Effort & Result (normalized)
It is recommended to use a column display. This indicator measures the relationship between the body of the candlestick and the volume. Therefore, it measures the relationship between effort (volume) and result (price). It is still necessary to contextualize the price and not use the indicator without considering structure or relevant zones.
As we can see, this is an oscillator that ranges from 100 to -100 and helps visualize Volume Spread Analysis.
It can indicate three different types of relationships between candlesticks and volume:
1. Absorption: This is a significant discrepancy that shows that despite considerable effort in terms of volume, there has not been an adequate price result. High volume and little price movement. It can be detected when the indicator values are negative, and the closer to -100, the more pronounced the absorption. It indicates strong aggressive participation, but equally strong passive participation. It should be interpreted as an opposite signal; if the candlestick closes long with absorption, then it is likely that the bullish movement will not continue.
2. Absence of Resistance: This is a discrepancy that occurs when, despite low volumetric effort, there is a significant price movement. This is due to the absence of passive orders and is exactly the opposite of absorption. It is measured when the indicator value is positive. It means that a wide buy candlestick with low volume has not encountered resistance from passive sellers during its path, and vice versa for a sell candlestick. It should be interpreted as a "green light"; therefore, a buy candlestick that closes with a positive value in the indicator signals a likely price increase shortly thereafter.
3. Congruence: When the indicator value is close to 0, a situation of congruence occurs, where the result (price) is adequate to the effort (volumes). This indicates an efficient market with balanced participation from sellers and buyers, both passive and aggressive.
The pattern shown in the figure illustrates in the first line a sell candlestick with a very small body but a very high volumetric effort. Indeed, the corresponding column in the indicator shows negative values ("Absorption"). The second line shows how, after a few minutes, an "Absence of Resistance" situation occurs, this time for a buy candlestick that, despite low volumes, closed with a very wide body, in fact the indicator shows positive values. This specific pattern should be read as a long signal since sellers have been absorbed by passive buyers, and buyers have not encountered resistance from passive sellers. This indicates greater coordination and participation from both aggressive and passive buyers.
As we can see, this is an oscillator that ranges from 100 to -100 and helps visualize Volume Spread Analysis.
It can indicate three different types of relationships between candlesticks and volume:
1. Absorption: This is a significant discrepancy that shows that despite considerable effort in terms of volume, there has not been an adequate price result. High volume and little price movement. It can be detected when the indicator values are negative, and the closer to -100, the more pronounced the absorption. It indicates strong aggressive participation, but equally strong passive participation. It should be interpreted as an opposite signal; if the candlestick closes long with absorption, then it is likely that the bullish movement will not continue.
2. Absence of Resistance: This is a discrepancy that occurs when, despite low volumetric effort, there is a significant price movement. This is due to the absence of passive orders and is exactly the opposite of absorption. It is measured when the indicator value is positive. It means that a wide buy candlestick with low volume has not encountered resistance from passive sellers during its path, and vice versa for a sell candlestick. It should be interpreted as a "green light"; therefore, a buy candlestick that closes with a positive value in the indicator signals a likely price increase shortly thereafter.
3. Congruence: When the indicator value is close to 0, a situation of congruence occurs, where the result (price) is adequate to the effort (volumes). This indicates an efficient market with balanced participation from sellers and buyers, both passive and aggressive.
The pattern shown in the figure illustrates in the first line a sell candlestick with a very small body but a very high volumetric effort. Indeed, the corresponding column in the indicator shows negative values ("Absorption"). The second line shows how, after a few minutes, an "Absence of Resistance" situation occurs, this time for a buy candlestick that, despite low volumes, closed with a very wide body, in fact the indicator shows positive values. This specific pattern should be read as a long signal since sellers have been absorbed by passive buyers, and buyers have not encountered resistance from passive sellers. This indicates greater coordination and participation from both aggressive and passive buyers.