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Breaking out of Price Channels
MetaStock Formula
Breaking out of Price Channels, by Gerald Marisch, "Technical
Analysis of Stocks & Commodities", January 1998, page 93.
"Here's a technique based upon Tushar Chande's variable-length
moving average. The indicator is more responsive to market price
movements than a conventional simple or exponential moving average,
and can be used for position trading."
The following formula will match the authors slight modification to
the variable moving average:
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VIDYA 21,5 Indicator
Length:=Input("Length",1,200,21);
Smooth:=Input("Smoothing",1,200,5);
AbsCMO:=(Abs(CMO(C,Length)))/100;
SC:=2/(Smooth+1);
VIDYA:=If(Cum(1)<=(Length+1),C,(SC*AbsCMO*CLOSE)+(1-(SC*AbsCMO))*PREV);
VIDYA |
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The following Expert highlights will show you when the price
has undergone trend changes as discussed in the article. Enter
each section as a separate highlight in an Expert Advisor. To do
this, create a new Expert and select Highlights from the tab
dialog. Then select New and name it Bull. Paste the Bull trend
formula into the condition box within the editor and set the
colour to green. Do this for the Bear and the Pause conditions as
well, selecting the matching colours, Attach this Expert to your
chart and if the conditions are met, the price bars will be
displayed in the proper colours.
| Green Bars (Bull trend) |
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Length:=21;
Smooth:=5;
AbsCMO:=(Abs(CMO(C,Length)))/100;
SC:=2/(Smooth+1);
VIDYA:=If(Cum(1)<=(Length+1),C,(SC*AbsCMO*CLOSE)+(1-(SC*AbsCMO))*PREV);
C>(Vidya*1.01) |
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| Red Bars (Bear trend) |
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Length:=21;
Smooth:=5;
AbsCMO:=(Abs(CMO(C,Length)))/100;
SC:=2/(Smooth+1);
VIDYA:=If(Cum(1)<=(Length+1),C,(SC*AbsCMO*CLOSE)+(1-(SC*AbsCMO))*PREV);
C<(VIDYA*.99) |
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| Yellow Bars (Pause or
pending reversal of the trend) |
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Length:=21;
Smooth:=5;
AbsCMO:=(Abs(CMO(C,Length)))/100;
SC:=2/(Smooth+1);
VIDYA:=If(Cum(1)<=(Length+1),C,(SC*AbsCMO*CLOSE)+(1-(SC*AbsCMO))*PREV);
C>(VIDYA*.99) AND C<(VIDYA*1.01) |
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