Drummond Geometry - Pldot and Envelope

2024년 11월 27일

This Pine Script will:

1.Calculate and display the PL Dot (Price Level Dot), a moving average that reflects short-term market trends.
2.Plot the Envelope Top and Bottom lines based on averages of previous highs and lows, which represent key areas of resistance and support.

Drummond Geometry Overview
Drummond Geometry is a method of market analysis focused on:

PL Dot: Captures market energy and trend direction. It reacts to price deviations and serves as a magnet for price returns, often referred to as a "PL Dot Refresh."

Envelope Theory: Considers price movements as cycles oscillating between the Envelope Top and Bottom. Prices breaking these boundaries often indicate trends, retracements, or exhaustion.

The geometry helps traders visualize energy flows in the market and anticipate directional changes using established support and resistance zones.

Understanding PL Dot and Envelope Top/Bottom

PL Dot:

Formula: Average(Average(H, L, C) of last three bars)
Usage: Indicates short-term trends:
Trend: PL Dot slopes upward or downward.
Congestion: PL Dot moves horizontally.

Envelope Top and Bottom:

Formula:
Top: (11 H1 + 11 H2 + 11 H3) / 3
Bottom: (11 L1 + 11 L2 + 11 L3) / 3
Usage: Acts as dynamic resistance and support:
Price above the top: Indicates strong bullish momentum.
Price below the bottom: Indicates strong bearish momentum.

Advantages of Drummond Geometry
Clarity of Market Flow: Highlights the relationship between price and key levels (PL Dot, Envelope Top/Bottom).
Predictive Power: Suggests possible reversals or continuation based on energy distribution.
Adaptability: Works across multiple time frames and market types (trending, congestion).

Trading Strategy
PL Dot Trades:
Buy: When price returns to the PL Dot in an uptrend.
Sell: When price returns to the PL Dot in a downtrend.

Envelope Trades:
Reversal: Trade counter to price if it breaks and retreats from the Envelope Top/Bottom.
Continuation: Trade in the direction of price if it sustains movement beyond the Envelope Top/Bottom.