Adapting the Wilson Relative Price Channel with ATR

Summary

The document describes a modification to the Wilson Relative Price Channel, an indicator attributed to Leon Wilson and an article in the July 2006 issue of TASC. The original approach uses the Relative Strength Index to mark potential trading zones, with price percentage change providing the basis for drawing the channel. The author says that this construction is unsuitable for decision-making on lower time frames, though it can be used on weekly and longer charts.

The modified version substitutes Average True Range for percentage change. Because ATR adjusts to the chart’s price movement and time frame, the author presents the adaptation as usable across time frames. The suggested interpretation remains the original one: treat channel zones as possible overbought and oversold areas. No formulas, parameter settings, market examples, or performance results are supplied, so the claimed time-frame flexibility and trading value are not independently demonstrated here.

Key ideas

• The original Wilson channel uses RSI to identify potential trading zones.
• Its percentage-change basis is described as unsuitable for lower time frames.
• The modification uses ATR to adapt channel construction to the chart’s movement.
• The zones are intended to indicate possible overbought and oversold conditions.
• The document provides no settings or empirical evidence of profitability.

Tags

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