Decoding Momentum with Precision: Absolute Strength HistogramMomentum is more than just a buzzword—it’s the pulse of price action. The Absolute Strength Histogram v2 is a powerful open-source indicator that brings that pulse to life, helping traders visualize the ongoing tug-of-war between bulls and bears with clarity and precision.
In this post, we’ll explore how this tool works, how we use it at Xuantify, and how you can integrate it into your own trading strategy to sharpen your edge.
🔍 What Is the Absolute Strength Histogram ?
Originally developed by jiehonglim , this indicator is a refined version of the classic Absolute Strength Histogram. It measures the relative strength of buyers and sellers and plots it as a color-coded histogram.
Key Features:
Color-coded bars to reflect bullish or bearish dominance
Clear visual cues for trend strength and exhaustion
Helps identify trending vs. ranging market conditions
Open-source and customizable
Unlike traditional oscillators, this histogram doesn’t just show overbought or oversold—it shows who’s in control , and how strongly.
🧠 How We Use It at Xuantify
At Xuantify, we use the Absolute Strength Histogram as a momentum confirmation tool within our multi-layered trading models. Here’s how:
1. Trend Confirmation
We look for alignment between price structure and histogram color. For example, if price breaks structure to the upside and the histogram turns green and rising, that’s a strong confirmation of bullish momentum.
2. Divergence Detection
When price makes a new high but the histogram prints a lower high, it signals momentum divergence —a potential early warning of reversal.
3. Range Filtering
Flat or alternating histogram bars often indicate a ranging market . We avoid trend trades during these periods and instead look for mean-reversion setups.
🧩 New: Pivot High/Low Overlay for Reversal Clarity
To make the Absolute Strength Histogram even more actionable, we’ve added a custom Pivot High/Low indicator that visually marks key swing points on the chart. This addition helps traders clearly see how the histogram behaves before, during, and after reversals .
Below an example of HTF 4H used as stronger trade confirmation:
Why this matters:
It highlights where momentum shifts align with structural turning points
It helps validate divergence signals from the histogram
It makes backtesting and visual analysis much easier
How to use it:
Watch for histogram color or slope changes near pivot highs/lows
Look for divergence between price and histogram at these pivots
Use the pivot zones as potential entry or exit points when confirmed by momentum
🔄 Does It Repaint?
One of the most common concerns with momentum indicators is whether they repaint —meaning they change past values based on future price action. The Absolute Strength Histogram is designed to be non-repainting .
Once a histogram bar is printed, it remains fixed, making it suitable for real-time decision-making and reliable backtesting . This gives traders confidence that what they see on the chart is what actually happened in the moment—not a hindsight illusion.
⚙️ Settings That Matter
The indicator comes with several adjustable parameters, but one of the most impactful is the “Indicator Method” setting.
Our recommendation:
Set Indicator Method = STOCHASTIC for smoother, more responsive signals
This setting tends to reduce noise and better capture momentum shifts
It works especially well in combination with structure-based entries
Other useful settings include:
Length – Controls the sensitivity of the histogram
Smoothing – Helps reduce choppiness in volatile markets
Color thresholds – Customize visual cues for easier interpretation
⚙️ Best Combinations with This Indicator
To maximize its effectiveness, we combine the Absolute Strength Histogram v2 with:
Market Structure Tools – Like BOS/CHOCH from LuxAlgo Smart Money Concepts
Volume Profile – To confirm strength around key volume nodes
Fair Value Gaps (FVGs) – For precision entries when histogram confirms direction
RSI or Stochastic – For additional momentum or exhaustion confirmation
This layered approach helps us filter out noise and focus only on high-conviction trades .
⚠️ What to Watch Out For
No indicator is perfect. The Absolute Strength Histogram can sometimes lag slightly in fast-moving markets. It’s best used as a confirmation tool , not a standalone signal generator.
Also, in low-volume or choppy conditions, the histogram may give mixed signals. Always combine it with structure and context.
🚀 Final Thoughts
The Absolute Strength Histogram is a clean, intuitive, and powerful tool for traders who want to see momentum clearly . Whether you’re a trend trader, scalper, or swing strategist, this indicator can help you stay on the right side of the market.
At Xuantify, we’re all about combining simplicity with precision. This tool fits that philosophy perfectly.
Add it to your chart, test it, and see how it sharpens your edge.
