Description:
The Vertical Horizontal Filter (VHF) is a technical analysis tool developed by Adam White to help traders and investors identify trending and ranging market conditions. It measures the level of trend activity in a financial market by comparing the price range over a specific period to the cumulative price movement within that period.
Input Parameters:
- Length: Number of periods used in the calculation
- Upper: Presets to 0.6 which represents the upper boundary of the indicator.
- Lower: Presets to 0.2 which represents the lower boundary of the indicator.
- Price Source: The specific data points (such as open, high, low, or close) from each candle in a financial chart that an indicator uses for mathematical computations, enabling the calculation of metrics like the average over a specified period.
Use Cases:
- Trend Identification: A higher VHF value indicates a stronger trend, suggesting that the market is experiencing a trending phase. Conversely, a lower VHF value implies that the price movement is more random, and the market is likely in a range-bound condition.
- Ranging/Trending Markets: While there are no universally accepted VHF thresholds to determine whether a market is trending or ranging, some traders use the following guidelines: VHF values below 0.15 indicate a ranging market, VHF values between 0.15 and 0.30 signal a moderately trending market, VHF values above 0.30 suggest a strongly trending market.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Dynamic Alerts
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
May 17, 2024