TD Moving Average for Trend Identification

Summary

This document describes a Tom DeMark-inspired moving average indicator that identifies a likely trend from changes in recent highs or lows. A bullish condition occurs when the current low exceeds prior lows over a configurable trend period; a bearish condition occurs when the current high falls below prior highs. When either condition appears, the indicator draws a trend line for up to four bars and extends it if another qualifying extreme forms. Otherwise, it displays a horizontal line in the previous trend color.

The line uses a simple moving average of lows during bullish conditions and of highs during bearish conditions. The trend lookback defaults to 12 bars, while the smoothing period is configurable. The document explains the indicator's rules but presents no testing, trading signals, or evidence of profitability. Its trend labels depend on chosen parameters and price extrema, so they should be treated as a technical visualization rather than validated forecasts.

Key ideas

• The indicator infers a likely direction from higher lows or lower highs over a configurable lookback.
• A qualifying trend line is drawn for four bars and can continue when another extreme confirms the condition.
• When trend conditions fail, the indicator holds a horizontal line in the previous trend color.
• It averages price lows in bullish conditions and price highs in bearish conditions.
• The description gives no performance evidence, and the indicator's output depends on its settings.

Tags

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