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The PerfectBounds indicator is a new type of indicator based on the idea of catching the bounds of the trend formed by moving averages with periods up to 255.

The upper bound in green color is formed by the highest ma value of the price highs (HMV and the determined period PMH).

The lower bound in red color is formed by the lowest ma value of the price lows (LMV and the determined period PML).

A trendline is shown in the direction of the major trend.

So if PML>PMH we have a downtrend and if PMH>PML we have an uptrend. Remember the "best" period of the movering averages is determined on every bar.

There a just two parameters:

  • showTrendline shows the major trend line on top of the bounds and can be turned off here.
  • barsAverage is initially 1 but can be increased to any reasonable number to average price bars together. So you can display the bounds of a higher period on the current chart.

For example a value of 5 gives the bounds of M5 if you are looking at the M1 chart. A value of 8 gives the bounds of period H4 if you are looking at the M15 chart.

The advantages are:

  1. Easily determine the bounds of the trend. Often, the price returns to the bound of the trend.
  2. Detect the closing triangle of the price bounds which is if the gap between HMV and LMV is getting smaller. This often suggests a breakout or trend change.
  3. Better identify a ranging phase where upper and lower band are close together and we see frequent trend changes.
  4. Use this indicator twice on the screen, one with a different bar averaging to see if a counter trend on the primary period is just a test in a higher period.

This indicator, in my opinion, offers a new ways of looking at the price movement.

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