The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

the hAnDbook of teChnICAL AnALySIS

Figure 5.19 depicts a three‐period SMA of the bar stochastic accurately iden-

tifying bearish divergences in uptrends and bullish divergences in downtrends.

7. Average Candlestick Real Body to Range Ratio: A gradual decrease in the real
   body to candlestick range is also an early indication of potential weakness
   in an uptrend. In similar fashion, a gradual decrease in real body to candle-
   stick range is a bullish indicator in a downtrend. A simple moving average of
   the real body to candlestick range ratio is used to monitor this price action
   behavior. See Figure 5.20.

figure 5.18 Declining Bar Stochastic Ratio Indicating Trend Weakness.

figure 5.17 Variation in Trend Persistence on the Hourly Chart of GBPJPY.
Source: MetaTrader 4