This indicator analyzes how effective the current market movement is based on the true high-low ratio
a certain number of bars.

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• Market movement efficiency coefficient
• A ratio below 1 means that the market is going nowhere
• A ratio above 1 means that the market is starting to show direction
• A ratio above 2 means that the market is showing effective movement
• A ratio above 3 means that the market has moved too much: it will stop or recover

This has direct trade implications.

• Look for positional opportunities when the line is red
• Look for trading opportunities in the range when the coefficient is orange
• Look for trend trading opportunities when the ratio is blue

How is the indicator calculated?

The indicator shows how many typical true ranges the market has moved over the desired number of bars. Typical true range –
this is the average true range of the high and low from the last number of bars, which is later compared to the absolute range
market movement over the same time period. The indicator coefficient gives you a measure of the market performance, as the ratio between the range and
market movement. Zero means that the market is not efficient and goes nowhere.

settings

The indicator has only one parameter: the indicator period, which is the number of bars for the reverse evaluation.

author

Arturo Lopez Perez, private investor and speculator, software engineer and founder of Point Zero Trading Solutions.