A description from a Markos Katsanos book (Intermarket Trading Strategies) :
The age-old problem for many trading systems is their inability to determine if a trending or trading range market is at hand. Trend-following indicators, such as the MACD or moving averages, tend to be whipsawed as markets enter a non-trending congestion phase. On the other hand, oscillators (which work well during trading range markets) are often too early to buy or sell in a trending market. Thus, identifying the market phase and selecting the appropriate indicators is critical to a system's success. The Congestion Index attempts to identify the market's character by dividing the actual percentage that the market has changed in the past x days by the extreme range.
Unlike similar indicators, like the vertical horizontal filter (VHF) or Wilder's ADX, the Congestion Index is directional for the following reasons:
Chande Momentum Oscillator with added Discontinued Signal Lines instead of using static levels for trends displayed on the main chart as bars (if the current chart style is bars or line) or candles (it is done automatically).Dsl - CMO
Chande Momentum Oscillator with added Discontinued Signal Lines instead of using static levels for trends.