Many first-time users believe these tools represent an accurate projection of what tomorrow’s trading range will be. This is not necessarily the case. Instead, what is important is to observe how the price trades during the day with respect to these support/resistance lines. If price opens above the High Support Line, then subsequently makes a significant break below this line, there is a high probability that prices will continue to decline all the way to the Low Resistance Line. Conversely, if the price opens below the Low Resistance Line, then subsequently makes a significant break above this line, there is a high probability that prices will continue to rise all the way to the High Support Line.

Arps Pro-Mom Trend Bars

This set of enhanced trend bar studies is highly accurate in revealing the overall trend direction. When the bars are painted blue, an uptrend is underway. When the bars are painted red, a downtrend is underway. The greater the number of consecutive bars painted, the more reliable is the trend detection on any time frame. When alternating clusters of red and blue bars appear, it suggests a sideways market with no real trend.

Arps Hurst Bands– Historic

This indicator plots a series of support and resistance channel lines around a polynomial regression centerline. The formula for the centerline takes the form, a + bx +cx2 + dx3 + ex4 …. The Arps Hurst Bands are spaced so that each channel represents one-half sigma, or standard deviation.

Trading with the Arps Hurst Bands

Prices tend to regress toward the mean, which is represented by the blue centerline on the Arps Hurst Bands chart. It has been observed that when prices cross outside the outer boundaries of the Arps Hurst Bands they almost invariably return to the centerline (reversion to the mean).

The three curvilinear bands above and below and paralleling the centerline represent one, two and three sigma (standard deviations) of the closing prices from the mean centerline. There is only a five-percent chance that prices will exceed the 2-sigma, and less than a one-percent chance that they will exceed the 3-sigma line. So, when prices reach these bands, a relatively low-risk entry opportunity presents itself to trade in the opposite direction of the current move.

Since this particular indicator draws channels retroactively, it will only draw channel lines from a number of bars back equal to the Length input value. In other words, if Length is set to 150 bars, the indicator will only plot its values for the last 150 bars. Whenever a new bar is created on the chart, the indicator is recalculated based on last current 150 back. The more bars back you select, the less sensitive the curvature of the indicator will be. We have found that values between 75 and 150 bars work best.

Arps Hurst Bands - Actual

As you watch the Arps Hurst Bands in action on a real-time chart, you will see that the shape of the bands changes on each bar as the first bar of the previous bar’s regression calculation is dropped from the calculation and the new bar is added into the calculation. Thus, the Arps Hurst Bands – Actual indicator plots the progress of the end point of the Arps Hurst Bands – Historic indicator for each bar on the chart. Thus the Arps Hurst Bands - Actual indicator permits a continuous evaluation of how the relationships of the sigma standard deviation bands changed with time and how the end points looked at the time that particular bar was the last bar on the chart.

If you overlay the Arps Hurst Bands-Historic indicator with the Arps Hurst Bands-Actual indicator, both with the same settings, you will see that the value of the Historic lines on the last bar of the chart will match exactly the value of the corresponding Actual lines on the last bar. In effect, the Arps Hurst Bands - Actual indicator represent a “trail of crumbs” showing where the Arps Hurst Bands-Historic were when each bar was the last bar on the chart. The usefulness of this indicator is to show how the Arps Hurst Bands calculations have behaved in the past as the regression channels are recalculated on every bar.

Arps Hurst Bands Oscillator

The Arps Hurst Bands Oscillator indicator, shown as the oscillator in the lower portion of the price chart above, plots on a straight-line scale the relationship between the price and the Arps Hurst Bands – Actual. The red lines above and below the oscillator represent the “straightened out” 3-sigma channel boundaries, while the green centerline represents the “straightened out” centerline. The purpose of this indicator is to normalize the price in terms of standard deviations from the centerline, thereby displaying when prices are overbought or oversold.

Arps Hurst Bands Centerlines

Another use for the Arps Hurst Bands - Actual calculations is to plot the Arps Hurst Bands Centerline on a chart twice using two different settings for the Order input. The example below shows a blue Arps Hurst Bands-Actual line of Order 3 and a red Arps Hurst Bands-Actual line of Order 4. Note how closely the blue line follows behind price and how responsive it can be to changes in trend direction. When the red crosses the blue, the price is often about to reverse direction. The use of these lines in trend analysis opens a whole new area of potential for better technical analysis tools.

Arps Monthly/Weekly/Daily Pivot Points Support-Resistance Lines

It used to be that many traders on the floor of the exchange, most of whom would be too busy to do sophisticated calculations during the trading day, would come into the pits in the morning with a set of price levels written on a little card which represent the predicted intraday support/resistance levels for the upcoming trading day. These price levels, based on the Floor Traders’ Pivot Formulas, would be calculated based on the values of the previous day’s high, low, and close, as follows:

Avg Price = (H+L+C)/3

Resistance 2 = Avg Price + H - L;

Resistance 1 = 2*Avg Price - L;

Support 1 = 2* Avg Price - H;

Support 2 = Avg Price + L - H;

Since the “Secret” Floor Pivot formulas have become common public knowledge, they have also become self-fulfilling prophecies and other traders have begun to “gun” for them.

Our research at Jan Arps’ Traders’ Toolbox has shown that not only do the Pivot Point calculations work well for intraday price action, but they also have been found to be quite effective over larger time frames, such as daily, weekly and monthly charts, to pinpoint potential support and resistance levels. Our research has also shown that the midpoints between the classic support/resistance lines have become very significant support and resistance levels.

Accordingly, we developed the Arps Pivot Points Monthly, Arps Pivot Points Weekly, and Arps Pivot Points Daily indicators to provide the user with a set of guidelines for the expected price range over the current monthly/weekly/daily period. Increased potential for price support or resistance occurs at levels of confluence of the pivot lines for the different time frames.

These tools also provide the capability of calculating an additional pair of lines, S3 and R3, which extend the support-resistance levels beyond the standard S2,S1,Pivot,R1, and R2 lines. Because the midpoint lines are also critical support-resistance levels, a midpoint line capability is also included in these tools. Try them and see if you don’t find a lot of support and resistance at these levels.

The Arps Pivot Points Monthly, Weekly and Daily Studies include the following significant inputs:

Only Plot Current Period (Default=False) When set to “True”, will only plot the support-resistance line for the most recent period, to reduce chart clutter.

Enable R3 S3 (Default=True) When set to “True”, will display the R3 and S3 lines, in addition to the standard support-resistance lines of R1, S1, R2, S2, and Pivot

Plot Midlines? (Default=False) When set to “True”, will display the midpoint lines between the standard support-resistance lines of R1, S1, R2, S2, and Pivot.

Arps SuperPaint Permission Screen

The Arps SuperPaint Permission Screen tool is used as a confirming indicator in conjunction with other tools to give an indication as to when it is advisable to take a long or short position. When the permission screen is blue, only buy signals should be considered. When the permission screen is red, only sell signals should be considered.

This tool is based on the Arps Price Leader algorithm, which is a very sensitive, acceleration-based oscillator. It detects small direction changes, so should be used with caution as an entry/exit tool of itself, but it can serve as a setup tool in conjunction with other triggers.

Universal Swing Tool for eSignal

The universal swing tool is a “Swiss army knife” tool for displaying and analyzing price swings of different magnitudes. This tool generates a series of zigzag lines connecting successive swing highs and swing lows. Accordingly, we are able to filter out the random noise in price fluctuations and focus our attention on the magnitude and speed of the up moves and down moves of price and their relationships to one another.

As well as plotting the basic zigzag line, this tool has the additional capability of displaying the following information about the price swings:

1. The magnitude of each swing, in points,

2. The ratio of the magnitude of each swing to that of the preceding swing (swing ratios),

3. The longer-term trend direction.

4. Retracement support/resistance levels for the current swing as well as for previous swings,

5. The swing reversal price, that is, the price to which a current swing will have to reverse to constitute a reversal of swing direction.

The usefulness of each of these functionalities is explained below.

The basic Arps Universal Swing Tool connects alternate swing highs and swing lows using a proprietary pattern-recognition algorithm that is universally applicable to all charts on any time frame. The size of the swings to be recognized is controlled by a User Input, “Sensitivity”, which works like a volume control on a radio. A Sensitivity value of 1 will display swings of the smallest magnitude, while a Sensitivity of 10 will display only very major swings. Typically, to display roughly 5 – 8 swings in a chart window, a Sensitivity value of around 3 to 5 will work with charts in any price range.

The most recent swing leg on the chart connects the highest high/lowest low with the last confirmed previous swing high/low. As you follow this line in real time you will see that it changes as new highs/lows are reached, until it is finally confirmed as a turning point by accomplishing the required reversal amount.

The Universal Swing Tool is one of the most important tools in your Arps Crown Jewels tool kit. Learning to use it effectively will make mastering and understanding the market moves much easier. Running the tool more than once on the same chart with different Sensitivity settings will show the interrelationship between swings of different magnitudes.

When Show Trend Color is set to “True”, the Universal Swing Tool changes color when the long-term trend changes from Up to Down. A long-term trend change from UP to DOWN occurs when price breaks below the previous pivot low. A trend change from DOWN to UP occurs when price breaks above the previous pivot high.

When Show Reversal Point is set to “True”, the Universal Swing Tool displays two dots on the last bar of the chart. The dot in the opposite direction of the current swing indicates the price at which, if reached, the swing line will reverse direction. The dot in the same direction as the current swing indicates the price at which, if the existing trend reversed, the trend would reverse back into the original direction.

When Show Swing Length is set to “True”, the Universal Swing Tool displays a set of numbers representing the number of points in each successive swing. For the current swing, this value will increase every time the swing length increases. Show Swing Length is a very useful feature which allows the user to see recent swing amplitudes and make a judgment about a follow-through of similar-sized swings into the future.

When Show Swing Ratios is set to “True”, the Universal Swing Tool automatically connects adjacent peaks with a straight line and adjacent valleys with a straight line. It then displays on this line the ratio of the vertical lengths of two swings leading from the first peak/valley to the second peak/valley. This number represents the actual retracement ratio of the current swing to the previous swing in the opposite direction. As more fully described in the work by Larry Pesavento, these Swing Ratios frequently occur at common Fibonacci values, and thus can be useful in recognizing and predicting the harmonic relationships from one price swing to the next.

When Show Retracement Ratios is set to “True”, the Universal Swing Tool automatically calculates and plots Retracement levels for the current swing. These retracement ratios are usually Fibonacci ratios, but can be set by the user to be any desired fraction, both greater than or less than 1. Five Retracement Ratio inputs, Retracement Ratio 1 through 5 have been provided as user-controllable inputs. As the swing increases in amplitude, the retracement levels are automatically recalculated and replotted continuously in real time

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