This indicator carries out a search for important price extrema. It is based on the algorithm described in the articles by Fink and Gandhi: "Important Extrema of Time Series" (2007) and "Compression of Time Series by Extracting Major Extrema" (2011). This algorithm compresses a price timeseries and finds the most significant price points or extrema. The algorithm assigns levels of importance to all points of the price timeseries and then leaves only the most important ones. The number of the most important price points is determined by the level of compression, set by the user. For instance, with the level of compression set at 80%, the indicator will display only 20% of all important points. The indicator compresses prices High and Low separately and the final curve consists of the most important extrema of High and Low prices.
The indicator has four buffers:
- All important points
- Extrema of prices High
- Extrema of prices Low
- Type of the extremum (maximum: +1.0, minimum: -1.0, the rest: 0.0)