Description
The PZ Lopez Channel Indicator is a non-repainting tool that identifies price boundaries where reversals are likely to occur. It is designed to detect whether the market is trading within a tight, stable range—and help you act accordingly.
The channel is constructed as follows:
- The green line marks the oversold zone, calculated from a 3-period moving average of the last two true highs minus the ATR
- The red line marks the overbought zone, calculated from a 3-period moving average of the last two true lows plus the ATR
This formula adapts to market volatility and naturally tracks the evolving price range. The result is a flexible, dynamic channel that remains reliable across instruments and timeframes.
You’ll know the market is potentially reversing when:
- Price touches the green line — look for long setups
- Price touches the red line — look for short setups
Use this tool on its own or in combination with oscillators or candlestick patterns for even higher-probability entries. Because the indicator supports custom timeframes, you can calculate bands from a higher timeframe and display them on a lower one to create a multi-timeframe confluence effect.
Input Parameters
- Timeframe – The timeframe used to calculate the channel levels (e.g. H1, D1, etc.)
- Indicator Period – Number of bars to look back when building the channel
Disclaimer
This indicator is a tool for technical analysis only and is designed to assist in chart interpretation. It does not constitute financial advice, investment recommendation, or any guarantee of results. Trading involves a high risk of loss and can result in the loss of your entire capital. Use this indicator at your own risk and only with money you can afford to lose. For complete details, please read our Terms and Conditions.
