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This is an Implementation of the Congestion Index Indicator presented in the book "Intermarket Trading Strategies" by Markos Katsanos.
It can be used to identify trading ranges and the direction and normalized strength of an trend. Values above 30 indicate an uptrend and values below -30 can be considered as downtrend.
Markos Katsanos recommends to smooth the indicator with an 3-bar EMA to reduce the noise.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.