Projection Bands were developed by Mel Widner, Ph.D and were introduced in an Technical Analysis of Stocks & Commodities magazine article in July, 1995.
Indicator Description
You may calculate the Projection Bands by establishing the highest high and lowest low in the n bar lookback period. The bands plot parallel to a regression line of the high/low and indicate potential areas of support and resistance.
As the name indicates, the indicator plots bands, not the channel lines as with the standard Regression Channel, Daily Regression Channel and the Raff Channel.
Should you see prices reach the upper band, it may indicate an overextension and a bearish reversal setup. Opposite, if prices reach the bottom band it may indicate bullish reversal opportunities.
Because the indicator locates the highest high and lowest low in the n bar lookback period, prices will never break above or below the Projection Bands.
Public Projection Bands DataSeries:
You may access four additional public DataSeries via the strategy builder:
- SlopeSeries
- UpperMaxDeviationSeries
- LowerMaxDeviationSeries
- RegressionTrend
SlopeSeries: Indicates the current slope of the regression line (rise over run) measuring the trend strength.
UpperMaxDeviationSeries: Holds the highest high in the n bar lookback period, parallel to the regression line
LowerMaxDeviationSeries: Holds the lowest low in the n bar lookback period, parallel to the regression line
RegressionTrend: Holds the value + 1 for an up-sloping regression line and -1 for a down-sloping regression line.
Market Analyzer Column: The indicator comes with a market analyzer column. It allows for displaying the ProjectionChannelTrend on the market analyzer.
Other Library indicators
You may increase the probability of locating profitable Projection Bands reversal setups by using Volume Analysis and “buying support and selling resistance”. Additional information on that can be found in our Indicator Spotlights on the Daily Pivot Levels and Fibonacci Retracement Levels.
A variety of Support / Resistance indicators are available from the Session Tools and Fibonacci indicators categories, including the Daily Pivots / Prior Day Fibs, Weekly Pivots /Prior Week Fibs and the Monthly Pivots / Prior Month Fibs. Finally, the Better Volume indicator can be used to validate reversal setups. Finally, our library has a Projection Bandwidth indicator, indicating increasing / decreasing volatility.
Our Indicator Spotlight has also reviewed other indicators from our Channel Indicators category, namely the Regression Channel and the Donchian Channel. The post on the Squeeze indicator is also relevant, being the dizygotic twin of the Squeeze Channel indicator.
The Projection Bands indicator is available for NinjaTrader 8.
