A Smoothed Up-Down Count Ratio for Futures Bottom and Trend Signals

Summary

This document presents a futures indicator intended to help identify comparatively low-price conditions. It first reviews chart patterns such as double bottoms, head-and-shoulders formations, and triple bottoms, then defines a bottom indicator as the count of non-declining closes divided by the count of declining closes over a lookback window. Values above one are interpreted as a bullish balance of rising versus falling periods, while values below one suggest bearish conditions.

Because the raw ratio is described as too sensitive for direct trading, the method smooths it with two moving averages and generates long or short signals when those averages cross. The article includes a backtest setup covering part of 2020 and shows performance and capital-curve figures, but the supplied text does not report numerical outcomes or enough detail to assess robustness, costs, or out-of-sample behavior. It presents the indicator as a directional aid rather than a guarantee of buying bottoms; the proposed signals can still lag or whipsaw as market conditions change.

Key ideas

• The indicator compares counts of non-falling and falling closes over a rolling period.
• A ratio above one is treated as bullish, while a value below one is treated as bearish.
• Two moving averages of the ratio are crossed to produce long and short signals.
• The document provides a historical futures backtest setup and figures, but no textual performance statistics.
• The indicator is a directional heuristic and may be sensitive to parameter choices or changing market conditions.

Tags

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