The Hodrick-Prescott Channel is a powerful tool that plots a price channel using the Hodrick-Prescott Filter, which is essential for traders looking to refine their analysis.
To get started, we first calculate the smoothed values of the Close prices. Then, we apply an additional smoothing with a higher period, resulting in what we call HP and HPSlow. The next step involves calculating the standard deviation of HP relative to HPSlow, which allows us to construct the channel effectively.
One of the standout features of this indicator is that it displays the ratio of the full channel width to HPSlow[0] as a percentage. You can easily reposition this information anywhere on your chart by simply dragging it with a double click of your mouse.
For our smoothing calculations, we've utilized the HPF (Hodrick-Prescott Filter) function from https://www.mql4.com/. This ensures our results are as accurate as possible, allowing traders to make informed decisions.
Indicator Input Parameters:
- HP Fast Period – This defines the smoothing period for HP;
- HP Slow Period – This sets the smoothing period for HPSlow.
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