Description

• Developed by Mel Winder, projection bands are like support and resistance line drawn across price to act as crucial reversal points
• Bands are calculated using period highest and lowest value and plotting them parallel to a regression line of the high/low value

Interpretation

• If price reaches upper band, its price top and a shorting signal
• If price touches lower band, its price bottom and a buy signal
• Price never crosses the upper or lower band and therefore breakout doesn’t occur
• During a significant up or down trend it becomes difficult to make money using projection bands as new top gives fall signals. Other indicator can be used to filter such situations

Default Parameters Used/Inputs

• Price
  Highest price, lowest price, high price, low price.
• Period
  Number of bars (daily/weekly/monthly/yearly) for undertaking calculation of regression line for projection bands. High line

Returns/Output

Upper Band and Lower Band value of the stock

Formula

HiSlope = slope of regression line of the high over n periods
LowSlope = slope of regression line of the low over n periods
HiBand = max over n periods of (high[-x] + b*x)
LowBand = min over n periods of (low[-x] + b*x)