Using SMA Channel Plots to Read Trend Direction

Summary

This document describes an indicator built from a single simple moving average that displays a channel on a chart. Users can choose between two plot styles: lines or bars. The indicator is presented as a visual way to classify the prevailing direction of a trend.

In bar mode, blue bars below the candle are labeled as an uptrend and gold bars above it as a downtrend. In line mode, the relative order of the blue and gold lines supplies the signal: blue above gold indicates an uptrend, while gold above blue indicates a downtrend. The document gives these visual conventions as examples but does not specify the moving average period, how the channel boundaries are calculated, or any entry, exit, or risk rules. It provides no performance evidence, so the described signals should be treated as an indicator-reading guide rather than a validated trading strategy.

Key ideas

• The indicator uses one simple moving average to draw a channel on a chart.
• Users can display the channel as lines or bars.
• Blue bars below a candle are described as an uptrend signal, while gold bars above indicate a downtrend.
• In line mode, blue above gold signals an uptrend and gold above blue signals a downtrend.
• The document does not define channel calculations or provide performance results.

Tags

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