Aligning Short- and Long-Period Price Trends for Trade Signals

Summary

This trend-following method estimates direction over two lookback periods. For each period, it compares the close with the midpoint of the recent high-low range, then smooths consecutive above- or below-midpoint readings. A long signal occurs when both period trends are positive; a short signal occurs when both are negative. The document gives default periods of 14 and 21 and describes colored chart bands to display direction.

The published backtest settings specify BTC/USDT futures with a daily strategy period and hourly base period, from October 2022 to October 2023, but include no performance results. The method can remain in its prior direction when neither smoothed condition resolves, and its repeated aligned signals may cause position changes depending on platform behavior. The document notes that sideways markets can produce false signals and that the logic omits fundamental factors. It provides no explicit stop-loss or position-sizing method, so risk controls and trading costs would need separate evaluation.

Key ideas

• The method compares price with recent high-low midpoints over two lookback periods.
• It smooths above- and below-midpoint readings to estimate each period’s trend direction.
• It signals long or short when both period trends agree.
• The default lookback periods are 14 and 21; published test settings use BTC/USDT futures.
• No backtest results, explicit stop-loss method, or position-sizing rules are provided.

Tags

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