This indicator is a result of an attempt to combine the theory of movement stability with the Hodrick-Prescott filter.
The Hodrick-Prescott filter is a method for smoothing the time series, which is used to identify long-term trends in the time series, i.e. seasonal swings and trends.
The general stability theory was developed by A. M. Lyapunov, who formulated and proved the main theorems of the movement stability theory.
The indicator has two input parameters:
Filter – filter calculation period
Applied price – price used for calculation
Due to the use of the HP filter, the indicator has the following feature: three bars including the current one are redrawn. This can be ignored however due to the relatively small lagging: the indicator is good at predicting possible changes in the price movement.
