Constructing Dynamic Stop Lines from Ichimoku Levels and ATR

Summary

This indicator description presents paired long and short stop lines using Ichimoku-style price levels and average true range. It calculates midpoints from the highest highs and lowest lows over 9 and 26 periods, averages those two values, then offsets the result by 0.89 times the 14-period ATR. A 5-period triangular average smooths each resulting line.

The lower offset is intended as the long-position stop and the upper offset as the short-position stop. This makes the stop distance respond to recent volatility while anchoring it to a smoothed price reference. The document supplies the calculation rules and indicator code, but no chart evidence, backtest, execution guidance, or comparison with other stop methods. It does not specify how to handle gaps, position sizing, or whether and how the stop levels should trail over time.

Key ideas

• The indicator averages price-range midpoints calculated over 9 and 26 periods.
• It offsets the reference level by 0.89 times the 14-period ATR in both directions.
• A 5-period triangular average smooths the long and short stop lines.
• The document provides no performance evidence or rules for position sizing and gap handling.

Tags

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