Description
The PZ Lopez Pressure Indicator quantifies market activity into a pressure ratio ranging from 0 to 100. It calculates buying pressure as the total accumulation (up candles) over a set number of bars, multiplied by volume. Similarly, selling pressure is the total distribution (down candles) times volume. The resulting percentage represents how dominant buying activity is compared to total market participation.
Here's how to interpret the readings:
- Above 70 – Market is overbought, selling pressure may increase soon
- Below 30 – Market is oversold, buying pressure may rise
- Around 50 – Market is balanced with no dominant pressure
In addition to the pressure ratio itself (dotted red line), the indicator plots two moving averages:
- Orange Line – Main trend average of pressure
- Blue Line – Signal line (shorter MA) used to detect momentum shifts
These lines help you confirm whether the current pressure is gaining or losing strength. When the signal line crosses above the main line, it implies bullish momentum; if it crosses below, bearish pressure is taking over.
This indicator is ideal for early reversal signals, overbought/oversold filters, or volume-based trend analysis. It can be applied to any symbol and timeframe and works best when used alongside other confirmation tools or price action strategies.
Input Parameters
- Period – Number of bars to evaluate buying and selling pressure
- Fast MA – Short-term moving average for signal line (blue)
- Slow MA – Long-term moving average for main line (orange)
