Deviation Trend Profile: ATR Bands and Trend-Specific Price Distributions

Summary

This indicator combines a simple moving average, ATR-based deviation bands, and a histogram of closing prices during the current trend phase. It sets upper and lower zones at one, two, and three ATR multiples from the average. Trend changes are identified when a scaled measure of the average’s recent slope crosses positive or negative thresholds. On the latest bar, the script counts how often closes during that phase fall into bins across the outer deviation range, then displays those counts as a horizontal profile.

The accompanying explanation interprets concentration in outer zones as possible directional strength and clustering near the average as possible exhaustion or range behavior. It also suggests using the trend markers and comparing multiple timeframes. These are visual interpretations, not tested entry rules. The profile uses closing-price frequency rather than traded volume, and the bands are ATR multiples rather than statistical standard deviations despite the indicator’s terminology. The source is an experimental educational tool and supplies no backtest or evidence that the displayed patterns forecast future returns.

Key ideas

• Trend shifts are marked when a normalized moving-average slope crosses set thresholds.
• ATR multiples around a simple moving average define three bands on either side.
• The profile counts trend-phase closes across bins spanning the outer bands.
• Outer-zone concentration and clustering near the average are offered as interpretive cues.
• The histogram is based on close frequency, and the document reports no predictive validation.

Tags

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