Psychological Line (PSL) Indicator Explained

The Psychological Line (PSL) could not be simpler: the percentage of the last N bars that closed up. Twelve up days out of twelve = 100 — and a crowd that bought twelve days straight is a crowd running out of buyers.

How It Works

• (Up closes ÷ N) × 100 over the window.
• 50 is neutral; sustained readings above ~75 mark one-sided optimism.
• Below ~25, pessimism is similarly stretched.

How to Trade It

PSL extremes are contrarian pressure gauges: fade 85+ readings in ranges, or use them to tighten stops in trends. Its robustness comes from ignoring magnitude entirely — a streak is a streak, which makes PSL a good diversifier next to size-based oscillators.

Building It in Setup.Cash

Add Psychological Line (PSL) in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. The Increasing/Decreasing primitives detect the same streaks as boolean events. For the full category overview, see the advanced momentum library guide.

Momentum signals are timing tools — combine them with a trend or regime filter and backtest the exact rules before going live.