This is an implementation of the market cycle indicator described by Raghee Horner in the book "Forex Trading for Maximum Profit".
The current state of the market can be determined by analyzing the inclination angle of the exponential moving average (EMA) running on a period of 34 bars. If the EMA inclination is defined as the direction of the hour hand on the dial from 12 to 2 hours, then an uptrend is considered to be present; from 2 to 4 hours, the market consolidates; from 4 to 6 hours, a downtrend is considered to be present.
The indicator highlights the corresponding bars:
- Green bars represent the presence of an uptrend, which appears when a bar closes above ЕМА 34 (High);
- Blue bars represent the price consolidation, which appears when a bar closes within ЕМА 34 (High) and ЕМА 34 (Low);
- Red bars represent the presence of a downtrend, which appears when a bar closes above ЕМА 34 (Low).
Signals are confirmed when three candles of the same color appear.
- EMA - period of the indicator's moving average
- Moving average lines - display the moving averages
- Prices flags - display the price at the wave boundaries