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Elder's Thermometer (ETHERM)
Elder's Thermometer (ETHERM) measures bar-to-bar range extension — the maximum outward protrusion of the current bar beyond the previous bar's high or low. Inward contractions clamp to zero. A bias-compensated EMA signal line provides a smoothed baseline for detecting explosive moves. Output is ≥ 0, in the same units as price.
HISTORICAL CONTEXT
Dr. Alexander Elder introduced the Market Thermometer in Come Into My Trading Room (2002) as part of his Triple Screen trading system. Elder observed that bars extending well beyond the prior bar's range signal heightened volatility — the market "running a fever." ETHERM distinguishes outward breakouts from inward consolidation, making it practical for stop placement and position sizing.
HOW IT WORKS
ETHERM is a two-stage pipeline:
Stage 1 — Temperature
For each bar, compute how far the high protrudes above the previous bar's high, and how far the low protrudes below the previous bar's low. Only outward extensions count; inward contractions clamp to zero. Temperature is the larger of the two protrusions:
T = max( max(High − PrevHigh, 0), max(PrevLow − Low, 0) )
Stage 2 — Signal
A bias-compensated EMA of the temperature provides a smoothed baseline. Bias compensation ensures accuracy from the first valid bar by dividing out the geometric decay factor, converging to a standard EMA as warmup completes.
Explosive move detection
A common approach is to flag bars where Temperature exceeds Signal × multiplier (e.g., 3×) as explosive moves — the market equivalent of a clinical fever.
INPUTS
- Period — Lookback length for the EMA signal line. Default: 22. For period = 22, the signal half-life is approximately 7.6 bars (β ≈ 0.913).
OUTPUTS
- Temperature — Raw bar-level outward extension (current bar only), ≥ 0, price units.
- Signal — Bias-compensated EMA of Temperature. Use this for trend comparisons and threshold logic.
HOW TO USE
Apply to any instrument with real OHLC data (futures, forex, equities, crypto). Requires High and Low — does not work correctly on close-only synthetic charts.
Reading the output
- Temperature near zero: inside bar or small range extension — consolidation.
- Temperature significantly above Signal: explosive outward expansion — elevated volatility, potential breakout or reversal setup.
- Signal rising persistently: sustained volatility expansion in progress.
Suggested use cases
- Stop placement: widen stops when temperature is high; tighten when near zero.
- Position sizing: reduce size when the market is "running a fever."
- Entry filter within a trend-following system: require temperature < Signal before entering (wait for fever to break).
LIMITATIONS
- Warmup: Requires period bars before IsHot = true. Earlier outputs are produced but should be treated as provisional.
- Inside bars: Both protrusions clamp to zero, producing Temperature = 0. This is by design.
- First bar: No previous bar exists; Temperature = 0, signal begins building from bar 2.
- SIMD: The recursive EMA dependency prevents vectorization — no performance benefit from parallel processing.
- No equivalent function exists in TA-Lib, Skender, or Tulip; validation is against Pine output and internal batch/streaming/span consistency.
IMPLEMENTATION
Part of QuanTAlib TA library — an open-source quantitative analysis library for C#, Python and Pine Script. All indicators validated for streaming consistency (same result bar-by-bar vs. batch recalculation).
REFERENCES
- Elder, Alexander (2002). Come Into My Trading Room, Wiley. p. 162.
- Elder, Alexander (1993). Trading for a Living, Wiley.
HISTORICAL CONTEXT
Dr. Alexander Elder introduced the Market Thermometer in Come Into My Trading Room (2002) as part of his Triple Screen trading system. Elder observed that bars extending well beyond the prior bar's range signal heightened volatility — the market "running a fever." ETHERM distinguishes outward breakouts from inward consolidation, making it practical for stop placement and position sizing.
HOW IT WORKS
ETHERM is a two-stage pipeline:
Stage 1 — Temperature
For each bar, compute how far the high protrudes above the previous bar's high, and how far the low protrudes below the previous bar's low. Only outward extensions count; inward contractions clamp to zero. Temperature is the larger of the two protrusions:
T = max( max(High − PrevHigh, 0), max(PrevLow − Low, 0) )
Stage 2 — Signal
A bias-compensated EMA of the temperature provides a smoothed baseline. Bias compensation ensures accuracy from the first valid bar by dividing out the geometric decay factor, converging to a standard EMA as warmup completes.
Explosive move detection
A common approach is to flag bars where Temperature exceeds Signal × multiplier (e.g., 3×) as explosive moves — the market equivalent of a clinical fever.
INPUTS
- Period — Lookback length for the EMA signal line. Default: 22. For period = 22, the signal half-life is approximately 7.6 bars (β ≈ 0.913).
OUTPUTS
- Temperature — Raw bar-level outward extension (current bar only), ≥ 0, price units.
- Signal — Bias-compensated EMA of Temperature. Use this for trend comparisons and threshold logic.
HOW TO USE
Apply to any instrument with real OHLC data (futures, forex, equities, crypto). Requires High and Low — does not work correctly on close-only synthetic charts.
Reading the output
- Temperature near zero: inside bar or small range extension — consolidation.
- Temperature significantly above Signal: explosive outward expansion — elevated volatility, potential breakout or reversal setup.
- Signal rising persistently: sustained volatility expansion in progress.
Suggested use cases
- Stop placement: widen stops when temperature is high; tighten when near zero.
- Position sizing: reduce size when the market is "running a fever."
- Entry filter within a trend-following system: require temperature < Signal before entering (wait for fever to break).
LIMITATIONS
- Warmup: Requires period bars before IsHot = true. Earlier outputs are produced but should be treated as provisional.
- Inside bars: Both protrusions clamp to zero, producing Temperature = 0. This is by design.
- First bar: No previous bar exists; Temperature = 0, signal begins building from bar 2.
- SIMD: The recursive EMA dependency prevents vectorization — no performance benefit from parallel processing.
- No equivalent function exists in TA-Lib, Skender, or Tulip; validation is against Pine output and internal batch/streaming/span consistency.
IMPLEMENTATION
Part of QuanTAlib TA library — an open-source quantitative analysis library for C#, Python and Pine Script. All indicators validated for streaming consistency (same result bar-by-bar vs. batch recalculation).
REFERENCES
- Elder, Alexander (2002). Come Into My Trading Room, Wiley. p. 162.
- Elder, Alexander (1993). Trading for a Living, Wiley.
开源脚本
秉承TradingView的精神，该脚本的作者将其开源，以便交易者可以查看和验证其功能。向作者致敬！您可以免费使用该脚本，但请记住，重新发布代码须遵守我们的网站规则。
Rigorous technical indicators for Pine Script 6 with O(1) streaming, defensible math, and proper initialization. Fully documented, implemented in C#, transcribed to Pine Script, and wrapped for Python.
免责声明
这些信息和出版物并非旨在提供，也不构成TradingView提供或认可的任何形式的财务、投资、交易或其他类型的建议或推荐。请阅读使用条款了解更多信息。
开源脚本
秉承TradingView的精神，该脚本的作者将其开源，以便交易者可以查看和验证其功能。向作者致敬！您可以免费使用该脚本，但请记住，重新发布代码须遵守我们的网站规则。
Rigorous technical indicators for Pine Script 6 with O(1) streaming, defensible math, and proper initialization. Fully documented, implemented in C#, transcribed to Pine Script, and wrapped for Python.
免责声明
这些信息和出版物并非旨在提供，也不构成TradingView提供或认可的任何形式的财务、投资、交易或其他类型的建议或推荐。请阅读使用条款了解更多信息。