PriceVar% is an indicator designed to measure the percentage difference between the price and a moving average, highlighting the strength of the market movement in relation to a reference value.
How it works
- If the closing price is above the average, the calculation is:
Var = (High - MA) / MA * 100;
- If the closing price is below the average, the calculation is:
Var = (Low - MA) / MA * 100;
The result is displayed as a percentage histogram (%):
Green → when the price is above average (buying force).
Red → when the price is below average (selling force).
Interpretation
Positive values indicate the distance of the high from the average.
Negative values indicate the distance of the low from the average.
The higher the absolute value, the greater the percentage distance of the price from the average.
Practical applications
Identifying moments of overbought/oversold relative to the average.
Measuring percentage volatility around the average.
Aid in breakout or reversal strategies by validating the intensity of the movement.
Use as a filter in automated systems (e.g. only trade when the percentage change exceeds a certain threshold).
Parameters
- Average period (iPeriod): defines the horizon of the moving average used as a reference.