A Moving-Average Channel Indicator for Detecting Trend Strength

Summary

This indicator builds channels from the rolling highs and lows of several moving-average lines. It compares each moving-average channel’s width with a threshold based on the close-price range over the prior 300 bars. A sufficiently wide channel is treated as evidence of a trend; the moving average’s position within the channel determines direction, while the channel-to-range ratio informs line color intensity as a visual proxy for trend strength. Users can choose the moving-average type and adjust the trend-check period and threshold.

An optional linear-regression step is intended to smooth noise, with the stated caveat that it can introduce one or two bars of delay. The description offers parameter guidance and an implementation for ProRealTime version 11 or later, but no backtest or evidence that the trend classification predicts returns. Results depend on timeframe, lookbacks, and settings; the indicator is a visualization and trend filter, not a complete trading system.

Key ideas

• The indicator forms channels from the rolling highs and lows of moving averages.
• It compares channel width with a fraction of the price range over the previous 300 bars.
• The moving average’s position in the channel classifies trend direction, while relative width affects color intensity.
• Linear regression can smooth the moving-average input but may add one or two bars of delay.
• The document provides no backtest evidence or complete trading rules.

Tags

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