This powerful and easily overlooked indicator is based on a simple candlestick price action pattern. It extracts and isolates raw market strength by measuring the unchallenged portion from one bar to the next. As it does not need smoothing, this indicator is as fast as the chart it is derived from.

The value is found by calculating the unchallenged zone between the previous open and the current bar. This zone is indicative of strength because either one side was too strong or the other too weak and the result yields a measurement of directional momentum.

The colored rectangles represent unchallenged zones. The blue zone is a show of bullish strength and the red one, of bearish strength.

This is an important conjecture as the market is sending an irrevocable message of who is in

Editor’s Note: Ian Woodward has developed a comprehensive and unique way of looking at the markets. This article highlights several of the indicators and insights he has developed. It is a glossary because the terms are his creation, however each of his ideas is testable on any platform and many traders will find these ideas to be invaluable. This glossary originally appeared on Ian’s blog (http://go.mta.org/546), supplemented with material provided by Ian, and is reprinted here with permission.

I am reminded by Tim, a friend and supporter of the HGSI Software who gave me good and encouraging advice in his feedback to my previous blog note of terms Ron and I use from time to time that new readers may come across which are unfamiliar to the casual reader. This Blog Note is to help such readers with a brief description of some of the terms I use from time to

How would you describe your job?

In my current role, I am responsible for technical analysis research pertaining to the fixed income and currency asset classes. It’s a challenging and interesting role, as it involves not only producing technical research related to these asset classes, but also marketing the research to our global staff and client base. I am a big proponent of educating salespeople, traders and clients alike about how they can use technical analysis effectively in their respective roles – whether it is for a trade idea or a potential hedge in order to manage risk exposure.

I rely heavily on intermarket analysis in this regard, as it provides a cross asset view of the financial world that can be invaluable in today’s uncertain investment climate. This broadens the appeal of the research product as well in that it becomes relevant to a number of different portfolio and risk managers

This article was originally posted at The Canadian Technician blog (http://go.mta.org/540) and is reprinted here with permission of the author.

FEDEX – I heard this morning that Fedex is not like UPS at all. It is only UPS that has a problem. Let’s check the charts. Here is FEDEX weekly from 2005.

Well. Is it a canary, A black bear, a Grizzly or a Kodiak?

Notice the RSI (“Relative Strength Index”) has given us a bear market signal.  A bear market signal is when the RSI falls to 30. On the following rally, the stock has trouble pushing the RSI above 60-65. Bear market signals on an RSI are pretty reliable, but they never tell us when the following top will come in.

Well, we got our bear market signal in 2011, and here we