Projection Oscillator: Band Position, Divergence, and Trigger Signals
Summary
The Projection Oscillator expresses the closing price as a percentage of a range formed by projected high and low bands. The described calculation estimates linear regression slopes for highs and lows over a 14-period lookback, projects earlier observations using those slopes, and takes the outer projected values as the band boundaries. The close’s location within that range becomes the oscillator reading, with reference levels at 20 and 80.
The document outlines several ways to interpret the indicator: divergence from price may suggest a possible reversal, readings above 80 or below 20 mark potentially overbought or oversold conditions, and a moving average can serve as a trigger line. Crosses of that average are framed as buy or sell signals, with crosses occurring above 70 or below 30 described as stronger. These are indicator conventions, not demonstrated trading results. The document provides no market-specific evidence, parameter comparison, or rules for risk management, and the oscillator’s usefulness will depend on the instrument, timeframe, and testing approach.
Key ideas
- The oscillator measures the close’s position within projected high and low bands.
- Its example uses a 14-period lookback and linear regression slopes for highs and lows.
- Divergence from price is presented as a possible reversal clue.
- Levels below 20 and above 80 are treated as potential oversold and overbought extremes.
- A moving average crossover can act as a trigger, but the document supplies no performance tests.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.