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Bob is correct; what you are asking about is Stowell's Three Bar Net Line.
The rules are:
1. Assuming the market is in a current up move, find the highest high and
use the low of this bar as bar 1.
2. Compare this low to the most recent previous low that is lower than the
low of bar 1 and label this bar 2.
3. Using the low of bar 2, compare this low to the previous low that is
lower than the low of bar 2 and label the new low as bar 3.
4. Working from right to left on your chart, disregard all inside bars.
5. The low of bar 3 becomes the Three Bar Net Line for the current up move.
6. Each time the newest bar's high is greater than the previous highest
high, it is necessary to recalculate the location of the Three Bar Net Line.
7. The Three Bar Net Line is a single value and extends directly across the
chart.
8. As long as the market does not close below this trend line, the trend is
up.
Stowell uses the Three Bar Net Line together with a 3 period ROC to trade
bonds on a 144 tick bar chart.
Sorry, but I can't help you with the EZLanguage nor can I confirm the
usefulness of the technique.
JFB
Shaven Heads Trading NYC
-----Original Message-----
From: Bob Hunt [mailto:RHunt.066@xxxxxxxxxxxxxxxx]
Sent: Friday, February 12, 1999 10:08 PM
To: Dave Pape
Cc: omega-list@xxxxxxxxxx
Subject: Re: Coding a semi-permanant support/resistance line
It seems to me that I remember Joseph Stowell, of bond trading fame,
used this technique to determine trend. A few years back, I strained
my brain for quite some time trying to code this, and I finally
decided it was just too complex to even mess with (it's easy to do it
visually, but back then my coding skills just weren't up to it, and
they may not be up to it even today).
My recommendation would be to abandon it. There's many, much easier
ways to determine trend.
Bob Hunt
--------------------------------------------------
Dave Pape wrote:
>
> Recently, I've been looking at an idea that I read in one of my trading
books.
> Unfortunately, I can't remember what book I read it in but the authors
idea was to
> produce floating support/resistance lines.
> While it is easy to produce manually on a small number of charts, I am
curious to
> know if it can be coded for backtesting and ease of use on numerous
charts.
> Someone with more experience and resources (I'm using Supercharts 4.0) may
> have better luck with it than I have.
>
> The idea is this:
> 1. If the market is in an uptrend and todays low was higher than
yesterdays,
> mark today as Day 1.
> 2. Draw a line to the left from the low of Day 1 until it hits a bar with
a lower low
> and label that Day 2.
> 3. Draw another line left from the low of Day 2 until it hits another bar
with a lower
> low. This would be Day 3. Draw a line to the right from the bottom of
this bar into
> the future.
>
> This line becomes the Short Countbackline (a floating support line).
>
> As the next bar is formed, if the low was higher than yesterdays, a new
line
> would take the place of the previous. If the next bars low was lower, not
higher,
> our original line would remain. A sell signal would be produced if prices
in the
> future close below our line.
> To generate a Long Countbackline (floating resistance line) he used the
same
> technique as above, except higher highs are used.
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