HL-D Close Fraction Oscillator | Adulari

Description:
This indicator calculates the difference between price high's and low's, and fractions it by the close price. If it calculates the difference between a high and low or low and high is defined by whether the current close is higher than the previous close. It is then also rescaled to ensure the value is always appropriate compared to the last set amount of bars.

This indicator can be used to determine whether a market is trending or ranging, and if so in which direction it is trending.

How do I use it?

• Never use this indicator as standalone trading signal, it should be used as confluence.
  
• When the value is above the middle line this shows the bullish trend is strong.
  
• When the value is below the middle line this shows the bearish trend is strong.
  
• When the value crosses above the upper line this indicates the trend may reverse downwards.
  
• When the value crosses below the lower line this indicates the trend may reverse upwards.
  
• When the value crosses above the signal this indicates the current bearish trend is getting weak and may reverse upwards.
  
• When the value crosses below the signal this indicates the current bullish trend is getting weak and may reverse downwards.
  

Features:

• Oscillator value indicating the difference between highs and lows fractioned by the close price.
  
• Signal indicating a clear trend and base line value.
  
• Horizontal lines such as oversold, overbought and middle lines, indicating possible interest zones.
  

How does it work?
1 — Define trend by checking if current close is above or below previous close.
2 — If the current close is above the previous close, calculate the oscillator's value using this formula:

Pine Script®

2 — If the current close is below the previous close, calculate the oscillator's value using this formula:

Pine Script®

3 — Smooth the original value using a specified moving average.
4 — Rescale the value using this formula:

Pine Script®

5 — Calculate signal value by applying smoothing to the oscillator's value.