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Positive & negative market data index

An improved variation of the classic PVI & NVI volume analysis indicator. Compare price dynamics with a range of market data.

Indicator appearance.

Indicator appearance.

Description​

Positive market data index (PMDI) is a technical analysis indicator that gives signals about price dynamics based on a positive change in a given market data series. PMDI helps assess trend strength and can confirm price reversals.

The indicator consists of two lines:

  • PMDI;
  • Moving average of PMDI.

PMDI is based on price movement, depending on whether the current value of the tracked market data is higher than in the previous period. If the tracked market data parameter does not increase from one period to the next, PMDI stays the same.

PMDI is calculated by the formula:

 PMDIt=datat>datat−1  ?  PMDIt−1+Closet+Closet−1Closet−1×PMDIt−1:PMDIt−1\ 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:

  • datatdata_{t} - tracked market data parameter at time tt,
  • ClosetClose_{t} - closing price at time tt.

NMDI is based on price movement, depending on whether the current value of the tracked market data is lower than in the previous period. If the tracked market data parameter does not decrease from one period to the next, NMDI stays the same.

NMDI is calculated by the formula:

 NMDIt=datat<datat−1  ?  NMDIt−1+Closet+Closet−1Closet−1×NMDIt−1:NMDIt−1\ 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: datatdata_{t} - tracked market data parameter at time tt, ClosetClose_{t} - closing price at time tt.

tip

The SpreadFighter platform also has the classic versions: PVI & NVI. They take volume as the source argument.

Use cases​

RSR​

NMDI shows whether a given market data metric has a trend, together with price.

Consider the TWT token on 8 Nov 2023. The asset shows a steady downtrend in open interest and cumulative delta.

tip

With some assumptions, we can say that holders of long positions tend to get rid of their exposure with market orders as soon as possible.

This kind of dynamic points to weakness in the asset at the moment. It can be a reason to reduce a long position and look for a point to open a short.

On 8 Nov 2023 at 7:28 UTC+3, manipulation activity rose in the asset, and large volumes traded that were later positioned toward the downward move. They can be used as a price level for opening a short position. The moment when manipulation activity falls can be taken as the profit-taking point.

RSR

RSR