The PerfectBounds trend 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 250.
For the time frames M1, M5, M15, H1, H4, D1 and W1 the bounds are calculated:
- The upper bound is formed by the highest ma value of the price highs of each time frame (HMV and the determined period PMH).
- The lower bound is formed by the lowest ma value of the price lows of each time frame (LMV and the determined period PML).
- 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 a few parameters:
- period_XX is the maximum period choosen for the timeframe xx. A value between 5 and 250 is valid. Set it to 0 to disable display the lines.
- mode Set it to 0 to display only the supporting trend lines. Set it to 1 to display the bounds. Use it to combine two indicators with different modes and see the bounds with the trend highlited. The trend lines are always shown below the prices on an uptrend and above the prices for an downtrend.
- lineWidth set it to any reasonable value. Use it for example with mode=0 and lineWidth=3 to highlight the trend direction and a second indicator with identical periods and mode =1 and lineWidth=1.
- periodMultiplier allows fast shifts of period values without changing each value. Values up 6 with default period values make sense.
- maxBarsToShow can bet set to 0 to calculate all values for the indicator but it is but for perfomance reasons to limit the value.
The advantages are:
- Easily determine the bounds of the trend. Often, the price returns to the bound of the trend.
- 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.
- Better identify a ranging phase where upper and lower band are close together and we see frequent trend changes.
- As the longer period bounds are coming "updated" always a bar behind you can easily recognize breakouts.
This indicator, in my opinion, offers new ways of looking at the price movement.
* Included new default mode to show trends and bounds together.
* Introduced an overview panel which shows the trend values for all timezones.
This panel shows 6 columns:
1.) time frame of calculation
2.) period used for calculation
3.) trend arrow, in the color of the trend: green for up and red for down. Blue if near or exceeding the bounds.
greater than 95% blue up arrow;
greater than 80% green up arrow;
greater than 60% arrow medium up;
greater than 40% sideways arrow;
greater than 20% arrow medium down;
greater than 5% red down arrow;
smaller than 5% blue down arrow
4.) position of price in the bounds range. See description above. It can get negative values and values above 100% if the price is trending.
5.) width of the trend bounds. This allows us to see if we have more a ranging than a trending market if you remember older values. But this can be used to identify opportunities as prices like to bounce at the timeframe bounds (M15, H1 and H4).
6.) time till the current bar is completed. The last 5 seconds are shown in red. If the price exceeds a bound for example at H1 the bounds will jump to the high (or low) of that bar if the bar has closed. I have observed that on the higher time frames (H1, H4, D1) very often the price returns to that bound before closing.