Ohm's Law Market Model (V=I·R)

Ohm's Law Market Model (V=I·R)
This indicator applies the concept of Ohm's Law from physics to the financial markets, creating a model to analyze market dynamics as if they were an electrical circuit.

The core idea is:

• Voltage (V): Represents price "pressure" or the strength of a recent price move (the return).
  
• Current (I): Represents the "flow" of transactions, measured by volume relative to its average.
  
• Resistance (R): Represents the market "friction" or difficulty of moving the price.
  

By combining these, the indicator calculates Power (P), which signifies the overall energy and strength behind a market move.


How to Read the Indicator

This indicator displays five main lines in an oscillator panel below your chart. By default, they are "Z-score normalized," meaning they show how many standard deviations away from their 200-bar average they are.

• A value of 0 is "normal."
  
• A value of +2.0 is "very high" or "very strong."
  
• A value of -2.0 is "very low" or "very weak."
  

The 5 Plots

• Voltage (V) - Teal/Red:
  
• Above 0 (Teal): Positive price pressure (price has gone up recently).
  
• Below 0 (Red): Negative price pressure (price has gone down recently).
  

What it means: How much "push" is behind the price?

• Current (I) - Teal/Red:
  
• Above 0 (Teal): High, positive transaction flow (high volume on up-moves).
  
• Below 0 (Red): High, negative transaction flow (high volume on down-moves).
  

What it means: Is volume confirming the price push?

• Resistance (R) - Orange:
  
• High (e.g., > 0.5): High market friction. It's hard to move the price. This can be caused by low volume (low Current) or high volatility (ATR friction).
  
• Low (e.g., < 0): Low market friction. It's easy to move the price.
  
• Conductance (G) - Blue:
  
• This is simply the inverse of Resistance (G = 1/R).
  
• High (e.g., > 0.5): The market is "conductive." Price can move easily.
  
• Low (e.g., < 0): The market is "non-conductive." Price movement is difficult.
  
• Power (P) - Purple (Thick Line):This is the most important line, as it combines Voltage and Current (P = V * I).
  
• High (e.g., > 1.0): Indicates a very strong, energetic, and well-supported trend (high price pressure and high volume flow).
  
• Low (e.g., < -0.5): Indicates a weak, "exhausted" market, or a strong "anti-trend" (e.g., a sharp drop with high volume).
  

Key Signals

The indicator generates two primary signals, shown as triangles on the chart:
Breakout (BRK) - Teal Triangle Up:
This appears when Power is high and Conductance is high.Interpretation: The market is showing a lot of energy (high Power) and it's easy for the price to move (high Conductance). This is a classic sign of a strong breakout or trend continuation.
Exhaustion (EXH) - Red Triangle Down: This appears when Power is low and Resistance is high.Interpretation: The market has very little energy (low Power) and it's very difficult to move the price (high Resistance). This often signals that a trend is running out of steam and may be at an exhaustion point, ripe for a reversal.

Key User Inputs

• Voltage Window (20): How far back (in bars) to look to measure the price "push" (Voltage).
  
• Current Baseline (50): The moving average length used to normalize volume (Current).
  
• Z-score normalize plots (Checked): This is the setting that makes all plots revolve around the "0" line. It's highly recommended to keep this on.
  
• Include ATR Friction (Checked): Adds a volatility (ATR) component to Resistance. When checked, high volatility increases resistance, making it "harder" for a trend to continue, which is a realistic model.