B-Indicator: Measuring Trend Strength Against Price Noise
Summary
The B-indicator estimates trend strength by comparing the absolute smoothed trend with a noise estimate and scaling the ratio to a 0–100 oscillator. It is designed to show whether price movement is more trend-like or noise-dominated, without indicating whether the market is rising or falling.
The document describes readings of 50–65 as weak trending, 65–80 as moderate trending, and above 80 as strong trending. It presents 65 as a practical boundary for distinguishing trending from ranging conditions, which can guide the choice between lagging and leading technical indicators. The accompanying implementation uses a moving-average spread to set trend direction internally, smooths signed price changes, and estimates noise from deviations between those changes and the smoothed trend. The output also displays a separate sign signal. The text gives an interpretation and code, but no empirical performance tests; the oscillator alone cannot identify reversals and requires additional tools for direction or reversal analysis.
Key ideas
- The B-indicator scales absolute trend relative to estimated noise onto a 0–100 range.
- Readings above 65 are presented as evidence of trending conditions, with higher readings indicating stronger trends.
- The indicator’s quality measure does not itself show whether price is moving up or down.
- The implementation estimates direction separately and uses deviations from a smoothed trend to measure noise.
- The document provides no performance evidence, and reversal analysis requires additional tools.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.