The Market Thermometer indicator is described in the book “Trading with Dr. Elder. Encyclopedia of stock trading”.

It measures the degree of market volatility based on intraday ranges. If the market temperature starts to exceed the average or remains below the average for several days, this is a trading signal.

Parameters:

• Thermometer_EMA_Length (22) – The length of the moving average for calculating the market temperature. The default value of 22 is equal to the average value of trading days in the month.
• Spike_Alert_Factor (3) – If the market temperature exceeds its average (EMA) factor times, a visual indication is displayed on the chart.
• Quiet_Alert_Count (6) – If the market temperature remains below its average (EMA) for Quiet_Alert_Count days, a signal appears on the chart.
• Spike_Symbol (6) – Symbol code for displaying spikes in market temperature (spike).