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1998issue C091-3

Moving-average candidates gated by support and resistance

A simple moving average is the baseline for later signals. Support-state and resistance-state then update with new lows and highs, and a crossover-candidate becomes a buy or a sell only when that state and a critical-percentage band also qualify.

  • The moving average is a baseline, not a finished order. A close that crosses it is a crossover-candidate until support-state or resistance-state and the critical-percentage band also qualify.
  • While the close stays above the average, resistance-state rises to each new high. While the close stays below the average, support-state falls to each new low.
  • A buy or a sell can come from a qualified average cross or from a close that crosses the tracked support or resistance level, and each path still needs the opposite state to exist.
  • A shared-lookback can keep the average and the highest-high and lowest-low lengths aligned. A position-limit can keep the same signal set from opening more than one position.
Entries in this reading3 entries
Current trackBreakout system74 readingsRule-based entry193 readingsMoving average465 readings

What the procedure computes

The procedure computes a simple moving average of a chosen price series over an explicit lookback and uses that average as the baseline for later signals.

Construction uses three inputs: the price series for the average, the lookback length, and a critical-percentage entered as a percent figure. The critical-percentage lifts the tracked support level and cuts the tracked resistance level into confirmation bands.

Support-state and resistance-state

While the close is above the average, resistance-state is raised to any new high. While the close is below the average, support-state is lowered to any new low.

Support-state is the running low recorded while price remains below the moving average. It is used both as a plotted level and as a gate on later signals. Resistance-state is the running high recorded while price remains above the moving average, used both as a plotted level and as a gate on later signals.

From crossover-candidate to buy or sell

A close that crosses the moving average is a crossover-candidate. It is treated as incomplete until existing support-state or resistance-state and the critical-percentage band also qualify.

A buy is issued when the close crosses above the average, a support-state already exists, and the close remains below resistance reduced by the critical-percentage factor. A buy is also issued when the close crosses above the tracked resistance level and a support-state already exists.

A sell is issued when the close crosses below the average, a resistance-state already exists, and the close remains above support raised by the critical-percentage factor. A sell is also issued when the close crosses below the tracked support level and a resistance-state already exists.

Shared-lookback and position-limit

One reconstruction applies a shared-lookback: the same length to the average, the highest-high resistance, and the lowest-low support, so those three lengths can be changed together.

One reconstruction applies a position-limit that forbids extra entries by keeping the procedure to a single open position.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
8 of 23 in the Breakout system track
20001-3 pp.Next on Breakout systemConstructing next-close envelope targets for breakout stopsA next-bar band target is the unknown future close that would make price equal a moving mean plus or minus a stated multiple of moving standard deviation.
All readings on this track · 23 readings
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  2. 1995Write a weekly breakout as one parameterized entry and exit
  3. 1995Combining a trend rule, a breakout trigger, and a seasonal filter
  4. 1996Constructing a two-bar clearance breakout from a twenty-session exponential average
  5. 1996Two-bar exponential-average breakout as setup, stop, and flatten
  6. 1998A noise-offset breakout judged after walk-forward re-estimation
  7. 1998Gating a weekly average crossover with stored support and resistance
  8. 1998Moving-average candidates gated by support and resistance
  9. 2000Constructing next-close envelope targets for breakout stops
  10. 2001February soybean high breakout and June trailing stop
  11. 2005Box-and-breakout states written as ordered entry and exit rules
  12. 2007Match trend and breakout rules to the market condition
  13. 2010How a JM internal band becomes long and short entry and exit rules
  14. 2013Constructing a three-average trend-aligned breakout system
  15. 2016Volume-confirmed breakout entry rules
  16. 2017How to construct exponential standard deviation bands
  17. 2017Four-day green candle breakout as one swing procedure
  18. 2018Constructing inverse ETF breakouts above a 200-day average
  19. 2018Evaluating trend, breakout, and regression rules by average robustness
  20. 2019A crypto pair breakout after a sideways range
  21. 2019Next-session breakout rules after a high-volume close
  22. 2020Altcoin dual-stop breakout with a timed exit
  23. 2020Critiquing required stops in mechanical breakout systems
By fieldEntry and exit rules231 readingsBy year199860 readings
All 74 readings tagged Breakout system
Also on Breakout system5 readings
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