CCI and ATR Trailing Trend Line with Price Zones

Summary

This indicator uses the Commodity Channel Index (CCI) to set a trend line on a price chart. When CCI is nonnegative, the line is placed below the current low by an Average True Range (ATR) amount; when CCI is negative, it is placed above the high by an ATR amount. The line is constrained from moving against its prior direction under the stated conditions, making it resemble a trailing trend guide.

The indicator also compares the close with the line and two nearby thresholds to color the chart in four bullish-to-bearish zones. The described defaults are a 50-period CCI, a 5-period ATR, and a threshold offset of one decimal unit. The document provides the logic but no backtest, performance evidence, or rules for entering and exiting trades. The line and colors are therefore visual signals whose usefulness depends on the instrument, timeframe, and implementation; they do not establish predictive value.

Key ideas

• CCI sign determines whether the trend line is placed below lows or above highs.
• ATR sets the distance of the line from the selected high or low.
• The line is prevented from moving against its prior direction in specified CCI conditions.
• Price relative to the line and its offset bands determines one of four background colors.
• The document supplies indicator logic but no evidence of trading performance.

Tags

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