Trend Line Bands from Pivot Highs and Lows for Mean Reversion and Breakouts

Summary

The document describes an experimental technical indicator that builds a support and resistance band from trend lines connecting recent price pivots. It identifies candidate highs and lows using RSI thresholds and local price comparisons, forms multiple lines between those points, then averages the high-based lines into resistance and the low-based lines into support. Their midpoint is also reported. Unlike volatility bands, these boundaries are straight lines derived from selected swing points.

The author suggests three possible interpretations: price bouncing from a band for mean reversion, a decisive move through a band for a breakout, and band convergence, including support moving above resistance, as a possible trend reversal signal. No performance results or market examples are supplied. The author says the suitable market, timeframe, and trading system remain for the user to determine, and cautions that the indicator is experimental and open to development.

Key ideas

• The indicator estimates support and resistance by averaging lines drawn between recent price pivots.
• RSI thresholds and local highs or lows are used to identify candidate pivot points.
• The resulting boundaries are straight and differ from volatility bands such as Bollinger Bands.
• Possible uses include mean reversion at a boundary and breakouts through it.
• Support crossing above resistance is presented as a potential reversal signal, not a tested result.
• The author provides no performance evidence and leaves market and timeframe selection open.

Tags

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