A Bayesian Oscillator for Breakout Probabilities and Directional Signals

Summary

This indicator estimates upward and downward price-break probabilities from recent observations relative to Bollinger Band levels and a moving average. It combines those estimates into plotted probability series, including a composite reading, and uses a threshold to mark low-probability conditions as potentially sideways. Signals arise when the composite or directional readings move away from specified extremes. Optional confirmation uses Bill Williams style momentum and Alligator measures.

The accompanying notes explain the intended interpretation: falling probabilities after a ceiling reading are treated as stronger reversal cues, while changes from low readings are weaker cues; the revised logic also filters signals around a sideways zone. The author frames the method as a binary, lookback-based probability approach and acknowledges that it cannot specify when or how far a move will travel. The document gives no out-of-sample validation or performance statistics, and its probability formulas and assumptions should not be read as calibrated forecasts without testing.

Key ideas

• The oscillator derives directional break estimates from price positions relative to bands and a moving average.
• A composite probability and threshold are used to distinguish signals from possible sideways conditions.
• Changes from extreme readings generate the stated long and short signals.
• Optional momentum and Alligator conditions can confirm directional signals.
• The author presents the readings as uncertain estimates, with no performance validation supplied.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.