163 Moras compression

Ultimately, we know the price is consolidated (current volatility ) when it starts raging within a narrower band that we are use to see ( Historical volatility ), so the ratio of the current to historical volatility becomes a straightforward identification of consolidation zones and that is what this indicator provides.

The indicator is scaled such that values near zero mean price is compressed and values near 100 price is over-extended. The indicators is designed to allow different time-frames, while avoiding repainting.

Figure 14.33: Moras compression indicator