Bubbles and Drops: Forecasting Price Movement with Fading Waves

Summary

This indicator models each price bar as a disturbance whose effect fades over time. It treats bars with Open above Close as rising bubbles and bars with Open below Close as falling drops, then uses the Open–Close difference as the disturbance amplitude. A simple sine-based fading function estimates each effect, and the successive values are added to a starting value taken from an earlier historical bar.

The document explains the indicator’s construction but supplies no chart examples, performance tests, trading rules, or evidence that its output predicts future prices reliably. It does not specify how to choose the history depth or amplitude scaling, and the stated formula is not accompanied by validation or parameter guidance. The idea is therefore a proposed price transformation rather than a demonstrated forecasting strategy; users would need to define signals and test them against suitable data before drawing conclusions.

Key ideas

• The indicator treats each bar’s Open–Close difference as the amplitude of a price disturbance.
• It models the disturbance’s effect with a sine-based function that fades over time.
• Effects from successive bars are added to a starting value taken from historical data.
• The document provides no performance evidence or rules for turning the indicator into trades.

Tags

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