The Echo Forecast
By LuxAlgoOct 4, 2021
The Echo Forecast brings analog forecasting to the chart: it searches past data for the window whose price changes best match (or, in dissimilar mode, most differ from) the latest ones, then projects what followed that historical episode into the future. Similarity is scored with correlation coefficients, a choice well suited to periodic series, and every ingredient of the forecast is drawn on the chart so nothing about it is a black box.
How to Trade The Echo Forecast?
- Orange segment: the benchmark window of recent price action the search tries to match.
- Green segment: the best-matching (or most dissimilar) historical window, located inside the gray search zone.
- Forecast: the projection built from the matched window's subsequent changes, extended over the forecast horizon.
- Detrend first: the method rewards detrended, periodic inputs, such as smooth or momentum oscillators, over raw trending price.
Beyond prediction, the drawing itself is useful: it highlights which stretch of history most resembles the present, a quick way to study how comparable conditions previously resolved.
The Echo Forecast Settings
- Evaluation Window: the window used to hunt for similar or dissimilar history; the total evaluation span combines the Forecast Window and Evaluation Window.
- Forecast Window: the forecast's time horizon.
- Forecast Mode: match toward similarity or dissimilarity.
- Forecast Construction: 'Cumulative' stacks the matched changes onto the latest price, 'Mean' blends them with the benchmark window's average, and 'Linreg' combines them with a linearly extrapolated regression fit.
- Source Input: the series being forecast.
Frequently Asked Questions
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