Congestion Zone Formula

TNTrader5159

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This is a part of my Impedance Factor measuring support or resistance via Peaks, Valleys, and Congestion Zones. The formula for determining congestion zone strength is as follows:

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At a given price, take the first bar back containing that price as 1. Any series of bars containing that price, broken or unbroken, would qualify as a Congestion Zone. Four additional bars behind the most recent occurrence, however far back that is, would make for 5 in a row or a strength of 5. If 2 bars are skipped before another one is reached, then you have 6 out of 8. The formula for determination of a broken or unbroken series is (Actual Matches / Total Bars) * Actual Matches. Six out of eight (6/8) would be .75 * 6 or a score of 4.5. It's a measure of density, and the chart can be scanned back however many bars desired to find a density ratio greater than the Thrust Factor of the pattern itself. Any move reaching a Congestion Zone greater than the Thrust Factor of the pattern that launched it would be exited MIT at that level.
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This is part of an ongoing discussion that follows determination of the Thrust Factor of a completed pattern. It is used to help determine a profit objective or occasionally a Stop Loss point.
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