CVI: ATR-Normalized Price Distance from a Moving Average
Summary
The Chartmill Value Indicator (CVI) measures how far a price series has moved from a moving average, scaling that distance by average true range. The document explains the intuition: during a trend, price can pull away from its average; when price consolidates, the gap may narrow while the average continues to adjust more slowly. ATR scaling is intended to make the measure more comparable across different volatility conditions and to highlight unusually extended moves.
CVI is configurable by calculation period, moving-average method, and whether the deviation uses ATR or its square root. The source attributes the indicator to a 2013 magazine article, but the calculation formulas are missing from the provided text. It gives no thresholds, trading rules, chart examples, or performance evidence, so it describes an indicator concept rather than a tested strategy. Its overbought and oversold interpretation would need to be evaluated for the chosen market and settings.
Key ideas
- CVI gauges price distance from a moving average relative to a volatility measure.
- The indicator is intended to show when price has become unusually extended from its average.
- The description links narrowing price-to-average distance during consolidation to the moving average's lag.
- Users can choose a period, moving-average method, and ATR-based or square-root-of-ATR scaling.
- The provided text omits the formulas and supplies no trading thresholds or performance tests.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.