New Breed of Technical Indicators — Indigo

Discussing a New Technical Indicator and Coding it in TradingView

This article discusses one of the indicators of a set called the Rainbow Indicators which are structured and unique combinations of price-derived techniques aimed to help the trader predict reversals or to confirm the on-going trend. The indicator discussed is called the Indigo indicator, a contrarian method based on the concept of slopes.

For a detailed and thorough collection of contrarian trading strategies, you can check out my book. The book features a huge number of classic and modern techniques as it dwelves into the realm of technical analysis with different trading strategies. The book comes with its own GitHub.

Creating the Indigo Indicator

One of the pillars of descriptive statistics is the normal distribution curve. It describes how random variables are distributed and centered around a central value. It often resembles a bell.

Some data in the world are said to be normally distributed. This means that their distribution is symmetrical with 50% of the data lying to the left of the mean and 50% of the data lying to the right of the mean. Its mean, median, and mode are also equal as seen in the below curve.