This is the Market Mean . It is used to identify if the market is really trending or if it is range bound(random). In theory, a random sample will be mean reverting 75% of the time. This indicator checks to see what how much the market is mean reverting and converts it to a percentage. If the is around 75 or higher than the price curve of the market is range bound and there is no trend from a statistical standpoint. If the is below 75 this means the price curve of the market is in fact trending in a direction as the market is not reverting as much as it should if it were truly following a random/range bound price curve.
//@version=2 study("MMI-Price Changes") // Set Inputs inputLength=input(300) topband=input(76) bottomband=input(74) // Get Average Price Change mean(price1, price2, length) => sum = 0 for i = 0 to length if price1[i] - price2[i] > 0 sum := sum + (price1[i] - price2[i]) else sum := sum + (price2[i] - price1[i]) sum / length // Market Meaness Index Function MMI(price1,price2, length) => m = mean(open,close,inputLength) nh = 0 nl = 0 for i = 1 to length if price1[i] - price2[i] > 0 if (price1[i] - price2[i]) > m if (price1[i] - price2[i]) > (price1[i+1] - price2[i+1]) nl := nl + 1 else if (price2[i] - price1[i]) < m if (price2[i] - price1[i]) < (price2[i+1] - price1[i+1]) nh := nh + 1 100 - 100*(nl + nh)/(length - 1) u=plot(topband) l=plot(bottomband) t=plot(90) b=plot(60) fill(u,l,black) fill(t,u,yellow) fill(b,l,blue) plot(MMI(open,close,inputLength))