Consecutive Up and Down Bars - Works With Any Trading Indicator

by Caleb, 596 days ago

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Consecutive Up or Down Bars is a technical analysis indicator that detects up or down vector values and calculates the number of consecutive bars a specific vector closed above its previous value and the number of consecutive bars this vector closed below its previous value. The number of consecutive up and down movements are displayed on the same line. If the vector returns a positive value then this indicates that we are dealing with up movements; if values are negative then we are dealing with down movements.

The trading indicator allows you to enter one argument. You can for example enter "close" (which refers to the security close price), to detect the number of consecutive bars a stock or an asset increased or decreased in price.

Example:
ConsUPDown(close) > 5
The above trading rule generates a signal when the close price of a particular security increases for more than 5 consecutive trading days.

ConsUPDown(close) < -5
This rule is almost the same as the previous one, however in this case the signal is generated when the close price decreases for more than 5 consecutive trading days.

hhv(absolute(ConsUPDown(close)), 20) < 4
Here is a more complicated trading rule. Here, we first calculate the absolute value of the consecutive Up Down indicator then we calculate the highest value over the previous 20 bars.
The rule returns a trading signal when this highest value is lower than 4, which could be translated into: Return stocks that did not increase or decrease more than three times in a row.
This trading rule can be used to detect periods with high uncertainty. The opposite rule can be used to search for period with low uncertainty and therefore can be applied to trend following systems for example.