Moving Average Distribution for Trend Pullback Signals

Summary

This indicator describes a pullback measure built around a short moving average of median price. It subtracts that average from the current median price, then scales the difference by average daily range to normalize the reading for recent price movement. The result is displayed as a histogram, with colors distinguishing positive from negative values.

The proposed interpretation combines the indicator with a longer trend measure: in an uptrend, a notably negative reading marks a pullback that may be considered for a buy; in a downtrend, a notably positive reading may be considered for a sell. The example uses a 20-period moving average and a 20-day average daily range, and notes that enough daily history must be available to calculate the range. The document gives no threshold for what counts as significant, nor does it provide backtest results or risk rules, so the histogram alone does not establish a trading system’s effectiveness.

Key ideas

• The indicator measures the difference between median price and its short moving average.
• It scales that difference by average daily range to account for recent price movement.
• Negative readings are framed as pullbacks to consider in an uptrend.
• Positive readings are framed as pullbacks to consider in a downtrend.
• The document does not specify signal thresholds or provide performance evidence.

Tags

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