Candle Average Price

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Overview

The Candle Average Price indicator is a custom tool designed to help traders identify key price levels by calculating and displaying the average price of recent candles on your TradingView chart. This indicator computes the average price based on a user-defined percentage of each candle's range over a specified number of candles. It then plots a horizontal line representing this average, covering only the last N candles as defined by you.

Key Features

Customizable Number of Candles: Define how many past candles to include in the average calculation.
Adjustable Percentage Level: Choose any percentage of each candle's range (from low to high) to calculate the price level.
Dynamic Horizontal Line: The indicator plots a horizontal line representing the calculated average, updating with each new bar and covering only the specified number of candles.

How It Works
Price at Specified Percentage:

For each candle, the indicator calculates a price level at your chosen percentage within the candle's range.
Formula: Price = Low + (Percentage Level / 100) * (High - Low)
Average Price Calculation:

It computes the average of these price levels over the last N candles.
Formula: Average Price = Sum of Price Levels over N Candles / N
Horizontal Line Plotting:

A horizontal line is drawn at the calculated average price level.
The line spans from N candles ago to the current candle, covering exactly the number of candles specified.

Input Parameters
Number of Candles (length):

Description: The number of recent candles over which the average is calculated.
Default Value: 4
Range: 1 to any positive integer.
Usage: Adjust this to include more or fewer candles in the calculation. A higher number smooths the average, while a lower number makes it more responsive to recent price changes.
Percentage Level (%):

Description: The percentage within each candle's range to calculate the price level.
Default Value: 50%
Range: 0% (candle low) to 100% (candle high).
Usage: Modify this to focus on different parts of each candle:
0%: Uses the low of each candle.
50%: Uses the midpoint of each candle.
100%: Uses the high of each candle.
Custom Percentage: Any value between 0% and 100% to target specific levels.

How to Use the Indicator

Adding the Indicator to Your Chart:
Open the TradingView chart of your preferred financial instrument.
Click on Indicators at the top of the chart.
Select Invite-Only Scripts if you've saved the script there, or use the Pine Editor to paste and apply the script.

Configuring the Settings:

After adding the indicator, click on the gear icon ⚙️ next to its name to open settings.
Adjust the Number of Candles (length) to your desired period.
Set the Percentage Level (%) (percentage) to the specific level within each candle's range you want to analyze.
Interpreting the Horizontal Line:

The horizontal line represents the average price calculated based on your inputs.
It updates with each new bar, always reflecting the most recent data over the specified number of candles.
The line only spans the last N candles, providing a focused view of recent price action.
Practical Applications
Identifying Support and Resistance Levels:

The average price line can act as a dynamic support or resistance level.
Traders can watch for price reactions around this line to make trading decisions.
Trend Analysis:

Observing how the price interacts with the average line can provide insights into the current trend's strength and potential reversals.
Entry and Exit Signals:

Use the line as a reference point for setting stop-loss orders or taking profits.
Combine it with other indicators for more robust trading signals.

In highly volatile markets, consider increasing the number of candles to avoid false signals.

Limitations and Considerations
Not a Standalone Tool:

This indicator should not be used in isolation for making trading decisions. Always consider additional analysis.
Market Conditions Matter:

The indicator may perform differently in trending markets versus ranging markets.
Data Refresh:

Ensure you have a stable internet connection and that your TradingView chart is set to the correct time frame.
Conclusion
The Candle Average Price indicator is a flexible and user-friendly tool that provides valuable insights into recent price action by calculating the average price based on your specific criteria. By adjusting the parameters to suit your trading style, you can incorporate this indicator into your technical analysis to help identify potential trading opportunities.

Disclaimer: Trading financial instruments involves risk, and past performance is not indicative of future results. This indicator is a tool to assist in analysis and should not be considered financial advice.

Happy Trading!