Advance/Decline Ratio (Bars) on Gold

What it shows

A stepped blue line under the candles, with a grey mark at 1 where up and down candles are level. It jumps from value to value because a 9-candle count can only take a handful of ratios.

How Pravex works it out

1. A candle counts as up when it closed at or above its open, and as down otherwise.
2. Count the up candles and the down candles over the last 9 candles.
3. Ratio = up candles ÷ down candles.
4. When the window has no down candle, the value is the number of up candles, which equals the length.
5. Count an invented window of 6 up candles and 3 down: the ratio is 6 ÷ 3 = 2.
6. The name comes from market breadth, but here it counts the candles of one chart. It reads only open and close, no volume.

Settings

Setting	Default	What changing it does
Length	9	How many candles go into the count. A shorter window reacts quicker and jumps in bigger steps; a longer one is smoother.

How traders read it

The mark at 1 is the reading point. Above it, up candles lead, and below it, down candles lead. The line crossing 1 means the balance of the window changed sides.

Because it counts candles and ignores their size, a window of many tiny up candles and one large down candle still reads above 1. Check the candles themselves before trusting a high ratio.

Steps are coarse. With 9 candles, the ratio takes only a few values, such as 0.8, 1.25, 2, 3.5 and 8, so the line moves in jumps rather than gently.

When it misleads

The ratio ignores how big each candle was, so it can look bullish while price fell on net. With no down candles in the window, the value is capped at the length instead of growing without limit. A candle that closes exactly at its open counts as up, which tilts the count in calm gold stretches, where many candles end near flat.

Questions and answers

What does an Advance/Decline Ratio of 1 mean on a chart?

The window has as many up candles as down candles, so the line sits on the grey mark at 1.

Is this the same as the market breadth ratio?

No. Market breadth counts stocks that rose against stocks that fell. This one counts the candles of the chart you are looking at.

Why does the line only take a few values?

With 9 candles there are only ten ways to split them into up and down, so the ratio jumps between fixed steps. Raise the length to 20 or 30 for finer steps and a steadier line.

Does it use volume?

No. It reads only the open and the close of each candle.

Related: Balance of Power, Relative Vigor Index, Bull Bear Power, every indicator.