Consolidation indicator

Well with the ability of cut 'n' paste and a few little additions i added i think i have come up with something that i was after. Im sure there are other people out there that could completely refine the indicator attached but it does have good potential.

Essentially the indicator will show areas of consolidation and hopefully give good idea that a breakout will occur very soon. I have run some visual back tests and it is quite promising.

I originally got the idea from DIBS, but thought that there would be a better way to visually define a breakout with less discretion

Anyways, will leave it in the hands of you guys and hopefully you will see what im getting at.

height - maximum distance in pips from a bars high and low

distance - amount of time (previous bars) that were within the height threshold

Im sure you will find errors, im a complete novice but its the best i could do.


Enjoy

No thoughts/suggestions/ideas....input ?

Is it because i haven't added MACD's/RSI's/MA's or some other indicator?

Are there any other threads that have dealt with price consolidation that maybe i have missed? I thought at the very least for the long tailed trader it would spark some discussion.... maybe not.

I believe you just created a donchian channel.

Thanks for a reply.

Had a look at the Donchain channel.... it is kind of the same but much more difficult to use in my opinion and is a bit of a visual mess.

Much harder to identify consolidation areas and less accurate

Personally for this situation, I use Bollinger Bands and look at the distance between the bands and the angle of the middle band. I know absolutely nothing about the DIBS method.

An alternative is a fast SMA (3 or 5) of the highs and lows of the bars and limit the difference and the angle.