Smoothed Candle Trend Signals with Price-Strength Filtering
Summary
The document presents a short-term directional signal that combines smoothed candle direction with a price-strength filter. In the source, open, high, low, and close are smoothed to construct Heikin-Ashi-style candles; their direction identifies an uptrend or downtrend. A two-period weighted moving average of closing price is then subtracted from price, and a threshold on this difference filters signals. Entries are triggered when the filtered direction changes and the current candle agrees with it.
Although the title and prose describe a Price Volume Trend method and mention filtering by elevated volume, the shown calculation does not use volume. The source also includes session shading and a date-window function that, as written, always returns true, so those features do not appear to restrict entries. The document warns about false signals, frequent-trading slippage, and limited evidence for longer-term performance. Backtest settings specify Bitcoin futures and a period, but no outcome statistics are supplied; the method's stated advantages therefore remain unverified.
Key ideas
- Smoothed candle direction supplies the source code's basic trend state.
- Price minus a short weighted moving average forms a strength value used to screen directional signals.
- The source does not calculate or apply a volume filter despite the document's description.
- Frequent signals can raise slippage exposure, and the document provides no backtest performance results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.