Trend Force: Measuring Bullish and Bearish Strength with ATR

Summary

This note describes Trend Force, an indicator that displays bullish and bearish trend strength as separate measures. Bullish strength compares the close with the lowest low over a recent lookback, while bearish strength compares the highest high with the close. Each distance is scaled by average true range, making the readings relative to recent price movement. The bearish measure is displayed with a negative sign to distinguish it from the bullish measure.

The document states that stronger trends may be followed by more significant reversals, but it provides no backtest, market examples, or evidence supporting that relationship. It also does not specify how to translate the readings into entry, exit, or risk rules. The indicator is therefore a descriptive tool rather than a complete trading strategy, and its reversal interpretation should be evaluated across instruments and timeframes before use.

Key ideas

• Bullish strength is measured as the close’s distance above a recent lowest low, scaled by average true range.
• Bearish strength is measured as the distance from a recent highest high to the close, scaled by average true range.
• The bearish reading is negated so the two directions can be displayed together.
• The document proposes a relationship between stronger trends and significant reversals but supplies no supporting performance evidence.

Tags

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