Using the Thermometer Indicator to Measure Market Strength

Summary

The document describes Alexandre Elder’s Thermometer indicator as a way to gauge market strength, with the suggested display being a daily histogram that distinguishes upward from downward movement. Its calculation takes the larger of the current bar’s change in high and its change in low, comparing each with the previous bar. This produces a single value intended to summarize the day’s range movement.

The document provides a formula but no chart examples, parameter comparisons, trading rules, or performance evidence. It does not explain how to interpret particular readings, set thresholds, or combine the indicator with other signals. The description is therefore a basic indicator definition rather than a tested strategy. The accompanying privacy notice is unrelated to trading and adds no analytical guidance.

Key ideas

• The indicator compares current highs and lows with their values on the previous bar.
• It returns the larger of the two price changes as a measure of market strength.
• The author suggests viewing the result as an uptrend or downtrend histogram on daily charts.
• The document gives no thresholds, trading rules, or evidence of historical performance.

Tags

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