1 Minute Technical Analysis: Market Score

The Market Score is an uniquely informative indicator developed at Dcypher. Instead of tracking a specific asset, it gives you an idea about the general condition of the market as a whole.

To calculate the indicator we are scanning all trading signals generated by various algorithms in a specific market for a period of time and then chart the "buy" vs the "sell" ones.

The result of this are two lines called the “buy” line that shows the total number of buy signals and the “sell” line that doesn the same for sell signals. 

market-score-sell-and-buy-lines

There are three basic ways to use the Market Score indicator when you are making your trading decision:

Crossovers

When the "buy" line crosses the "sell" line in upwards direction this indicates that the number of buy signals generated by traditional indicators is surpassing the number of sell signals and the market is entering a bullish phase. As a result of this you may expect the price for individual assets to also increase.

market-score-crossovers

The opposite is also true. When the sell line goes below the buy line we know that the market as a whole is becoming bearish.

Trend strength

Another way to use the indicator is to look at the spread between the “buy” and “sell“ lines. If there is a large difference between the two lines this means that the current trend is strong. With a strong trend you can expect reversals to be short lived. 

In this chart we have a very weak “buy” line that is below 500 and an extremely strong “sell” above 2000.

maret-score-trend-strength

Trend direction

The third, and most intricate way to use the Market Score is to look for the trend in the lines themselves. For example, if the “buy” line has been going down for some period of time we can expect that a crossover is going to happen soon and the market may enter a bearish phase. 

In the chart below we see the “buy” line steadily losing strength which is then followed by a crossover and an uptrend in the “sell” line.

market-score-trend-detection