ECI (Expansion Contraction Indicator)

M

Miket

New member
Can anyone help me out. How do you use this indicator? What do you do when you see past plotted lines. Should that act as support resistance? When it's compressing does that mean its getting ready to make a big move? Any input would be greatly appreciated

http://tos.mx/2Lyqnt



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BenTen

BenTen

Administrative
Staff
VIP
@Miket The notes in that indicator made it very clear what it does.

> Expansion Contraction Indicator (ECI):
ECI Identifies areas of price compression which leads to price expansion. ECI doesn't show the direction of a trend but does indicate when a trend is going to resume (price flagging) or if a change in trend polarity is happening.
I don't think it shows support or resistance. Basically just where price consolidate and that suggests the stock will be making a move one way or the other soon.

 
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M

Miket

New member
I see a green box and red box form above & below the yellow dots. Sometimes its there sometimes not. What does it mean?

 
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markos

markos

Member
VIP
Miket, The green and red boxes are just visuals. Mobius calls them hot air but included them for the visually impaired. There are many variations of the script floating around, Read the notes and comments where you found the study in the Onenote. They do not show support or resistance as BenTen noted. They also have nothing to do with direction. That is why Mobius mentioned other studies to go along with the ECI. I don't use them but was around for their creation and hacking by others.

I could have made it shorter if I had just included this directly from the script: ECI plots the areas where price becomes compressed with colored and clouded bands.

 
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