Stiffness

Description

Stiffness is a technical indicator introduced by Markos Katsanos. This indicator helps assess the stiffness (i.e., the quality) of an uptrend. Based on the observation that in strong long-lasting uptrends, price seldom penetrates the 100-bar simple moving average, this indicator might help estimate how strong the current trend is by calculating the stiffness coefficient.

The stiffness coefficient is calculated as the ratio of the number of times the price has closed above the moving average during the indicator period to the length of that period in bars. In order to make the calculation more flexible and eliminate minor movements, a volatility threshold is taken into account. If the price closes above the moving average but the distance between the average and the close price is less than a specified fraction of standard deviation, the bar is disregarded when calculating the stiffness coefficient.

By default, the stiffness coefficient is to be at least 90 for the uptrend to be considered strong by this indicator. 

Input Parameters

Parameter

Description

price The price to be used in the calculation of the Stiffness indicator.
length The period to be analyzed by the Stiffness indicator.
average length The length of the simple moving average.
num dev The volatility threshold, measured in standard deviations. The price is only considered to be above the moving average if it is greater than the average by this value.
stiffness level The minimum value of the Stiffness indicator for the uptrend to be considered strong.

Plots

Plot

Description

Stiffness The Stiffness coefficient histogram.
Level The minimum coefficient level for a strong uptrend.

Example*

*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.

Further Reading

1. "The Stiffness Indicator" by Markos Katsanos. Technical Analysis of Stocks & Commodities, November 2018.

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