Trend Follower: MA Channel Width and Relative Trend Strength

Summary

The indicator estimates trend direction and strength by comparing the recent range of a moving average with a fraction of the price range. It forms an upper and lower boundary from the highest and lowest moving-average values over a chosen trend window, while a separate lookback sets the recent high-to-low price range. A trend is recognized when the moving-average channel exceeds the scaled price-range threshold and the current average is positioned near the relevant side of that channel.

The output is signed according to direction and scaled by the ratio of channel width to the threshold. The description uses histogram colors to distinguish direction and indicate whether the measured trend is strengthening or weakening. Inputs allow choosing a moving-average type or a linear-regression alternative, along with periods and the range percentage. The document describes the indicator’s construction but supplies no testing results or evidence that its signals are profitable; its behavior depends on parameter choices and historical ranges.

Key ideas

• The indicator compares moving-average channel width with a scaled recent price range to detect a trend.
• The moving-average channel is built from its recent highest and lowest values.
• The signed output represents direction, while its magnitude reflects channel width relative to the threshold.
• Histogram color changes are used to show direction and changes in measured strength.
• The indicator description provides no backtest or profitability evidence.

Tags

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