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Countback Line
Note. This is very good, but the limitation is the lookback period.

The calculation point for the CBL line might be 5, 10, 15, 30 daysaway from todays date.Also watch for the way 'gap' days are treated. DarylGuppy

Copied from StockCentral - Thanks Ken D

Well .... last weekend I replied to a post requesting a MetaStock solutionfor calculating the Countback Line discussed in Daryl Guppy's book "ShareTrading:An Approach to Buying and Selling". Subequently, about 30 requests for the formulas I use were received. Not unexpectedly, a few defects were found with the original offerings.This helped forge a somewhat more robust solution, which is here givento the wider audience of this Forum, so that further improvements may beforthcoming. Alternatives of presentation style are many, according to taste, butwe are here requesting improvements in substance, identification of possibleflaws,or have real simplification benefits - please provide solutions wherepossible.

ACKNOWLEDGEMENTS .... With thanks to the several people who have commented,all constructively it is pleasing to say,particular credit is warranted by the significant contributions fromBryan Stanton and Siobhan Channon.

LIMITATIONS .... With MetaStock, there seems to be a need for two differentformulas to handle the issue: - one for the CBL from a LOW (CBLlo), - the other for the CBL from a HIGH (CBLhi). The formulas given belowwere generated using v.6.52.Because of the use of PREV they won't work in some earlier MetaStockversions it seems, though a bit of thought should overcome this limitation- anyone able to comment?
As written they are based upon relative prices over a DEFAULT coverof 13days (but adjustable from 3 to 55 days) - this is one of the potentialweaknesses which commands individual interpretation for a particular equity orcontract, which may cycle more or less frequently and require differenttimeframes.
Other indicators and assessments are, of course, needed to gauge theprobability of a CBL-indicated counter-trend holding.Also, for particularly choppy or indecisive circumstances there maybe a need to extend the Ref(H or L, -5) to a greater number of comparisondays by appropriate copyingand adjustments to the basically simple pattern in these formulas -but if it came to this perhaps the trade should be left alone anyway!
Owing to price vagaries it is not unusual for a CBLhi to be less thana CBLlo calculation, or the converse, especially with low-gradient trendsor sideways price movements.

NOTE: With each formula below, copy exactly from "HighDays" or "LowDays" down to "PREV )))))" into the Indicator Builder.


CBLhi

HighDays := Input("Enter # days to cover lastHIGH for CBL calc'n:", 3, 55, 13);

If(HIGH < HHV(HIGH, HighDays), {then ...}PREV, {previous CBLhi, else...} If(Ref(L,-2) < Ref(L,-1) AND
Ref(L,-2) < L AND
Ref(L,-1) < L, {then ...} Ref(L,-2),{2nd day back low, else...}
If((Ref(L,-3)< Ref(L,-2) AND
Ref(L,-3) <Ref(L,-1) AND
Ref(L,-3) < L) AND
(Ref(L,-2)< L OR
Ref(L,-1) < L),{then ... } Ref(L,-3), {3rd day back low, else...}
If((Ref(L,-4)<Ref(L,-3) AND
Ref(L,-4) < Ref(L,-2) AND
Ref(L,-4)< Ref(L,-1) AND
Ref(L,-4) < L) AND
(Ref(L,-3)< L OR
Ref(L,-2)< L OR
Ref(L,-1) < L), {then... }
Ref(L,-4), {4th day back low, else...}
If((Ref(L,-5)<Ref(L,-4) AND
Ref(L,-5) < Ref(L,-3) AND
Ref(L,-5) < Ref(L,-2) AND
Ref(L,-5) < Ref(L,-1) AND
Ref(L,-5) < L) AND
(Ref(L,-4)< L OR
Ref(L,-3) < L OR
Ref(L,-2) < L OR
Ref(L,-1) < L), {then ...}Ref(L,-5), {5th day back low, else...} PREV )))))

 

and for the CBL from a LOW

 


CBLlo

LowDays := Input("Enter # days to cover lastLOW for CBL calc'n:", 3, 55, 13);

If(LOW > LLV(LOW, LowDays), {then ...} PREV,{previous CBLlo, else...}
If(Ref(H,-2) > Ref(H,-1) AND
Ref(H,-2)> H AND
Ref(H,-1) > H, {then ...} Ref(H,-2), {2ndday back high,else...}
If((Ref(H,-3)> Ref(H,-2) AND
Ref(H,-3) > Ref(H,-1) AND
Ref(H,-3) > H) AND
(Ref(H,-2)> H OR
Ref(H,-1)> H),{then ... } Ref(H,-3), {3rd day back high,else...}
If((Ref(H,-4)>Ref(H,-3) AND
Ref(H,-4) > Ref(H,-2) AND
Ref(H,-4) >Ref(H,-1) AND
Ref(H,-4) > H) AND
(Ref(H,-3)> H OR
Ref(H,-2) > H OR
Ref(H,-1)> H), {then... }
Ref(H,-4), {4th day back high,else...}
If((Ref(H,-5)>Ref(H,-4) AND
Ref(H,-5) > Ref(H,-3) AND
Ref(H,-5) > Ref(H,-2) AND
Ref(H,-5)> Ref(H,-1) AND
Ref(H,-5) > H) AND
(Ref(H,-4)> H OR
Ref(H,-3)> H OR
Ref(H,-2) > H OR
Ref(H,-1) > H), {then ...} Ref(H,-5), {5th dayback high,else...} PREV )))))

 

e-w-Countback_line.gif
Please advise of any problems or suggested improvements in calculatingthe CBL. It is again emphasized that this is by no means proposed as the bestsolution, but as ONE solution which seems to work.

Regards.
Source / From: TOP
http://www.guppytraders.com

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