Modified Explosion Indicator

This indicator is based on Waddah Attar's original indicator. I only incorporated a dynamic dead zone line based on the ATR times a factor of 3.7. I've also included a smoothing of the trend histogram using linear regression to a period of 8 (period is not adjustable, due to the increase of lag if this value is increased), to prevent sudden moves above and or below the explosion line / dead zone line.

For those not familiar with Waddah Attar's explosion indicator: the trend histogram is literally a histogram of a MACD where values below zero is made positive. A MACD is the difference between a fast exponential moving average and a slow exponential moving average. The explosion line is the difference between the upper Bollinger band and lower Bollinger band, and finally the dead zone line represent volatility in the form of an ATR calculation set to a period of 100 (not adjustable).

Possible future work: Applying standard deviation directly to price is fundamentally incorrect (foundation of a Bollinger Bands calculation). The reason is that price do not have a Gaussian probability density function (Gaussian / Normal PDF). Hence one need to transform price to a near Gaussian PDF before the application of a standard deviation. Work done by John F. Ehlers (Fisher Transform).

NNFX traders can use this indicator as a VOLUME indicator or EXIT indicator.