ATR-Normalized Moving Average for Overbought and Oversold Readings

Summary

This indicator plots a moving average of the difference between closing and low prices, normalized relative to Average True Range. It displays overbought and oversold thresholds in a separate chart window. Its inputs let the user choose the calculation period, moving average method, and the two threshold levels. The combination is intended to express the close-to-low measure in relation to recent price range, while the threshold settings define when readings are considered unusually high or low.

The document provides a high-level formula description but omits the displayed formula itself, so the exact normalization and scaling cannot be reconstructed from this text alone. It gives no guidance for interpreting threshold crossings as trade signals and supplies no examples, market tests, or performance evidence. Users would need to inspect the indicator implementation and validate its behavior for their instruments and chosen settings before using it in a trading process.

Key ideas

• The indicator averages the difference between closing and low prices.
• Average True Range is used to relate the measure to recent price movement.
• Users can set the averaging period and method as well as overbought and oversold thresholds.
• The text omits the actual formula and provides no tested entry or exit rules.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.