An improved variation of the classic volume analysis indicator PVI & NVI. Compare price dynamics and a number of market data.
External view of the indicator.
Positive market data index (PMDI) is an indicator used in technical analysis, which gives signals about price dynamics based on positive changes in certain market data. PMDI helps to assess trend strength and potentially confirm price reversals.
The indicator is represented by two lines:
PMDI is based on price movement depending on whether the current value of the tracked market data is higher than the previous period. If the tracked market data parameter does not increase from one period to another, PMDI remains the same.
PMDI is calculated using the formula:
$$ \ PMDI_{t} = data_{t} > data_{t-1}\;?\; PMDI_{t-1} + \dfrac{Close_{t} + Close_{t-1}}{Close_{t-1}} \times PMDI_{t-1}:PMDI_{t-1} $$
where: - $data_{t}$ is the tracked market data parameter at time $t$, - $Close_{t}$ is the closing price at time $t$.
NMDI is based on price movement depending on whether the current value of the tracked market data is lower than the previous period. If the tracked market data parameter does not decrease from one period to the next, NMDI remains the same.
NMDI is calculated using the formula:
$$ \ NMDI_{t} = data_{t} < data_{t-1}\;?\; NMDI_{t-1} + \dfrac{Close_{t} + Close_{t-1}}{Close_{t-1}} \times NMDI_{t-1}:NMDI_{t-1} $$
Where:$data_{t}$ is the tracked market data parameter at time $t$,$Close_{t}$ is the closing price at time $t$.
<aside> 💡 There are also classic versions on the SpreadFighter platform: PVI & NVI. They take the volume value as the source argument.
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NMDI provides an answer about the presence/absence of a trend in a particular market data metric in conjunction with price.