Moving Average Squeeze %

The Moving Average Squeeze % indicator measures the proximity of multiple simple moving averages to quantify market consolidation, providing a unified percentage score where 100% represents a perfect convergence of all selected averages.

Usage

The Usage section describes how the script can be used to identify periods of price compression and potential breakouts. Traders can monitor the "Supertrend %" line to gauge the overall tightness of the moving average cluster. When the percentage is high (near 100%), it indicates a significant squeeze, often preceding a volatile move.

The indicator can be utilized in several ways:

• Identifying Consolidations: A rising Supertrend % suggests that the 10, 20, 50, 100, and 200 SMAs are converging, signaling a range-bound market.
• Breakout Preparation: By setting a high threshold (e.g., 78%), users can highlight zones where the squeeze is most intense, indicating an imminent trend shift.
• Composite Analysis: By enabling the display of individual pair squeezes, users can see which specific moving averages are converging, providing a more granular view of short-term vs. long-term consolidation.

Details

The script calculates the "squeeze" between various pairs of Simple Moving Averages (SMAs). It utilizes the 10, 20, 50, 100, and 200-period SMAs. The core calculation for each pair involves determining the absolute distance between two MAs and normalizing that value against its historical distance over a user-defined lookback period.

The "Supertrend %" is an arithmetic average of 10 distinct SMA pair calculations:

1. 10/200, 10/100, 10/50, 10/20
2. 20/200, 20/100, 20/50
3. 50/200, 50/100
4. 100/200

Additionally, the indicator includes a Normalized Price Trend line, which maps current price action relative to its historical range within the specified period, allowing users to compare price positioning against the moving average cluster.

Settings

• Period: The lookback length used for normalizing the distance between moving averages and the price trend.
• % Max: The upper threshold (default 78) used to trigger background highlights and alerts when the squeeze reaches extreme levels.
• % Min: The lower threshold (default 18) used to identify when moving averages are highly dispersed.
• Show MAs: A toggle to display or hide the individual composite squeeze percentages for each SMA pair.

FAQ

How do I interpret a Supertrend % value of 100? A value of 100% indicates that all five moving averages (10, 20, 50, 100, and 200) are crossing at the exact same price point, representing maximum compression.

What does the background coloring signify? Green background highlights indicate that the squeeze percentage has exceeded the "% Max" setting, while red highlights indicate the percentage has dropped below the "% Min" setting.

How can I access this tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.