# Price Compression Index

`D08-F07-A06` · Geometric Chart Patterns → Market Structure, Breakouts, and Regimes · archetype `record-transform` · difficulty 2/5 · verification **verified**

Full page: https://docs.thefintechbuilder.com/geometric-chart-patterns/market-structure-breakouts-and-regimes/price-compression-index/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { priceCompressionIndex } from "fintech-algorithms/geometric-chart-patterns/market-structure-breakouts-and-regimes/price-compression-index";
```

## Signature

```ts
priceCompressionIndex(input)
```

Compares short-horizon volatility to long-horizon volatility as `100 × ATR(short_period) / ATR(long_period)`. Readings well under 100 mark a market whose recent ranges have compressed against its own baseline.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `input` | `TopicInput` | yes | `bars` is the required OHLCV history, strictly ordered by `timestamp` and on a single adjustment basis. `parameters.short_period` (default `5`, integer of at least 2) and `parameters.long_period` (default `20`, integer of at least 6) set the two ATR lengths; `period` (default `20`) is validated by the family but unused here. |

## Returns

`TopicResult`

`series` and `latest` carry a single `value` key. The warm-up is `long_period - 1` bars, since the slower Wilder ATR seeds last, so with the defaults `ready_at` is 19; `value` is also null on any bar where the long ATR is zero.

## Warm-up

The first `long_period - 1 bars (19 by default)` positions are `null`. Both ATRs seed on `period` true-range observations starting at index 0, so the longer one determines the first non-null at index `long_period - 1`.

## Errors

- When `long_period` is supplied as a non-integer or as a value below 6 — throws Error
- When `short_period` is supplied as a non-integer or as a value below 2 — throws Error

## Complexity

Time `O(n)`, space `O(n)`.

## Worked example

Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

### Input

`input`:

```json
{
  "bars": [
    {
      "timestamp": "2024-01-02",
      "basis": "synthetic-unadjusted",
      "open": 100,
      "high": 101.45,
      "low": 98.695,
      "close": 100,
      "volume": 750000,
      "benchmark": 200
    },
    {
      "timestamp": "2024-01-03",
      "basis": "synthetic-unadjusted",
      "open": 101.49111452,
      "high": 103.38381693,
      "low": 100.05480022,
      "close": 101.78791214,
      "volume": 795117,
      "benchmark": 200.56326135
    },
    {
      "timestamp": "2024-01-04",
      "basis": "synthetic-unadjusted",
      "open": 102.45519048,
      "high": 104.6701838,
      "low": 100.91147007,
      "close": 102.9549389,
      "volume": 840234,
      "benchmark": 201.11020913
    }
  ],
  "parameters": {}
}
```

### Call

```ts
priceCompressionIndex(input)
```

### Returns

object with 9 fields: topic_id, title, state, ready, ready_at, series, latest, parameters, …

```json
{
  "topic_id": "D08-F07-A06",
  "title": "Price Compression Index",
  "state": "calculated",
  "ready": true,
  "ready_at": 19,
  "series": {
    "value": [null, null, null, null, null, null]
  },
  "latest": {
    "value": 103.23357388295663
  },
  "parameters": {},
  "diagnostics": {
    "causal": true,
    "input_count": 96
  }
}
```

## Verification and provenance

Tier: **verified** (via E).

The worked example below is the figure published in this algorithm's article, replayed and asserted by the test suite on every build. The arithmetic cannot drift without the build failing.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.0.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/geometric-chart-patterns/market-structure-breakouts-and-regimes/price-compression-index/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/geometric-chart-patterns/market-structure-breakouts-and-regimes/price-compression-index/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/geometric-chart-patterns/llms.txt