A Multi-Timeframe Trend Filter Using an Inverted Bollinger Band and Fast Average

Summary

This note describes a color-coded trend filter built from a fast moving average and an inverted Bollinger Band. It classifies conditions as upward when the average is above the upper band, downward when it falls below the lower band, and undefined when it lies between them. The author suggests displaying the classification as a histogram within a MaxMinBand channel, using Heiken Ashi candles for chart visibility, and calculating the signal on an hourly timeframe for viewing on shorter charts.

The document lists example settings for the timeframe, band period and deviation, moving-average parameters, and channel length. It offers no backtest, performance statistics, or detailed entry, exit, and risk rules. The claim that a fast-average crossing signals a likely trend is not supported with evidence, and the method’s behavior may depend heavily on parameter choices and market conditions. It is best understood as a visual trend-classification recipe rather than a validated trading system.

Key ideas

• The filter compares a fast moving average with upper and lower levels from an inverted Bollinger Band.
• It marks above-band readings as upward, below-band readings as downward, and intermediate readings as undefined.
• The author proposes computing the signal on an hourly chart and displaying it on shorter timeframes.
• Heiken Ashi candles and a MaxMinBand channel are suggested for chart presentation.
• The note gives no performance evidence or complete trade and risk management rules.

Tags

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