Measuring Moving Average Ribbon Compression

[diazlaz]

Hi Everyone,

I was about to embark in the development of a indicator or button, that attempts to measure detect moving average ribbon compressions, when there are multiple moving average tightly together to detect potential choppy trading period when using moving average ribbons for trading. As an example trading the Slim Ribbon, I want to detect potential compression to avoid trading the underlying.

I was thinking of subtracting the absolute value of the (fast - superfast) + (slow - fast), and take the value thru a moving average to detect compression.

As anyone coded or have a suggestion on the best approach to accomplish this?

Thanks in advance,
Laz.

 

[BenTen]

Take a look at this code https://usethinkscript.com/threads/...nkorswim-avoid-trading-in-choppy-markets.419/

I think you're on the right track. See if you can apply that concept to your script.

 

[diazlaz]

Thanks Ben. Will compare the results of the side way indicator and the compression and will share the results.

What I was thinking is getting a moving average of the absolute subtraction and additions of the distance of price of the ribbon, then getting the highestall, then using that to divide and calc a percentage or a ratio of compression relative to all of the moves in the average.

Thanks,
Laz.

 

[BenTen]

@diazlaz Do you have any real chart examples of that idea?

 

[diazlaz]

Thanks Ben - Here is an example of MSFT 2 Hours Using EMA Ribbon

Daily

Note the gray square areas, looking for a way to be able to detect ribbon compression during these periods or ratio out how wide the ribbons are contract or expanding state.

Thanks!
Laz.

 

[ljyeang]

I am also looking for a script that can sort out from a Watchlist during GMMA's MA ribbon compression .. hope you guys can help as I have zero programming knowledge

 

[SteveDay]

Hi Everyone,

I was about to embark in the development of a indicator or button, that attempts to measure detect moving average ribbon compressions, when there are multiple moving average tightly together to detect potential choppy trading period when using moving average ribbons for trading. As an example trading the Slim Ribbon, I want to detect potential compression to avoid trading the underlying.

I was thinking of subtracting the absolute value of the (fast - superfast) + (slow - fast), and take the value thru a moving average to detect compression.

As anyone coded or have a suggestion on the best approach to accomplish this?

Thanks in advance,
Laz.

Laz, Did you make any progress with that indicator? It sounded like an interesting idea.