MAD Ratio with Decile Thresholds

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The MAD Ratio with Decile Thresholds is a technical analysis indicator designed to assess market trends using the ratio of short-term and long-term Simple Moving Averages (SMA). It provides clear signals for potential buying and selling opportunities based on the relationship between these moving averages and predefined thresholds.

Key Features:
MAD Ratio Calculation:

The indicator calculates the MAD Ratio by dividing the 21-period SMA (short-term) by the 200-period SMA (long-term).
Threshold Levels:

Horizontal lines mark key threshold levels:
Ratio = 1: Neutral zone where short- and long-term trends align.
Top Decile Threshold (1.1): Indicates strong bullish conditions.
Bottom Decile Threshold (0.9): Indicates strong bearish conditions.
Buy and Sell Signals:

Strong Buy Signal: Triggered when the MAD Ratio exceeds 1.1, and the 21-SMA crosses above the 200-SMA.
Strong Sell Signal: Triggered when the MAD Ratio drops below 0.9, and the 21-SMA crosses below the 200-SMA.
Weak Buy Signal: Triggered when the MAD Ratio is greater than 1 but below 1.1, and a bullish crossover occurs.
Weak Sell Signal: Triggered when the MAD Ratio is less than 1 but above 0.9, and a bearish crossover occurs.
Visual Elements:

Buy and sell signals are displayed directly on the chart as labels or shapes for easy identification.
Background highlights:
Green zones: Strong bullish conditions (MAD > 1.1).
Red zones: Strong bearish conditions (MAD < 0.9).
The current MAD Ratio value is displayed as text on the chart for real-time monitoring.
Purpose:
This indicator helps traders identify momentum shifts and assess the strength of a trend using both short- and long-term market dynamics. It is especially useful for filtering signals based on decile thresholds to focus on high-probability trade setups.