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I find the Automatic Trend Channels to be a useful tool; however, I'm confused about how it chooses its pivot points on occasion.
As near as I can tell, the pivot points, when set for Minor Pivots, seem to be selected as follows:
- New pivot when a high or low exceeds the previous pivot-high or pivot-low.
- Reverse the trend when five new bars are created that do not create a new high or low. Select pivots by choosing the highest-high and lowest low from current and previous six bars.
- If an "engulfing" bar simultaneously breaks the pivot-high and pivot-low, then reach back to closest unbroken pivot-high or pivot-low and draw to engulfing bar's high (for uptrend) or low (for downtrend).
- If no new high or low in five bars from "engulfing" bar, then no-trend.
Here's where it gets confusing:
- Occasionally, after an engulfing bar, when the trend reverses, it will skip over a pivot and draw back to the engulfing bar as a pivot point.
- Occasionally, when the same low or high are touched, it will wait much much longer than 5 bars to draw the next point. Does it require a percentage count of higher or lower bars, rather than just straight "5 and reverse"? Or does it simply discount repeat touches of the high or low?
If anyone has other observations or clues about these rules, please feel free to share.
Cheers!
As near as I can tell, the pivot points, when set for Minor Pivots, seem to be selected as follows:
- New pivot when a high or low exceeds the previous pivot-high or pivot-low.
- Reverse the trend when five new bars are created that do not create a new high or low. Select pivots by choosing the highest-high and lowest low from current and previous six bars.
- If an "engulfing" bar simultaneously breaks the pivot-high and pivot-low, then reach back to closest unbroken pivot-high or pivot-low and draw to engulfing bar's high (for uptrend) or low (for downtrend).
- If no new high or low in five bars from "engulfing" bar, then no-trend.
Here's where it gets confusing:
- Occasionally, after an engulfing bar, when the trend reverses, it will skip over a pivot and draw back to the engulfing bar as a pivot point.
- Occasionally, when the same low or high are touched, it will wait much much longer than 5 bars to draw the next point. Does it require a percentage count of higher or lower bars, rather than just straight "5 and reverse"? Or does it simply discount repeat touches of the high or low?
If anyone has other observations or clues about these rules, please feel free to share.
Cheers!
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