Indicators: Mean Deviation Index Blau_MDI

[Automated-Trading]

Mean Deviation Index Blau_MDI:

The Ergodic MDI (Mean Deviation Index, MDI) is the double-smoothed Mean Deviation Index (see Momentum, Direction, and Divergence: Applying the Latest Momentum Indicators for Technical Analysis).

The mean deviation is defined as a distance between close price and exponentially smoothed moving average, applied to close price.

• The smoothing leads to a lag, it can be seen at price reversal points. The value of mean deviation shows the distance between price and r-period moving average, applied to price.
  
• The sign of the mean deviation shows price position relative to r-period moving average, applied to price: it positive if price below the moving average and negative if price is lower than moving average.

Author: Andrey N. Bolkonsky