Projection Bands: Price Extremes Projected Along a Regression Slope

Summary

Projection Bands are a technical indicator developed by Mel Widner and introduced in 1995. They define upper and lower price boundaries by taking the highest and lowest prices over a lookback period and projecting those extremes forward in parallel with a linear regression slope. The example uses a 14-period setting and calculates the slope from highs, then adjusts historical highs and lows by that slope to determine the bounds.

The document explains that the bands resemble other price bands and regression channels, while distinguishing them from Bollinger Bands: the described construction is designed to contain observed prices. It provides the calculation procedure but no trading rules, performance results, or evidence that band touches predict future moves. The lookback length is a parameter, so practical use would require choosing and evaluating it for the instrument and timeframe. The description also does not address execution, transaction costs, or risk controls.

Key ideas

• Projection Bands use a lookback window to identify price extremes.
• The upper and lower boundaries project those extremes using a linear regression slope.
• The example calculates the slope from highs and uses a 14-period lookback.
• The document describes indicator construction but does not establish a trading signal or performance advantage.

Tags

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