FaikValThe "FaikVal" indicator is a powerful tool designed to help traders analyze relative price movements between a base asset and up to three comparison assets. This indicator uses exponential moving averages (EMA) and normalization techniques to identify potential overbought and oversold situations.
Functions and Applications:
Comparison of Price Ratios: The indicator calculates the ratio of the closing price of the base asset to the closing prices of three user-defined comparison assets. This allows for direct comparative analysis and helps identify relative strengths and weaknesses.
EMA Calculations: Two EMAs are calculated for each price ratio (with configurable periods). The difference between these two EMAs serves as the basis for further calculations.
Normalization: The calculated values are normalized over a defined period, helping to smooth out extreme values and facilitate analysis. This normalization transforms the values onto a scale from -100 to 100.
Optional Smoothing: Optional smoothing of the normalized values can be enabled to further reduce short-term fluctuations and generate clearer signals.
Visual Signals: The indicator plots three lines (one for each comparison ratio), representing the normalized values. Additionally, horizontal lines are displayed at +60, -60, and 0 to mark overbought and oversold zones as well as neutral areas.
Customizability: Users can adjust the periods of the EMAs, the length of the normalization period, and the smoothing period. They can also specify which of the three indicators should be displayed.
Applications:
Relative Strength Analysis: Identify whether the base asset is performing stronger or weaker compared to other markets or instruments.
Trend Confirmation: Confirm existing trends by analyzing the movements of the base asset relative to the comparison assets.
Overbought and Oversold Signals: Use the displayed values and horizontal lines to identify potential market turning points and determine entry or exit points.
!!! It works best on the weekly and daily chart for swing trading. It is a set up tool, to determin weather you should go long or short and not a market timing tool. For timing you could use concepts like trend and supply and demand!!!
The "FaikVal" indicator offers versatile and detailed analysis, making it particularly useful for traders seeking deeper insights into relative price strength and weakness.
