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2014issue C1010-15

Constructing volume-scaled candlestick charts

A session's remaining technical record is five session fields: open, high, low, close, and volume. A hybrid mark keeps a volume-scaled box and paints the candle body inside it, so all five fields sit in one comparable entry in the price pane.

  • After news and fundamentals are set aside, the technical record of a session is five session fields: open, high, low, close, and volume.
  • A volume-scaled box sets height to the high-low range and width to that session's volume, so a heavier-volume period occupies more horizontal space than a lighter one.
  • Merging candlesticks onto those boxes and then discarding the outline removes the volume-shape cue the construction is built to show.
  • The hybrid mark keeps the box dimensions, paints the candle body inside, and lets easy movement, difficult movement, checkerboards, and breakout confirmation be read as one comparable entry.
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Current trackCandlestick patterns100 readingsVolume-price analysis129 readingsBreakout confirmation172 readings

Five session fields

After news and fundamentals are set aside, a session's technical record consists of five session fields: open, high, low, close, and volume. Those five values are what remain to be drawn.

A conventional bar mark makes the high-low spread and the open and close ticks easy to read. Volume plotted along the lower margin is hard to assign to a specific session.

Boeing daily close, April–July 2014

Boeing’s daily close climbed from the high 120s to about 138 dollars in early June 2014, then gave the whole advance back into the high 120s by mid-July. Those closes were read from the article’s traditional OHLC bar chart of BA, the example used to show open, high, low, close, and the detached volume strip.
Boeing’s daily close climbed from the high 120s to about 138 dollars in early June 2014, then gave the whole advance back into the high 120s by mid-July. Those closes were read from the article’s traditional OHLC bar chart of BA, the example used to show open, high, low, close, and the detached volume strip.Boeing Co. (BA) · daily · 2014-04-21T00:00:00.000Z to 2014-07-18T00:00:00.000Z

The 18 July last print is the figure header (127.22). Other closes were read from the published daily scale to the nearest half dollar; the raster does not support finer ticks. Volume stays in a separate pane on this chart and is not mixed onto the price axis.

The volume-scaled box

A volume-scaled chart replaces a uniform time axis with volume, so a heavier-volume month occupies more horizontal width than a lighter one. Each session is a volume-scaled box whose height is the high-low range and whose width is that session's volume.

Tall, thin volume-price boxes describe easy movement, the easy travel typical of trends. Short, wide boxes describe difficult movement, the sluggish travel often seen at tops. Extremely tall boxes on heavy volume are typical of panic lows.

Candle body and wicks

A candle body is the open-to-close span, with the remainder of the range drawn as wicks. Bodies tend to lengthen in trends, shrink in consolidations especially at tops, and become very large at lows.

Keep the box outline

Merging volume-scaled boxes with candlesticks while discarding the box outline removes the volume-shape cue that the volume-price construction is built to show.

The hybrid mark keeps the volume-defined box dimensions and paints the open and close inside that box, so all five session fields appear in one comparable entry.

Reading the hybrid mark

Narrow bodies inside very short volume boxes often mark tops. Same-direction bodies can string through declines or advances. Alternating colors in a range form a checkerboard. Important lows often show two neighboring tall, fairly wide opposite-color sessions.

The same mark across markets

The same hybrid construction is presented as applicable to individual equities, exchange-traded funds, market averages, and commodities.

On a hybrid spot-gold example, moves through support or resistance coincide with heavier volume, wider ranges, and large bodies. That combination is breakout confirmation. Quieter sessions show lighter volume, small ranges, and a partial fill, with the candle body occupying only part of the volume-scaled box.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
41 of 54 in the Candlestick patterns track
201510-14 pp.Next on Candlestick patternsWeekly range midpoints as support and resistanceThe weekly range line is the high-to-low span of every price traded across a five-session week, and the weekly body runs from the Monday open to the Friday close.
All readings on this track · 54 readings
  1. 1990Constructing three-session rally and reaction volume signals
  2. 1991Constructing candlestick real bodies and multi-session patterns
  3. 1991Treat a candlestick reversal as incomplete until %D confirms it
  4. 1991Filtering candlestick signals with stochastic percent-D
  5. 1991Constructing compressed candlestick summaries
  6. 1993Intraday candlestick confirmation with oscillators
  7. 1993Candlestick hypotheses from a 1993 reading list
  8. 1994License candlestick signals with oscillators and weekly vetoes
  9. 1995Real-body support, resistance, and close-through breakouts
  10. 1997Weekly reversal as a three-part hypothesis
  11. 1998Turning fear levels into testable rules with a psychological matrix
  12. 2000Evaluating three-bar reversal reliability
  13. 2000Prior-day candles, open confirmation, and same-session stops
  14. 2000Intraday candlestick volume confirmation for daytrading
  15. 2001Count the key reversal up before coding a mechanical exit
  16. 2001Rising and falling three continuation candle construction
  17. 2002Treat a moving average as a contested fence
  18. 2003Candlestick signals need support and a risk-reward screen
  19. 2003Constructing one-day reversal tops and bottoms
  20. 2003Chart sentiment as a regime filter for hourly stochastic entries
  21. 2004Confirming index reversals with candlesticks, stochastics and averages
  22. 2004The harami inner close as a reversal barometer
  23. 2004Constructing a true-range volume power-shift filter
  24. 2005Weighing reversal clusters against moving-average support
  25. 2005Candlestick exits confirmed by overbought stochastics
  26. 2005Confirming piercing patterns with stochastics and moving averages
  27. 2006Candlestick cluster exits confirmed by overbought stochastics
  28. 2007Three black crows become a trade hypothesis only after regime, trend and nearby levels
  29. 2008Asymmetrical RSI lookbacks for divergence and candle confirmation
  30. 2008A permission checklist for the end of a trend
  31. 2010Mechanical entries still need confirmation gates
  32. 2010Crude oil as a case study in candlestick session reading
  33. 2010Gold weekly candles and the thousand resistance breakout
  34. 2010A three-layer gold chart drill from waves to candle confirmation
  35. 2011Why entry scans fail without trend filters
  36. 2011Price-zone oscillator trend-regime rules
  37. 2011A candlestick checklist before commodity entries
  38. 2013Step candle construction at price turning points
  39. 2013Two-bar step-candle construction
  40. 2014Small-range bars as a timed volume-climax hypothesis
  41. 2014Constructing volume-scaled candlestick charts
  42. 2015Weekly range midpoints as support and resistance
  43. 2015Constructing weekly body-midpoint pattern codes
  44. 2015Evaluating encoded candlestick sequence hypotheses
  45. 2015Constructing a breakout relative-strength index from two-day range candles
  46. 2016A three-gate classroom on hourly sterling
  47. 2016Fibonacci retracement as a pre-commitment stop map
  48. 2017Nine-zone filter for decade-level breakouts
  49. 2017Constructing pin-bar and inside-bar setups
  50. 2017Two-bar soldier and crow rules become a system only after filters and exits
  51. 2017Confirm a one-white-soldier or one-black-crow before entry
  52. 2018Session control from marubozu and engulfing geometry
  53. 2019Volume, acceleration, and candle filters on a completed double bottom
  54. 2019Sector-filtered candlestick scans and predrawn stops
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