Updated the code and added the averages.
What is the Madrid Trend Squeeze indicator?
This indicator was designed to spot the most profitable points within a trend. A total of 7 colors used as part of the strategy:
- Dark green = Upward trend in general.
- Light green = Current bullish trend.
- Light blue = The maximum profitability in a long position.
- Brown = Downward trend in general.
- Red = Current downtrend.
- Fuchsia = The maximum return in a short position.
- Yellow = The trend has come to a halt and it is an investment warning or a continuation. These are entry points, re-entry or closing.
- A "Squeeze" occurs when Dark green + Light green + Light blue is aligned (the larger the values are).
- When Fuchsia or Light blue color disappear or contract significantly, it means a possible exhaustion of the movement that will have to be confirmed with the previous histogram bars.
- When the color of the compression (squeeze) appears without the intermediate color (Fuchsia + Yellow, Fuchsia + Brown, Light blue + Yellow, Light blue + Dark green) it could mean that this is just a shake of the movement.
PS: Please also try Kvak's alternative version here.