Developed by Tushar Chande as a way to quantify candlesticks, the QStick indicator is a moving average of the difference between the opening and closing prices of an issue.
With all candlestick charting, the body of a candlestick is black if today's close is less than the open and is white if today's close is greater than the open. If over a specified range of time the majority of candlesticks are white it is considered bullish, a majority of black candlesticks would then be considered bearish.
QStick values falling below zero indicate a majority of black candlesticks over the time periods under observation and provide a bearish bias for the security. Conversely, values above zero indicate a bullish bias.
Analysis of the QStick indicator can yield several trading signals. A QStick that is extremely low and then reverses itself is a signal to buy. If the QStick is extremely high and then begins moving down, use this as a sell signal. Lastly, when price and QStick values diverge, use the direction of the QStick to lead the eventual price movement.
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