Projection Bands & Oscillator Indicators
Projection bands are banded indicators used for forecasting future minimum and maximum price levels. Both projection bands and oscillator indicators were developed by Mel Widner and introduced in 1995. Projection bands resemble other band indicators such as moving average envelopes and Bollinger bands and have characteristics of channel indicators like Raff regression channels.
Projection bands are created by deriving two price bands--upper maximum and lower minimum price bands--derived from maximum and minimum prices over a period, and then projecting them into the future, parallel to the linear regression trendline. Unlike other bands, projection bands always contain the prices within them. Trading projection bands is similar to trading other bands; when prices are near the upper band, then overbought situation is identified and when prices are near lower band, oversold conditions are identified. Projection bands offer better results when used in conjunction with other trend analysis tools.
Projection oscillator is a modification of projection bands. It measures current price value to the upper and lower projection bands. Its value ranges from 0 to 100 where many traders use values above 70 to generate buy signals, and values below 30 to generate sell signals. But this approach is less reliable because projection oscillator is blind to stock momentum and market conditions. Crossovers (buy signal when the oscillator below 30 level cross 5-day MA) and Divergences (between current price and oscillator) are more reliable.
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Projection bands are created by deriving two price bands--upper maximum and lower minimum price bands--derived from maximum and minimum prices over a period, and then projecting them into the future, parallel to the linear regression trendline. Unlike other bands, projection bands always contain the prices within them. Trading projection bands is similar to trading other bands; when prices are near the upper band, then overbought situation is identified and when prices are near lower band, oversold conditions are identified. Projection bands offer better results when used in conjunction with other trend analysis tools.
Projection oscillator is a modification of projection bands. It measures current price value to the upper and lower projection bands. Its value ranges from 0 to 100 where many traders use values above 70 to generate buy signals, and values below 30 to generate sell signals. But this approach is less reliable because projection oscillator is blind to stock momentum and market conditions. Crossovers (buy signal when the oscillator below 30 level cross 5-day MA) and Divergences (between current price and oscillator) are more reliable.
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Upgrades, Downgrades
Coverage Initiate, Economic Calendar
posted by NobleTrading at
9:14 AM
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