HyperTrend: An ATR-Based Trend Line with Support and Resistance Bands

Summary

HyperTrend is presented as a real-time estimate of the underlying linear price trend, with upper and lower bands intended to act as resistance and support. The central line’s slope indicates direction: rising suggests an uptrend, while falling suggests a downtrend. The description also says that candle-wick contact with a band may point to a reversal or retracement. Its formula uses a long-period average true range scaled by a multiplicative factor to update the trend estimate and set the bands around it.

The settings alter the indicator’s behavior: a larger multiplicative factor produces fewer channel changes and is suggested for longer-term analysis, while a larger slope setting makes the returned channels flatter. The document presents these as chart-reading aids and includes indicator code, but gives no backtest, performance evidence, or formal rules for entering and exiting trades. Although it is designed to avoid repainting or backpainting, no comparative validation is supplied. Band contacts and trend direction should therefore be treated as signals for interpretation, not proven standalone trading rules.

Key ideas

• The indicator estimates a central trend line and surrounds it with support and resistance bands.
• An upward or downward slope is used to read trend direction.
• The bands are based on a scaled average true range measure.
• A larger multiplicative factor is described as producing fewer channel changes.
• The document offers no backtest or evidence that band contacts predict profitable reversals.

Tags

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