Price Action Toolkit Indicator Guide
The Price Action Toolkit created by Flux Charts identifies the concepts used by Price Action Traders. The Price Action Toolkit finds price action patterns or characteristics in a set of candlestick formations that can be used to predict future stock movements.
Flux Charts Price Action Toolkit Identifies:
- Fair Value Gaps (FVG)
- Break of Structures (BOS)
- Change of Character (ChoCh)
- Change of Character Plus (ChoCh+)
- Equal Highs (EQH)
- Equal Lows (EQL)
- Order Blocks (OB)
- Buy Side Liquidity (BSL)
- Sell Side Liquidity (SSL)
- Premium and Discount Zones
- Volume Imbalances
- MTF Highs and Lows
Volumetric Fair Value Gaps, Order Blocks, and Breaker Blocks
Volumetric Fair Value Gaps are a key feature in the Price Action Toolkit. They give traders key insights into the strength of an FVG Zone (Read about FVGs here). The spread between buy volume and sell volume can give a strong indication of how quickly and aggressively the price will react to an FVG.
A large amount of buy volume compared to sell volume during the formation of a bullish FVG indicates a strong FVG where the price is aggressively rejected when re-entering the FVG.
Multi-Time Frame FVG, OB and BB
The price action toolkit can plot Fair Value Gaps (FVGs), Order Blocks (OB), and Breaker Blocks (BB) for up to 3 different time frames on the same chart.
Here, a trader can see that two sell side order blocks have formed on two different time frames. Since the likelihood of the price breaking these two sell order blocks is low, a trader can feel confident entering a short position.
Zones that overlap will be merged into one zone with brighter hue. Two overlapping zones can be interpreted as a particularly strong order block.
Fair Value Gaps
Fair Value Gaps (FVGs) identify an area where there is an imbalance of buyers or sellers. A price is likely to be rejected when it enters an FVG.
Displays buy/sell volume and total volume information on the FVG.
Wick: If a low price moves under a bullish FVG, that zone is invalidated. If a high price breaks above a bearish FVG, that zone is invalidated
Close: If the price closes under a bullish FVG, that zone is invalidated. If the price closes above a bearish FVG, that zone is invalidated.
Average Range: If the middle candle of the FVG is not sufficiently larger than the other candles, that will not be considered a zone.
Volume Threshold: Zones are filtered by how much larger their formation volume is compared to the average volume.
Volume Threshold %
The percentage by which the formation volume of the FVG has to increase for it to appear on the chart.
Same type: All candles for a bullish FVG must be green. All candles for a bearish FVG must be red.
All: Any type of candle is acceptable in the formation of an FVG
This will affect the size of the zones identified. A low sensitivity will result in only large zones appearing. A High sensitivity will result in mixed zone sizes.
Order blocks identify areas where large institutions have placed large buy/sell orders. If the price re-enters this area, it could be driven back up or down depending on whether it is a bullish or bearish order block.
The size of the movement that created the order block. A smaller value will result in smaller order blocks.
A breaker block is formed when an order block fails to form, causing a drop in liquidity. Price is expected to fall after a bearish breaker block and to rise after a bullish breaker block.
Break of Structure (BOS)
Break of structures occur when price breaks a previous high or low in an uptrend or downtrend, suggesting the trend will continue.
Change of Character (CHoCH)
Change of Character or CHoCH is formed when a recent high or low is broken during an uptrend or downtrend. The CHoCH indicates a potential market reversal or change in trend.
Change of Character Plus (CHoCH+)
CHoCH+ is formed when a recent high or low is broken during an uptrend or downtrend, but before this occurs, price fails to make a lower low or higher high, resulting in a stronger confirmation of a price reversal to occur.
Equal Highs & Lows
EQH and EQLs are used to find levels of support and resistance. When these areas are broken, it also gives traders insight into future market moves.
Determines the maximum difference between two highs or two lows. Lower values have greater accuracy but are less common.
Buyside & Sellside Liquidity
These are levels at which the smart money traders have set their stop losses. Buyside is an area on the chart where short sellers have set stop losses, set and sellside is the area where traders in long positions have set stop losses.
The width of the zones relative to price.
This is the difference between buy and sell volume compared to the total volume. Areas with high buy volume are bullish, areas with high sell volume are bearish.
The gap size that is required for a volume imbalance to be detected. Higher values will result in fewer volume imbalances detected.
Disable Overnight Gaps
The gap that occurs during the transition from pre market to market open due to the volume spike is disabled.