Quadratic Regression Semaphores for Confirmed Market Turning Points

Summary

This indicator seeks local market reversals by fitting separate quadratic regressions to recent highs and lows. The upper curve is used to identify candidate peaks, while the lower curve identifies candidate troughs. A pivot is marked only after surrounding bars confirm that the fitted curve forms a local parabola, using a confirmation count controlled by the p setting.

The code plots the corresponding bar’s high or low, offset by half of the average true range for visibility. Its settings include a regression lookback length and a pivot confirmation parameter; the example uses length 30 and p 6. The author cautions that repeated signals in the same direction can occur because the upper and lower curves use different price series. No performance evaluation, trading rules, or evidence of predictive profitability is provided, so the indicator is best understood as a technical method for identifying candidate turns rather than a validated strategy.

Key ideas

• The indicator fits separate quadratic regressions to highs and lows over a rolling lookback.
• A configurable confirmation count determines whether a fitted curve marks a local peak or trough.
• Signals are plotted at the candidate pivot bar with an average true range offset.
• Different high and low inputs can produce consecutive signals in the same direction.
• The document provides implementation details but no evidence of trading performance.

Tags

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