Elders Thermometer

Elders Thermometer (THER) was authored, not surprisingly by Alexander Elder. The THER is the highest absolute difference of either, the previous low minus current low or, the current high minus previous high. The THER is plotted as a tri-colored histogram; and a signal line which is an exponential moving average of the THER is also displayed. User defined buy and sell factors are provided to further control the trading signals. The user may change the method (EMA), period length and buy-sell factors. This indicator’s definition is more distinctly expressed in the condensed code given in the calculation below.

How To Trade Using Elders Thermometer

Adjust the buy and sell factors to control the quantity and quality of the trading signals. If the THER is more than MA times sellFac a sell signal is generated. Conversely, if the THER is less than the MA times buyFac a buy signal is given.

How To Access in MotiveWave

Go to the top menu, choose Study>Alexander Elder>Elders Thermometer

or go to the top menu, choose Add Study, start typing in this study name until you see it appear in the list, click on the study name, click OK.

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Calculation

//method = moving average (ma), user defined, default is EMA
//period = user defined, default is 20
//buy factor = buyFac, user defined, default is 2
//sell factor = sellFac, user defined, default is .5
//index = current bar number

prevL = low[index-1];
prevH = high[index-1];
therL = Math.abs(prevL - low);
therH = Math.abs(high - prevH);
ther = therL;
if (therH moreThan therL) ther = therH;
PlotHist: ther;
Plot: ma = ma(method, index, period, THER);
//Signals
sell = ther moreThan (ma * sellFac);
buy = ther lessThan (ma * buyFac);