Three-state moving-average breakout bar coloring

What this construction does

The study builds a moving-average baseline from a user-chosen length, offset, price source, and averaging type, then classifies each bar against that baseline.

The moving-average is a smoothed baseline computed from the chosen price source, lookback length, offset, and averaging type. That level is the trend-filter: it classifies each bar as fully above, fully below, or overlapping the baseline.

Inputs that define the baseline

The length parameter has a lower bound of 1 and a default of 20, and the offset defaults to 0.

The average can be computed from close, high, low, open, the high-low midpoint, the high-low-close typical price, or the open-high-low-close average.

Averaging type can be simple, exponential, weighted, or volume-weighted, with simple as the default.

The three-state breakout rule

A breakout is a bar whose entire high-low range sits on one side of the moving-average baseline.

A bar is treated as a positive directional breakout when its low is entirely above the moving average.

A bar is treated as a negative directional breakout when its high is entirely below the moving average.

When a bar neither clears above nor clears below the average, the construction assigns a third, non-breakout color state. That is the overlap-state, the condition in which a bar straddles the baseline, so neither a full upside nor a full downside clearance is recorded.

How the states are drawn

The same three-state classification is applied to overlay price-bar color and to a paired histogram plot.

Price-bar-coloring is that mapping of the three classification states onto displayed bar color and a companion histogram.