Lemon Drops. Testing the CLAM Indicator

This Candle Length Average Multi-timeframe (CLAM) indicator started as an experiment to try to filter out market noise and spot signals others are missing. Understanding exactly what it is showing is a work in progress.

The histogram is plotting a fast trend of candle lengths, positive or negative.
It is an average of open-close cross using the triple-ema (TEMA) weighted against higher timeframes.
The calculation is similar to Know Sure Thing (KST), only using open-close (candle length).

• Histogram below the centerline means candles are mostly down candles.
  
• Histogram often stays below centerline for 4-5 down spikes, then it makes its way back up through.
  
• Before each downtrend starts, there are these spikes (highlighted in yellow).
  
• In an uptrend, the last spike up appears to be the highest. Count them.
  
• In a downtrend, the first spike up is probably the highest.
  
• Bottoms will also show up the same way.
  
• Confirm using other indicators and price history.
  

Another TEMA average of the histogram produces a line that changes color from lime to grape.

• When the line is lime, and the price is not going up much (divergence), it indicates resistance.
  
• Conversely, when the line is grape, and the price is not going down much, it's a signal of support.
  
• A break or bounce off of support or resistance tends to follow the current longer-term trend, up or down.
  
• The line color does not mean the price will go up or down. It merely shows the candle length trend.
  
• Trends in candle length do seem to reveal or serve as a reminder of potential trend direction changes.
  
• During a flat or ranging trend, the line and price track each other well.
  
• During steep trends, up or down, the signals are not as reliable, but could be useful to spot weakness.
  

Kommentera:

The coin being charted is not confirmed to go down. It just signals the start of a long consolidation or gradual downtrend. Notice the down consolidations are getting flatter. It could go flat, gradual down, or track the slow uptrend white line for days while candles get shorter. The last big drop didn't happen until the histogram was negative for almost a month.
As always, not investment advice. Do your own due diligence before placing a trade.

Kommentera:

As a matter of observation, it appears to be pivoting near 8k. It might take a few days to be sure, but closing shorts just in case.