MA RespectRatio

RespectRatio

A Structural Moving Average Quality Indicator


What is RespectRatio

RespectRatio is a statistical indicator designed to evaluate *how reliably a stock respects a specific moving average over time.

Instead of asking “Did price touch the MA?”, it answers a more meaningful question:

⁠Does this moving average actually function as support for this stock consistently and structurally?

The indicator focuses on *historical behavior, not short-term signals, and is intended to support buy / hold / reduce decisions rather than precise trade timing.



Why RespectRatio Exists

Many stocks frequently touch moving averages, but only some of them:

⁠Rebound cleanly
⁠ ⁠Hold above the average
⁠Do so repeatedly over long periods

RespectRatio was built to separate real support from visual noise.


Core Concept

RespectRatio treats every interaction between price and the moving average as a measurable event.

Each event ends in one of two outcomes:

•⁠ ⁠Bounce — price respects the moving average
•⁠ Break — price fails and breaks below it

Over time, these outcomes form a probability profile of how the stock behaves around that average.


How an Event Starts

An event begins when price meaningfully interacts with the moving average, either by:

•⁠ ⁠Entering a volatility-adjusted proximity zone around the MA, or
•⁠ ⁠Crossing below the MA (including gap-downs)

The proximity zone is adaptive and defined as:


k = ATR% × kMultiplier


This keeps the definition of “close enough” consistent across assets and volatility regimes.


Event Outcomes

Bounce (Respect)

An event is classified as a Bounce when price:

•⁠ ⁠Moves back above the moving average
•⁠ ⁠Clears a minimal buffer above it
•⁠ ⁠*Maintains that position for a defined number of sessions.

This confirms that the moving average acted as real support not a temporary pause.


Break (Failure)

An event becomes a Break when price:

•⁠ ⁠Remains below the moving average for too long, or
•⁠ ⁠Falls significantly below it and fails to reclaim it within a short window

A Break signals structural weakness at that average.


Noise Control

To avoid statistical distortion:

•⁠ ⁠Only one outcome per event is recorded
•⁠ ⁠A cooldown period prevents immediate re-counting of the same struggle
•⁠ ⁠Each event is counted once, regardless of intraday noise

This ensures clean, independent data points.


The Final Metric

The indicator produces a single core metric:


RespectRatio = Bounces / (Bounces + Breaks)


Calculated over a rolling historical window.


How to Interpret RespectRatio

•⁠ ⁠High RespectRatio
The moving average has historically acted as reliable support
→ suitable for accumulation or holding strategies

•⁠ Low RespectRatio
The moving average is frequently violated
→ caution when relying on it as support

RespectRatio does not predict future price, but measures structural trustworthiness.


What RespectRatio Is Not

•⁠ ⁠Not a buy/sell signal generator
•⁠ ⁠Not a trend-following indicator
•⁠ ⁠Not a momentum oscillator

It is a contextual filter* that improves decision quality.


Typical Use Cases

•⁠ ⁠Evaluating whether a stock deserves to be bought near a long-term MA
•⁠ ⁠Comparing multiple stocks using the same moving average
•⁠ ⁠Filtering candidates before applying other strategies
•⁠ ⁠Long-term portfolio decision support


One-Sentence Summary

RespectRatio quantifies how often the market actually respects a moving average — turning a visual assumption into measurable probability.*