PZ Lopez Channel

PZ Lopez Channel

This multi-timeframe indicator identifies the market's tendency to trade within a narrow price band.

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• It is easy to understand
• Finds overbought and oversold situations
• Draws at bar closing and does not backpaint
• The calculation timeframe is customizable
• The red line is the overbought price
• The green line is the oversold price

It has straightforward trading implications.

• Look for buying opportunities when the market is oversold
• Look for selling opportunities when the market is overbought

The indicator is calculated using a three-day moving average of the last two true highs minus ATR to derive the lower channel and a three-day moving average of the last two true lows plus ATR to derive the lower channel.

Input Parameters

• Timeframe: Timeframe to calculate the bands from
  
• Indicator Period: Amount of bars to look back to calculate the channel
  
  

Author

Arturo López Pérez, private investor and speculator, software engineer and founder of Point Zero Trading Solutions.