to them!
One other thing to mention. Candlesticks aren't the best representation of price. They give us 4 pieces of data: open, high, low, close. This doesn't tell us the volume-weighted average price (the midpoint of all trades in that period, by volume metric), ie. where the breakeven point for market prices lie within that candlestick. It only gives us a bounds in which trading occurred, and not exact points. Thus, this is flawed data, but it's pretty good and is the best we can do for now ;)
Hopefully this will help you out if you are reading this. Cheers.
Lots of technical analysis uses price as an input into a function with the goal of normalizing output or analyzing it for a specific time period. I like to use log returns, that is, the logarithm of returns over a specific period, as it's arguably one of the most objective signals of all time.
Why log returns? This article here explains it rather well and I don't want to plagiarize:
quantivity.wordpress.../21/why-log-returns/
In this chart is @balipour 's awesome work. The signal is called "Moments" and you can use it to calculate log returns and use it in conjunction with other information. Props to them!
One other thing to mention. Candlesticks aren't the best representation of price. They give us 4 pieces of data: open, high, low, close. This doesn't tell us the volume-weighted average price (the midpoint of all trades in that period, by volume metric), ie. where the breakeven point for market prices lie within that candlestick. It only gives us a bounds in which trading occurred, and not exact points. Thus, this is flawed data, but it's pretty good and is the best we can do for now ;)
Hopefully this will help you out if you are reading this. Cheers.