FRAMA Channels for Adaptive Trend and Breakout Signals

Summary

This indicator combines a fractal adaptive moving average (FRAMA) with volatility bands and a three-state momentum display. It estimates price-path roughness from ranges over two halves of a lookback window: smoother, directional movement raises the average’s responsiveness, while choppier movement slows it. The adaptive value is smoothed within the recursive calculation, which can reduce noise but adds some lag when conditions change.

The channel uses a 200-bar mean of high-low range, rather than standard deviation or average true range, to set bands around the FRAMA. A typical price crossing a band starts a bullish or bearish state; a close crossing the central average resets it to neutral. The code also limits arrows to the first breakout in a sequence and can label breakouts with either closing price or average volume. These are indicator rules, not evidence of profitability: the document gives no backtest results, and the range measure ignores gaps. The displayed state should be read as a breakout condition, not a direct trading position.

Key ideas

• FRAMA adapts its smoothing according to the estimated roughness of recent price movement.
• The indicator smooths the adaptive value inside its recursive update, trading some responsiveness for a cleaner line.
• Bands use a long-window average of high-low range, which reacts slowly and does not account for gaps.
• Band crossings set bullish or bearish momentum states, while a close crossing the center line returns the state to neutral.
• Breakout arrows are limited to the first event in a sequence and can show price or average volume.

Tags

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