Detecting Moving-Average Reversals with ATR-Scaled Sabre Shapes

Summary

This indicator flags a possible reversal when a selected moving average has moved in one direction for a chosen number of bars and then turns. It supports several common moving-average types, including simple, exponential, weighted, volume-weighted, Hull, double exponential, and triple exponential averages. At a bullish turn it marks the prior bar’s low; at a bearish turn it marks the prior bar’s high. From that point it draws a curved, sabre-like shape whose length follows the moving-average setting and whose slope scales with the 14-bar ATR.

The author presents the shape as a possible way to visualize direction, areas of interest, or potential support and resistance, and mentions that it may help frame stop placement. The display is offset to the prior bar for alignment. These are interpretive uses, not defined trade rules: the document gives no entry or exit system, backtest, or evidence that a moving-average turn predicts reversals. Results may vary with the chosen average, length, and trend-duration threshold.

Key ideas

• A signal appears when a moving average turns after a configured run in one direction.
• The indicator supports multiple moving-average formulas and a selectable lookback length.
• Bullish and bearish shapes originate at the previous bar’s low or high, respectively.
• Shape length follows the moving-average length, and its slope adjusts with recent ATR.
• The document provides no backtest or evidence that the reversals are predictive.

Tags

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