Classifying Six Market Regimes with RSI, Stochastic, or DMI Strength Measures
Summary
The indicator described here classifies conditions into six states: bull and bear markets, corrections within each trend direction, choppy conditions, and sideways markets. It adapts the Absolute Strength approach by offering three ways to calculate market forces: RSI, Stochastic, and DMI. Several smoothing, signal, and moving-average settings let users tune the calculation. The signal period can start at one, in which case the previous bar's bull and bear values are used.
The document also describes a calculation procedure intended for higher timeframes, allowing multiple timeframe readings to appear in one indicator subwindow. An optional alert mode reports changes in market conditions. However, the text provides no formulas, classification thresholds, sample signals, or empirical accuracy results to support its accuracy claim. It does not explain how to validate settings or distinguish regime changes from noisy transitions, so traders would need to assess the indicator against their own instruments and timeframe before relying on it.
Key ideas
- The indicator assigns market conditions to six trend, correction, and range states.
- It estimates market forces using RSI, Stochastic, or DMI calculations.
- Smoothing and signal parameters can be adjusted, and the signal period may start at one.
- A higher-timeframe procedure supports displaying readings from multiple timeframes together.
- Optional alerts report changes in market conditions, but no accuracy evidence is presented.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.