Indicators - Moving Average Fan Market Behavior Metric

I was watching another webinar by Andy Carlsen today called "The Application of Two Indicators" which can be found at TraderKingdom.com.  In the webinar, he discusses how he uses a moving average fan composed of 7 simple moving averages. He uses the moving average (MA) fan to determine if the market is trending up or down.

I was thinking to myself that there must be a way of to summarize the current state of the MA fan into a simple metric that can be used to determine if the market is trending up, trending down, or is range-bound.  When the market is trending either up or down, the MA fan is spread out and each moving average is ordered sequentially from shortest period to longest period in the direction of the trend.  When the market is range-bound, the moving averages do not have a uniform direction and they are crossing over one another.  The picture below shows how the various MAs are aligned when the price is trending up or down.

The metric needs to summarize each of these states and clearly distinguish between them.  I was thinking that comparing the difference between the indicators could provide a good summary metric.  You can sum the values of the difference between each MA pair in order of of the period length, for example (MA1-MA2) + (MA2-MA3) + (MA3-MA4) +... up to the last moving average.  If you are in a strongly up trending market, the metric would have a large positive value.  For a strongly down trending market, the metric would have a large negative value.  For a range-bound market, the moving averages would be crossing over one another so that sum of the MA pair differences would be positive and some would be negative resulting in a sum with a value closer to zero.

I personal prefer normalized indicators because the state of the indicator can easily be compared across market regimes and instruments.  This would be useful to determine which trading instrument would be the best candidate for a trend trade or mean reversion trade.  You can normalize the MA fan metric by dividing the sum of differences by the closing price of the current bar or perhaps the value of a middle period MA (for example if you have 7 MAs in your fan, use the value of the MA4).  The normalized MA fan metric will oscillate around zero and have a typical max and min value.  You can then determine positive and negative thresholds around zero to differentiate between the range-bound zone and the up/down trending zones.

I will spend a little time investigating this further.  Once I have an indicator that demonstrates what I am referring to in this post, I will create an update post.