An ATR-Scaled Price Change Indicator for Short-Term Reversal Signals

Summary

This indicator measures the current candle’s open, high, low, and close relative to the close from 60 bars earlier. It expresses each log price change on a scale adjusted by average true range, framing the result as a way to compare recent movement with prevailing market speed. The indicator plots the transformed values as colored candles and draws horizontal reference levels at zero and at positive and negative thresholds.

The author says the levels are used to identify reversals, with successive thresholds guiding a four-step martingale approach, mainly for binary options. This describes the intended use rather than evidence of effectiveness: the document provides no backtest, win rate, risk analysis, or guidance for selecting the ATR settings. Martingale staking can increase exposure after losses, and threshold crossings alone do not establish a reliable reversal. The indicator should therefore be understood as a visualization and signal concept, not a validated strategy.

Key ideas

• The indicator compares current candle prices with a close 60 bars earlier using logarithmic changes.
• Average true range scales the price changes to reflect prevailing market movement.
• Positive and negative threshold lines are intended to support reversal interpretation.
• The author describes using threshold crossings in a four-step martingale approach for binary options.
• No backtest or evidence of predictive performance is provided.

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