Using a Normalized Price Oscillator for Divergence and Pair Comparison
Summary
The document introduces an indicator that displays a chart’s price in normalized form. It suggests looking for divergence between the normalized series and market behavior, and placing normalized series for several currency pairs in the same window to compare their relative movement. The example names three currency pairs and assigns each a distinct display color, presenting this as a way to inspect relationships across instruments.
An updated version adds a moving average to the oscillator. The moving-average parameters can be changed in the indicator settings, and the overlay can be hidden. The document does not define the normalization formula, explain how to identify or trade a divergence, or provide chart evidence, backtests, or risk guidance. Its suggestions are exploratory, so the indicator’s calculation and any trading interpretation would need independent validation before use.
Key ideas
- The indicator plots normalized price for a chart.
- It can be used to inspect possible divergences.
- Multiple currency-pair series can be displayed together for visual comparison.
- A configurable moving average can be added to the oscillator or hidden.
- The normalization method and trading rules are not specified.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.