Q-Stick Indicator

The Q-Stick Indicator was developed by Tushar Chande. It provides a method for taking into account the color of Japanese candlesticks.

The distance between opening and closing prices is at the heart of chart analysis using candlesticks: when a candlestick body is dark, it means the close is lower than the open, and conversely when the candlestick has a light (or generally white) body.

Over a certain period, a majority of light-colored candlesticks signify an uptrend. Conversely, a majority of dark-colored candlesticks signify a downtrend.

The Q-Stick Indicator presents the Moving Average of the difference between opening and closing prices.

Example

Interpretation

When the Q-Stick Indicator is below zero, it means that the candlesticks are mostly dark in color over a given period and therefore the trend is bearish.
Conversely, when the Q-Stick Indicator is above zero, it means that the candlesticks are mostly light in color over a given period and therefore the trend is bullish.

There are several ways to take a position with this indicator:

1. Zero axis crossings: Buy when it crosses the zero axis upwards, and sell when it crosses this axis downwards.
2. Extreme values: Buy when this indicator is in a significant trough and begins to rise. Sell when it is at a significant peak and begins to fall.
3. Divergences: Buy when the indicator is growing and prices are falling. Sell when the indicator is decreasing and prices are rising.
   As a precaution, one can in this case wait for confirmation by price action.