Value Chart Divergence

ThinkScripter — Mon, 18 Oct 2010 22:07:36 +0000

Some time ago one of our Pro Members asked me to code an indicator which displayed signals when divergences of price action from the Value Chart occur. This indicator is the result. Today’s e-mini action is shown as an example below. Though I would not use this alone as a trading signal, it provides an excellent confirmation of price reversals. The notable breakdowns of the signal occur with rapid, breakout/breakdown events as divergence is overcome by momentum. (This indicator will be added to next weekend’s Pro Member update)

Value Chart

ThinkScripter — Mon, 16 Feb 2009 00:00:13 +0000

UPDATE 16 Feb 09: Changed a bit of the code around to make the study look a little better. You can hide the open and close dots as well for an even cleaner look.

I had numerous reader requests to create the Value Chart in thinkScript. The development, concepts and usage of these charts can be found in Dynamic Trading Indicators: Winning with Value Charts and Price Action Profile by Mark Helweg and David Stendahl. In a nutshell, this indicator seeks to capture the “Value” of a given underlying at the current price and time. The region between +4 to -4 is considered fair value; between +/- 4 to 8 is considered moderately overbought/sold; greater than +/- 8 is significantly overbought/sold. The default length is 5 per Helweg’s original description but I have found a value of 21 to be very useful. (Note: You’ll need to set the “BackgroundColor” plot color to your ToS background color for the chart to look right.)

Value Chart

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Value Chart Divergence

Value Chart