Volatility-Normalized Channels for Breakout Signals
Summary
The indicator identifies price channels from volatility behavior. It normalizes closing price within a rolling high-low range, measures the variability of that normalized series, and uses changes in the relative volatility extrema to define channel formation. A channel is drawn from the highest high and lowest low over its duration, with an ATR-based band near each boundary. New channels must persist beyond a minimum duration, and an option prevents price overlap between channels.
Breakouts trigger when price moves above or below a channel; the strong-close setting requires the candle’s open-close midpoint to clear the boundary, filtering out some wick-only moves. The indicator also displays total volume, up/down volume, or volume delta, and offers alerts for channel formation and directional breaks. The script describes its calculations and controls but provides no performance results or evidence that signals predict profitable trades. Channel levels and volume displays depend on lookback choices and data availability, while volume delta uses a selectable source timeframe.
Key ideas
- Channels are formed from the high and low across periods identified by changes in normalized-price volatility.
- A minimum duration and optional overlap check govern whether a new channel is drawn.
- Breakout signals can require the candle body midpoint to close beyond the channel boundary.
- Volume, up/down comparison, or volume delta can be visualized inside an active channel.
- The indicator defines alerts but supplies no evidence of trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.