CMH Price-Swing Histogram for Tracking Market Direction
Summary
The CMH, or Clear Method Histogram, is a price-only indicator intended to display the current swing direction. It has no adjustable parameters. The calculation tracks running swing reference levels from highs and lows, then changes the swing state when price crosses a relevant level. During an upward state, the histogram measures the distance between the high and a prior higher-low reference; during a downward state, it measures the distance between a lower-high reference and the low. The two directions are shown in different colors.
The note provides the state-transition rules and formulas, making the indicator’s basic construction inspectable. It does not explain how to turn the histogram into entries, exits, or position sizes, and it supplies no backtest or evidence about predictive value. The rules depend on how the running high and low references are initialized and updated, details that may affect implementation. As presented, CMH is a descriptive swing visualization rather than a fully specified trading system.
Key ideas
- CMH derives swing direction using price highs and lows without other indicators.
- It maintains swing reference levels and changes state when price crosses them.
- Its histogram measures a high-to-reference or reference-to-low distance, depending on direction.
- The document gives calculation rules but does not establish trading performance or complete system rules.
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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.