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2018issue C0124-25

A three-state overlay that colors a trend only after the line clears the bar

A momentum overlay can sit on any averaged price line. Buy-mode and sell-mode are assigned only when that line lies wholly outside the current bar. Intersection is built as congestion, and the plot is withheld so the procedure publishes no directional signal.

  • A momentum overlay can be built from a simple, exponential, double, or Hull average. The worked example uses a 21-bar exponential average.
  • A trend-filter paints the same line one color when momentum lifts price and another when it presses price down, without changing the average.
  • Buy-mode and sell-mode require a full clearance of the bar. Intersection is congestion, published as a withheld neutral-state.
  • The intended path is directional color, then a blank interval, then the opposite color. A brief stall inside one push is not an exit rule.
Entries in this reading3 entries
Current trackMomentum strategy103 readingsTrend filter137 readingsPrice-indicator divergence142 readings

How the line is read

A momentum overlay can be built from any averaged price line, including simple, exponential, double, or Hull averages. The worked example uses a 21-bar exponential average.

On the 15-minute EUR/USD example, the current value of that average is read as compressed recent history: whether price is rising or falling versus its latest path.

Color without rewriting the average

A trend-filter layer paints the same average one color when momentum is lifting price and another color when it is pressing price down. That paint does not change the underlying average.

Four opposite-color changes inside six bars are treated as a failed two-state reading, because price is oscillating rather than being pushed in one direction.

Congestion as a published third state

If the momentum line intersects the current bar, the construction labels the bar congestion, or neutral, and withholds a plot so no directional signal is issued. That withheld output is the neutral-state.

One illustrated episode keeps the line in that withheld neutral-state for 13 bars before a later buy-mode appears.

How a change of side is marked

A two-bar move from sell-mode into congestion and back to sell-mode is classified as a stall inside the existing push, not as a rule that requires an exit.

The intended state path is directional color, then a blank neutral interval, then the opposite color, so a transition is marked instead of an immediate opposite-color flip.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
42 of 51 in the Momentum strategy track
20188-13 pp.Next on Momentum strategyHalf-cycle relative-strength index with a Fisher map for cyclic reversalsA relative-strength index can be written without the conventional factor of 100 and without averaging, by independently accumulating closes-up and closes-down and forming their ratio.
All readings on this track · 51 readings
  1. 1984Half-cycle differencing for momentum signals
  2. 1987Relative strength evaluation under competing optimization criteria
  3. 1988Weekly MACD as a two-clock momentum confirmation stack
  4. 1989Equal-weight zero-cross from smoothed spreads
  5. 1989Testing relative-strength-index reversal rules against trend continuation
  6. 1989Smoothed three-day futures filter for index option bounces
  7. 1989Cycle-length windows for momentum, Relative Strength Index, and stochastic construction
  8. 1991Filtered rally magnitude as a bull-regime breakout
  9. 1992Constructing true strength from double-smoothed momentum
  10. 1992Constructing a double-smoothed true strength index
  11. 1993When momentum structure and breadth break together
  12. 1993Constructing double-smoothed range and momentum oscillators
  13. 1993Constructing a two-parameter relative momentum index
  14. 1993Building a bounded momentum oscillator with RSI smoothing
  15. 1993Two-speed oscillators with divergence and trendline gates
  16. 1993Constructing a relative momentum index from the relative strength index
  17. 1994Constructing daily advance-decline breadth tools
  18. 1994Building a composite regime score from monetary climate and weekly trend
  19. 1994Averaging Relative Strength Index and the stochastic oscillator into one reversal oscillator
  20. 1995Dividend-yield regression as a hold versus momentum gate
  21. 1996Jump and hold filters for long-term Treasury yield direction
  22. 1997Constructing extendedness from a 10 percent swing filter
  23. 1997A range-expansion oscillator that can refuse its own stretch
  24. 1997RSI trend permission and Fibonacci pullback rules
  25. 1998Nested midpoint construction for a range-normalized oscillator
  26. 1999Evaluating Relative Strength Index momentum with zero-line and threshold rules
  27. 1999Treat RSI and momentum as three mechanical procedures
  28. 2000Thrust strength figure from moving-average swings
  29. 2001Constructing a non-range-bound balance of market power score
  30. 2004Cleaned breadth oscillator and new-high divergence: a swing-market case file
  31. 2004Evaluating advance-issues-momentum on a fixed-symbol-basket
  32. 2004Constructing a trend filter from two adjacent high-low windows
  33. 2006A dollar-versus-commodity extreme as a regime case
  34. 2008Zero-centered stochastic bands and bracket stops
  35. 2012Evaluating engulfing momentum across hold windows
  36. 2012Staged stops as one mechanical entry and exit procedure
  37. 2012Stacking a relative-strength-index forecast, a trend filter, and long-only momentum
  38. 2013Constructing fair-value filters from averages and momentum
  39. 2014Constructing a multi-window slope divergence entry
  40. 2015Bandedge trend filter construction with inverse crossover rules
  41. 2017Opposite rules for index price and volatility momentum
  42. 2018A three-state overlay that colors a trend only after the line clears the bar
  43. 2018Half-cycle relative-strength index with a Fisher map for cyclic reversals
  44. 2018Emotion as a rule input when momentum breaks
  45. 2018Two-bar body expansion as a momentum breakout construction
  46. 2019Pair a two-day high breakout with a volume-weighted exit on the same chart
  47. 2020Building reflex and trendflex cross and extreme entry rules
  48. 2020Construct a dual-series price momentum oscillator overlay
  49. 2020A multi-timeframe stochastic as a panel of weekly voters
  50. 2020Centerline crossovers that compare index momentums
  51. 2020Multi-timeframe stochastic voting as one mechanical rule
By fieldIndicators and filters682 readingsBy year201898 readings
All 103 readings tagged Momentum strategy
Also on Momentum strategy5 readings
1989Equal-weight zero-cross from smoothed spreads1997Constructing extendedness from a 10 percent swing filter2000Thrust strength figure from moving-average swings2001Nonlinear Ehlers filter construction from momentum and distance weights2001A two-gate classroom test for a two-window momentum trend filter