Market Direction Indicator by Donald Lambert was described in the article “The Market Direction Indicator Anticipating Moving Average Crossovers” of “Stocks & Commodities” magazine.
The indicator has five input parameters:
Fast MA period – fast MA calculation period
Slow MA period – slow MA calculation period
Cutoff in points – “cutoff area” – filter of minor price fluctuations (in points)
Show below zero – display negative indicator values in the area below zero (oscillator)
Applied price
Rising indicator values mean a bearish trend, while falling ones mean a bullish trend, the values included into the +/- Cutoff range are considered neutral.
Fig. 1. Market Direction Indicator
Fig. 2. Market Direction Indicator as an oscillator
