Definition of a Trend

Objective: Test the definition of a trend as “Higher Highs and Higher Lows [or] Lower Highs and Lower Lows” by painting bars in a chart depending on whether the price is making new n-period highs or lows.

The image above paints blue bars after a new 20 period high and red bars after a new 20 period low. It appears that this definition of a trend holds up. I have found that combining this indication of opportunity with the direction of a moving average for confirmation can produce more profitable backtesting results on daily and weekly bars than simple moving average crossover strategies.

TradeStation EasyLanguage:

if H is >= the Highest(H,length) then color = Blue;
if L is <= the Lowest(L,length) then color = Red;
PlotPaintBar(H, L, “trend”, color);