Agile Quino Channel

Abstract : 

The Quino channel creates a trading path based on the statistical distribution in which a share price moves. Inserted in the price chart, it indicates where support or resistance is likely to occur. Moreover, by adding the same indicator to the price graph, it is possible to plot a short-term channel and a long-term channel by judiciously selecting the remarkable occurrences of the price distribution.

Concept :

When we observe the evolution of a share price over time, we notice that it (Close) oscillates around the same level several times over. The retracement of this level, corresponds to the behavior of Traders, linked to the psychology of the market at the different moments.

One way of spotting these remarkable levels is to construct a profile of values, formed from all the price values at defined frequencies.  In other words, to construct a distribution of “Close” values over a defined number of Bars, in the shape of a histogram.

To build the histogram for a given number of bars, the “Close” values are grouped together in classes of the same dimension. Each class corresponds to an interval in which “Close” values are ranked when these values are within the upper and lower limits of the corresponding class. The amplitude of the classes (at least 5 values minimum) and the number of classes (e.g 120 values) are defined by the Trader.  It corresponds  to around 2 years in daily timeframe. Then, this histogram can be plot inside the price indicator or outside.

The remarkable levels appear in the histogram as peaks (sometimes in the form of bell-shaped curves) more or less close to the reference class in which the current price lies. Depending on whether these peaks are to the left or right of this reference class, a support and resistance level can be deduced, forming a horizontal “Quino Channel”, a name which differentiates this original construction method from other channel ones.

This indicator, inserted into the price graph, makes it easy to identify these remarkable support and resistance levels and to trace the channel.

By default, an automatic search mode is activated. A button allows you to switch to manual mode to search for a channel more suited to the current situation.

This automatic search identifies the highest peaks in the support histogram area and in the resistance histogram area.

In addition, this indicator allows the trader to draw a theoretical Gaussian curve on the histogram, then, to check whether it looks like a normal distribution, and even so to make statistics if this is relevant.

How to use :

Configure the time frame in daily price graph.

Choose the quantity of history suitable for the configuration selected below (Typical: 200 units).

Insert the indicator in the price graph (recommended)

Enter the following parameters in the configuration window :

– NbrOfClasses : 120 (Typical).

– NbrOfSamplesPerClass : 5 (Typical)

– ClassSupportIndex : In manual search mode ,select the value of the remarkable class index on the left of the current class (purple)

– ClassResistanceIndex : In manual search mode, select the Value of the remarkable class index on the right of the current class (purple)

– CalibrationDistributionAuto (optional) : If needed, switch on True, when the indicator is inserted in the price chart for just zooming the histogram (warning : the sample quanties are multiplied)

– ClassAttributsIndex (optional)  0 by Default. Display the attributs of the selected class if  the ClassAttributsIndex > 0

– Info (optional) : Switch on True to display the chart  anchored information

– GaussianShape (optional) :  Switch on True to plug the theorical Gaussian shape on the historam

– DottedLineOrLine (optional)  : False ; Switch on  True to draw the channel in dotted lines

– QuinoChannelTracer :

By setting the QuinoChannelTracer button to False, the histogram is drawn in the price graph, allowing the selection of the remarkable peaks to the left and right of the reference class. Simply set the QuinoChannelTracer button to True to draw the channel in the price graph. Rescaling the price window may require a double click.

– Manual Search : False by default ; Switch on True to automatically search the higher peaks of class indexes.

Nb 1 : These ClassSupportIndex and ClassResistanceIndex can also be selected in stand-alone mode, outside the price graph.

Nb 2 : This indicator is a major development of an indicator I had previously created based on this principle.

Configuration backup :

All of these parameters (case of manual search) can be saved under the instrument name in the upper left corner of the indicator configuration window.

Finally

By default, the automatic search mode also starts channel tracing. This mode is useful for first-time users.

Once you’ve got to grips with this indicator, it’s very easy to use. With a single click in the indicator configuration window , it is possible to switch from the histogram, to the channel tracing in the price chart in live.

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