Wickiness Index

2024년 12월 28일

Wickiness Index - Detect Indecision and Trend Exhaustion
The Wickiness Index is a versatile technical indicator designed to measure the proportion of wicks (upper and lower shadows) relative to the total range of price bars over a specified lookback period. It provides insights into market indecision, reversals, and trend exhaustion by analyzing the structural composition of candlesticks. The indicator calculates the lengths of upper and lower wicks along with the body of each candlestick. Each bar's wick length is expressed as a percentage of the total range (High - Low). The ratio is scaled to 0–100, where 100 represents entirely wicks with no body (indicating pure indecision) and 0 represents no wicks with only body (indicating strong directional movement). These values are then averaged over the lookback period (default = 5 bars) to provide a smoothed representation of wickiness, reducing noise and highlighting trends.

A high value, especially above 70, suggests indecision or potential reversals, as candlesticks dominated by wicks often appear near tops or bottoms. Conversely, low values below 30 indicate trend strength and strong momentum, useful for spotting breakouts and trend continuation. Mid-range values between 30 and 70 often indicate consolidation phases or gradual transitions between trends. Traders can adjust the lookback period to match their trading style, with shorter periods offering faster responses and longer periods providing smoother trends.

This indicator is particularly useful for trend reversal detection, breakout confirmation, and volatility filtering. It scales effectively across all timeframes, making it suitable for both intraday traders and long-term investors. When combined with volume analysis or trend-following indicators, the Wickiness Index can further strengthen trade signals. The visual design includes a blue line for the index and horizontal reference lines at 30 and 70, allowing for quick and intuitive interpretation.

The Wickiness Index offers a unique perspective on market sentiment and price action behavior, providing traders with valuable insights into potential turning points, momentum shifts, and market indecision. It is a powerful tool for improving decision-making in volatile markets and identifying areas where price trends may weaken or reverse.