Market Anomaly Detector (MAD) Paid
2025-02-03
Category: None

Take a look at the Market Anomaly Detector (MAD)—it has beautifully captured both buy-side and sell-side momentum. Currently, it is indicating a sell-side bias, with confirmation from the blue line, which represents the true mean of the last several candles.

Unlike Bollinger Bands, the green and red lines are not standard deviations but statistically derived upper and lower bands, calculated using advanced statistical power. These bands act as dynamic ranges, guiding price movements between them. However, the blue line plays a crucial role as both a support/resistance level and a trend confirmation indicator. As you can see, it confirms the downtrend at the moment.

How the MAD Indicator Works
	•	This indicator was designed not just to detect trend direction (like other indicators) but also to identify reversals effectively.
	•	Typically, the price fluctuates between the green and red bands, traveling from one to the other.
	•	A buy signal occurs when the price closes above the green line, and a sell signal occurs when it closes below the red line.
	•	Additionally, reversal logic is implemented: if the price closes below the green line, it may still signal a sell, depending on specific conditions.
	•	To refine accuracy, the indicator checks the last five candles to validate reversals.

Z-Score & Strength Confirmation
	•	The Z-score provides additional strength confirmation.
	•	Currently, it’s greyed out, meaning the price is within its expected range. The RSI is at 44.
	•	When the Z-score rises above +1, it indicates strong buyer strength, turning green.
	•	When it drops below -1, it indicates strong seller strength, turning red.

This is why the Market Anomaly Detector is a powerful tool for identifying trends and reversals with precision. If you’d like to learn more about how it works, feel free to message me.

Thank you! 🚀