X PD&FV

Visualizes the price's premium or discount relative to a moving average benchmark, highlighting mean-reversion and trend-continuation opportunities. While the underlying math is simple, the application is nuanced and can enhance decision-making in both trending and ranging market conditions.

Core Logic:
This tool calculates a custom **spread value**, defined as the distance between the current price and a chosen exponential moving average (EMA). Specifically:

• When the current price is **above** the EMA, the spread is calculated as `low - EMA`.
  
• When the price is **below** the EMA, the spread is calculated as `high - EMA`.
  

This approach creates a dynamic spread that reflects deviation from the EMA, with histogram bars:

• Green when the spread is positive (suggesting a price premium),
  
• Red when the spread is negative (suggesting a discount).
  

A secondary EMA (default 9-period) is applied to the spread itself, plotted as a smoother line over the histogram. This "EMA of spread" line can be interpreted as a moving reference level for detecting directional shifts in momentum.

Interpretation:

Zero Line = Fair Value: The horizontal zero axis represents equilibrium relative to the moving average. Movement toward or away from this line signals potential shifts in market bias.
Trend Following Use: In trending markets, traders can:

• Buy when the spread dips below its EMA (discount within uptrend),
  
• Sell when the spread rises above its EMA (premium within downtrend).
  

Mean Reversion Use: A return to the zero line (fair value) often acts as an **inflection point**, which traders can monitor for either:

• Trend continuation (bounce away from zero), or
  
• Reversal (cross through zero).
  

Customization:

EMA length (default 50) is adjustable to fit different timeframes or asset volatility.