Monest Value Indicator (MVI)

12월 6일

Description
The Monest Value Indicator (MVI) is a modern oscillator designed to address common issues in traditional oscillators like RSI or MACD. Unlike classical oscillators, the MVI dynamically adjusts to relative price movements and market volatility, providing a transparent and reliable valuation for short-term trading decisions.

This indicator normalizes price data around a consensus line and accounts for market volatility using the Average True Range (ATR). It highlights overbought and oversold conditions, offering a unique perspective for traders.

Key Features

• []Dynamic Overbought/Oversold Levels: Highlights significant price extremes for better entry and exit signals. []Volatility Normalization: Adapts to market conditions, ensuring consistent readings across various assets. []Consensus-Based Valuation: Uses a moving average of the midrange price for baseline calculations. []No Lag or Stickiness: Reacts promptly to price movements without getting stuck in extreme zones.

How It Works

1. Consensus Line:
   
   Calculated as a 5-day moving average of the midrange:
   Consensus = SMA((High + Low) / 2, 5).
   
2. Offset OHLC Data:
   
   All prices are adjusted relative to the consensus line:
   Offset Price = Price - Consensus.
   
3. Volatility Normalization:
   
   Adjusted prices are normalized using a 5-day ATR divided by 5:
   Normalized Price = Offset Price / (ATR / 5).
   
4. MVI Calculation:
   
   The normalized closing price is plotted as the MVI.
   
5. Overbought/Oversold Levels:
   
   Default levels are set at +8 (overbought) and -8 (oversold).

How to Use

• Identifying Overbought/Oversold Conditions:
  
  When the MVI crosses above +8, the asset is overbought, signaling a potential reversal or pullback.
  When the MVI drops below -8, the asset is oversold, indicating a potential bounce or upward move.
  
• Trend Confirmation:
  
  Use the MVI to confirm trends by observing sustained movements above or below zero.
  Combine with other trend indicators (e.g., Moving Averages) for robust analysis.
  
• Alerts:
  
  Set alerts for when the MVI crosses overbought or oversold levels to stay informed about potential trading opportunities.

Inputs

• []ATR Length: Default is 5. Adjust to modify the sensitivity of volatility normalization. []Consensus Length: Default is 5. Change to tweak the baseline calculation.

Example

• []Overbought Signal: MVI exceeds +8, indicating the asset may reverse from an overvalued position. []Oversold Signal: MVI drops below -8, suggesting the asset may recover from an undervalued state.
• Flat Market: MVI hovers near zero, indicating price consolidation.