Trend Following Bar

The Trend Following Bar indicator analyzes moving average momentum and channel width to provide a multi-layered visualization of trend direction and strength. By comparing local moving average fluctuations against a broader price channel, the tool helps traders identify established trends and gauge their intensity through dynamic bar coloring.

Usage

The Usage section focuses on interpreting the visual output and adjusting the sensitivity of the trend detection.

• Trend Direction: Green/Blue tones indicate a bullish trend, while Red tones indicate a bearish trend.
• Trend Strength: The indicator uses a gradient system; lighter colors represent emerging or weakening trends, while darker, more saturated colors indicate strong momentum.
• Multi-Period View: The script calculates trends across 20 different periods simultaneously, stacked as a histogram. This allows you to see if a trend is consistent across short-term and long-term moving averages.
• Latency vs. Noise: Enabling Linear Regression can help filter out market noise for a cleaner visual, though it may introduce a slight delay (1-2 bars) in signal reaction.

Details

The indicator works by creating a local channel based on the highest and lowest points of a selected Moving Average (MA) over a specific lookback period. It then compares the width of this MA channel to a broader Price Channel (the high/low range of the last 300 bars by default).

If the MA channel's width exceeds a user-defined percentage of the broader price channel, the script identifies an active trend. The strength is then calculated as a ratio between the MA channel and the price channel; a higher ratio results in deeper bar colors, signifying a more robust trend.

Settings

• Source: The price data used for the Moving Average calculations (e.g., Close, HL2).
• Trend Channel Rate (%): Sets the threshold for trend detection based on the broader price channel.
• Trend Channel Period: The lookback period (default 300) used to establish the baseline price channel.
• MA Type: Choose between EMA, SMA, RMA, WMA, or VWMA for the underlying trend calculations.
• Check Trend Period: The period used to create the local MA channel. Higher values increase sensitivity.
• Apply Linear Regression: Toggle to smooth the Moving Average output and reduce noise.
• Linear Regression Period: The lookback period used specifically for the linear regression smoothing.

FAQ

How do I interpret the different color intensities?

Darker colors signify that the trend is strong and the moving average momentum is high relative to the price channel. Lighter colors suggest a weaker or consolidating trend.

What MA type is best for this indicator?

The choice depends on your strategy; EMAs are more responsive to recent price changes, while SMAs provide a smoother, more lagged baseline.

How can I access Trend Following Bar?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.