Psychological Line Pass Node
Psychological Line — Series Input
Overview
The Psychological Line Pass Node computes the Psychological Line (PL) on a series input. PL measures market sentiment by counting what percentage of bars in a lookback window closed higher than the previous bar — a simple yet powerful indicator of buying pressure.
A PL reading above 75% suggests excessive bullish bias and potential overbought conditions. Below 25% suggests excessive bearish bias and potential oversold conditions. The midpoint (50%) reflects balanced sentiment. PL is particularly useful for contrarian analysis and identifying crowd behavior extremes.
Formula
Parameters
| Parameter | Default | Description |
|---|---|---|
| period | 14 | Number of bars to count up-closes over |
Inputs & Outputs
| Slot | Direction | Type | Description |
|---|---|---|---|
| input | Input | { values, timestamps } | Price or any numeric series |
| values | Output | (number | null)[] | Psychological Line values in [0, 100]; nulls during warm-up |
| timestamps | Output | number[] | Unix timestamps aligned to input |
Use Cases
Contrarian Overbought / Oversold
When PL > 75%, buying pressure is extreme — a contrarian sell signal. When PL < 25%, selling pressure is extreme — a contrarian buy signal. These extremes indicate crowd behavior at potential reversal points.
Trend Confirmation
PL persistently above 50% confirms bullish trend participation — more than half of recent bars are closing up. PL persistently below 50% confirms bearish trend participation.
Market Breadth Proxy
Applied to an index, PL acts as a simple single-instrument breadth measure. When applied to individual stocks in a portfolio, compare PL scores to rank by bullish consistency.
Tips & Best Practices
Step-Wise Output
PL output changes in discrete steps of 100/period — with period=14, steps are ~7.1%. This staircase behavior is normal; smooth with a short EMA if continuous output is needed.
Combine with RSI
PL measures frequency of up-closes; RSI measures magnitude of up-closes. When both are extreme together (PL > 75 and RSI > 70), the overbought signal is much stronger than either alone.
Asian Markets Application
The Psychological Line originated in Japanese technical analysis and is widely used in Asian equity markets. It is particularly popular for analyzing individual stocks in trending markets.