Return to Mean
Topic: Return to Mean
I have been looking at various ways the market returns to the average price values. One strategy I've used with some success is using Keltner bands to measure 20 period standard deviations. Each deviation is a support and resistance level and should be traded as such. I like having 1.5 and 3 STD lines on my chart. The further it gets away from the twenty MA, the more likely it is to return. When it does stay away from the 20, it is usually a strong trend. I'm kind of torn between using the STD Channel tool and the keltner bands, but both are good indicators.