Madrid Vector

This study is used to detect Overbought/Oversold levels, reversal patterns, momentum divergence based on the ratio of the current level vs the trading range on a given period of time. It reduces the lag by using direct price levels instead of moving averages, and the results are smoothed using the supersmooth Ehler's filter.

This study utilizes simple parameters, the length of the analysis period and check boxes to display only the bull vector, the bear vector, or both of them.

When the vector crosses over the zero line, the stock is in the bull side, if it reaches levels above 80% it enters to the Overbought area, which means the price can go higher until a reversal takes it below the Zero Line to the Bear side, where if it reaches -80% it is said to be at the Oversold level until a reversal or a momentum divergence pattern flags a return to the Bull side.