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Price Velocity indicator

Price Velocity indicator

Price like a physical point moves up and down on vertical axe. Speed of these changes can be used to show trends direction and direction change. Velocity is derivative of price movement, so zero value of price velocity means extremum of price changes. After maximum point of price curve, it tends to decrease and increases after minimum.

In Price Velocity indicator, crossing the zero line shows trend direction change. Crossing zero line from negative value to positive means uptrend has started and vice versa. Minimum and maximum points of Price Velocity curve, indicates the reduction of trend power and trend slowly tends to reach its extremum value. I added colored bars for more clarity. Green bars show increasing and red bars show decreasing of Velocity.

I used low pass filter to softening velocity curve. The filter employs ALPHA factor which I put it as an input parameter. Lower values of ALPHA soften the velocity curve and higher values increase the sensitivity in respect to price changes.

Velocity indicator can be used in any timeframes.

Input Parameters:
  • applied_price = PRICE_MEDIAN;     // Applied Price Type
  • ALPHA=0.5;                                  // Curve Roughness  0.0 < R < 1.0

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