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Flat Market Indicator

by Brian Brown, 2419 days ago
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The flat market indicator is a technical analysis indicator that can help you identify possible congestions in your asset's prices.
Congestion is a situation where no significant change in asset's price happens. It also sometimes indicates areas where heavy trading volume occurred in the past. Congestion periods are sometimes followed by an increase in volatility and big moves in either direction (up/bullish or down/bearish).

There are several ways to use the FMI or flat market indicator. If you are a trend follower and trade based on moving average crossover, you can for example, invalid long/short signals (cross) if the flat market indicator detects a possible congestion area. We all know that trend following systems (like moving average crossovers) tend to work only when the market is trending.

A congestion or flat area is detected when the flat market indicator value becomes higher than "0.05".

Example:
a = flatmi(20) > 0.05;

// "20" is the lookback period. Depending on that value, you can try to identify congestions based on short, medium or long-term data.


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Type: Trading Indicator

Object ID: 1271


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Style:
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