SuperTrend, described rather than followed

What it means

A band is drawn above and below the midpoint of each bar at three times the average true range. The band only ever tightens until a close crosses it, at which point the line flips to the other side of price.

The result is a trailing description of which side price has been closing on. It contains no forecast; the flip is always reported after the close that caused it.

How we detect it

The engine reports which side the line currently sits on and how many bars it has been there.

It does not report the line as a stop, a target or an entry, which is what the indicator is popularly used for and exactly what this publication does not produce.

The ratchet matters: a band recomputed freshly each bar would jitter and report flips that no close caused.

When the read carries information

• The market is actually trending, which is when a trailing line has something to trail.
• ATR is meaningful, so the offset scales with how much this market normally moves.

When it misleads

• In a range it flips repeatedly, and each flip is a real event that means nothing.
• The multiplier is a convention. Three is common; nothing about markets requires it.
• A long run on one side describes what has happened and says nothing about how much longer it lasts.

How it reaches you

One line: which side, and for how long.

The line's value is never offered as a level to act at.