The improvements are:
1. it includes gaps because it uses true range in stead of the current bar,
2. it has been turned into a percent oscillator as the basic algorithm belongs in the family of oscillators.
Unlike the usual stochatics I refrained from over the top averaging and smoothing, nor did I attempt a signal line. There’s no need to make a mock .
The indicator should be interpreted as a stochastics, the difference between Stochs and is that stochs report inclinations, i.e. in which direction the market is edging, while reports movements, in which direction the market is moving. Stochs are an early indicator, is lagging. The emoline is a 30 period , I use linear regressions because these have no lagging, react immidiately to changes, I use a 30 period version because that is not so nervous. You might say that an MA gives an average while a gives an ‘over all’ of the periods.
The back ground color is red when the emoline is below zero, that is where the market ‘looks down’, white where the market ‘looks up’. This doesn’t mean that the market will actually go down or up, it may allways change its mind.
Have fun and take care, Eykpunter.