ATR and CCI Logic for a Color-Changing Trend Indicator

Summary

This document describes a trend-following line calculated using Average True Range (ATR), the Commodity Channel Index (CCI), and adjustable parameters. The line is plotted over price and changes color with its direction: green indicates an upward regime and red a downward regime. The description presents closing-price crosses of the line as potential entry signals and a close through the line as a possible reversal trigger for exiting or reversing a position.

The supplied formula uses CCI’s sign to choose the active side of an ATR-based band, with logic that carries the band forward as the trend continues. The stated default parameter values are included in the source, but the document gives no backtest, comparison, or evidence for its claim that the indicator is faster or more reliable than other trend tools. It does not specify position sizing, transaction costs, or conditions for avoiding whipsaws, so the described signals should not be treated as validated trading results.

Key ideas

• The indicator combines ATR-based price bands with the sign of CCI to determine its trend state.
• Its plotted line is described as green in an upward trend and red in a downward trend.
• A closing-price cross of the line is presented as a potential entry or reversal signal.
• The formula includes adjustable CCI and ATR periods, an ATR multiplier, and smoothing settings.
• The document supplies no performance tests or evidence for the claimed reliability advantage.

Tags

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