Psychological Line Settings: 5,760 Tests on What 75 Really Means

The psychological line does one thing: it counts how many of the last N bars closed up and turns that into a percentage. The usual setup is 12 bars, with 75% marked as overbought and 25% as oversold.

What separates it from every other oscillator is that it is a count, not an average. A bar that rose 50 pips and a bar that rose a tenth of a pip are the same tally mark. Nineteen indicators into this series, it is the first one that throws the size of a move away entirely.

Two consequences follow. The reading can only land on N+1 values, and the level you type does not sit on any of them.

Ask a 12-bar line for "above 75" and what you get is 10 bars out of 12 — 83.3%. Across the six periods tested here, a typed 75 never meant 75%.

values the period can reachwhere a typed 75 actually landsthe 75% typed

What the psychological line measures

The formula is one line:

Psychological line = (up bars in the last N ÷ N) × 100

No average, no standard deviation, no smoothing. Which is exactly why it behaves unlike anything else on the chart.

The level you type is not the level you get

A 12-bar psychological line can only produce thirteen values:

0 / 8.3 / 16.7 / 25.0 / 33.3 / 41.7 / 50.0 / 58.3 / 66.7 / 75.0 / 83.3 / 91.7 / 100

75.0 is on that list. But "above 75" excludes 75.0 itself, so the first value that qualifies is the next rung up: 10 of 12, or 83.3%.

Change the period and the landing point moves.

None of the six is 75%. That is the figure above: grey rungs are the values the period can reach, and the blue one is where a typed 75 lands.

Worse, there are ranges where moving the knob does nothing at all. On a 12-bar line, 75, 76, 80 and 83 are one rule — 10 of 12. Drop to 74 and it becomes 9 of 12, or 75.0%. Nine steps change nothing; one step changes everything.

At period 26, 74 and 75 are the same and 70 is different — the opposite pairing to period 12.

Identical rows show up inside the sweep

This is not a technicality. Here is the 15-minute mean-reversion buy at period 12 in 2025, swept over five entry levels and three exit levels.

Fifteen settings, nine distinct results. The same thing happens across the whole test: of 5,760 combinations, only 3,548 produced a different outcome. 38.4% of the grid duplicates another row.

The period sets the resolution

The ladder has period + 1 rungs, so a short period gives a coarse line. A 6-bar psychological line has seven readings, and typing any of the 101 levels from 0 to 100 selects one of only seven rules. At period 26 there are 27.

Fewer still turn up in practice. Counted on USD/JPY in 2025 at period 12:

And about one bar in five sits exactly on 50 on every timeframe (15-minute 22.65–23.71%, hourly 21.93–22.14%, 4-hour 21.59–21.76%).

That matters for the midline. A cross at 50 and a cross at 55 are the same rule going up and different rules coming down — both need the count to rise to 7 of 12, but the downward leg needs it to fall to 6 at level 50 and to 7 at level 55. On hourly bars in 2025 the up leg fired 365 times at both levels; the down leg fired 345 times at 50 and 365 at 55.

Trade volume moves with it. Average hourly trade counts were 378 at level 50, 703 at 55 and 622 at 45. Moving the level five points nearly doubles the trading.

There are two definitions of an up bar

Count bars that closed above the previous close, or bars that closed above their own open. Any bar that opens away from the last close splits the two.

They are genuinely different series. They are not different results. Across 2,134 live settings run both ways, counting bull bodies finished ahead in 1,006 — 47.1%, which is a coin flip.

How to add the psychological line to a chart

It came out of the Japanese equity market, so it is frequently absent from the built-in lists on non-Japanese platforms.

Exporting to MT4 means there is no iCCI-style built-in to call, so the count has to be written as a loop over the last N bars. The export used for this test does exactly that.

How the psychological line was tested

Before the numbers, the setup. Entering the same settings reproduces the same results.

The fade points one way — "below 25 is a buy" only ever produces buys — so the long and the short were swept as separate systems. The break and the midline are symmetric, so entry and exit share a rule set. Levels are handled as a reflected pair: typing 75 also draws 25.

The distribution is almost exactly a coin's

The premise behind the psychological line is that a run of up bars means the crowd has become too optimistic. If that were true, the direction of one bar would say something about the next, and the distribution of up-bar counts would not look like chance.

So it was counted directly.

measured (USD/JPY 2025, 15-minute bars)a coin with the same up-bar rate24,891 readings, 50.22% of bars up

The share of bars on each of the thirteen rungs, against what twelve tosses of a coin with the same up-bar rate would give. The two ladders differ by 0.97 percentage points in total on 15-minute bars in 2025 — 2.19 on hourly bars, 2.79 on 15-minute bars in 2024.

The reach rates are close to the theoretical values too.

Look at "above 75" against "75 or above": 1.76% and 7.02% for the same number. The comparison operator changes the frequency by a factor of four. Textbooks write "75% or more"; most rule editors write "above 75". At period 12 that difference is exactly one bar.

Does an up bar make the next one more likely?

If the distribution matches a coin's, bar direction has no memory. Measured directly:

Five of six are negative. An up bar is very slightly less likely to be followed by another. That points the same way the indicator's premise does — but at one to three points, nowhere near enough to pull the distribution off the coin.

Which sets the expectation: if there is anything here, it is on the fade side, and it is thin.

Three readings, backtested

The same period 12 and 75/25 pair, read three ways. The fade column shows the buy side and the sell side separately.

Trade counts matter here. On hourly bars in 2025 the fade took 26 buys and 28 sells, the break 32, the midline 402. The fade trades a few dozen times a year.

This is the first indicator in the series where mean reversion beat trend following. The fade buy is positive in 6 of 6 cells, the fade sell in 3 of 6, and the band break in 2 of 6. Eighteen previous articles found the opposite, so this deserves a closer look.

The reversal edge only exists in the flat year

The fade buy enters after a run of down bars. In a rising year that earns money regardless of what opened the trade, so the drift has to be separated from the indicator.

Each trade's result was compared with what an unconditional position of the same length would have made: the year's total move divided by its bar count, times the bars held. Whatever is left is the indicator's share.

Fade buys, averaged over settings with at least five trades. 2025 had almost no drift, so what is left is the indicator — and 77 of 81 settings kept something.

It disappears in 2024. The share falls to +0.36 on 15-minute bars and to −46.40 on 4-hour bars, where 49 of 57 settings are negative. USD/JPY rose 1,632 pips in 2024 and finished 2025 down 56.

"Overdone means it snaps back" only held in the market that snapped back. The cell where the lag-1 correlation turned most positive (+0.0274, 4-hour 2024) is the same cell where the fade broke worst.

What survived both years

A single year's ranking is a selection problem, so the count that matters is how many settings finished ahead in 2024 and 2025.

The 15-minute fade buy survived best at 60 of 90. The fade sell managed 41 of 270. A buy/sell gap that wide, measured over two years one of which trended hard, cannot be separated from the direction of the market.

The midline only survives on hourly bars — 1 of 30 on 15-minute, where it trades 729 to 3,968 times a year.

Parameter by parameter

Split by reading, because the same knob points different ways.

Fade buy, 15-minute, by period

Every one of the fifteen settings at period 6 finished ahead in both years. Lengthening the period thins the trades, and by 18 a year nothing survives 2024.

Midline, 1-hour, by level

The trade counts are not ordered by level. 50 is the quietest at 378 and 55 the busiest at 703, because 50 sits exactly on a rung and one bar in five parks there, which suppresses crossings. There was no reason to move the midline off 50 — but moving it changes the trading volume by nearly half.

Where the default settings landed

All of them are mid-table or below. The 4-hour break went from 28/30 to 4/30 between the two years. The defaults are neither especially good nor especially bad.

Out of sample: last year's best, applied to this year

The test at the centre of this series.

Two of five beat their median: the 4-hour midline (12/30) and the 15-minute fade buy. The fade buy cleared its median by 1.6 pips — +252.2 against +250.6 — which is not a margin to act on.

Rank correlations:

All three midline figures are negative. Last year's best midline setting points at this year's lower half. The +0.596 on the hourly fade buy stands out, but that cell trades about 25 times a year.

Is counting bars worth more than measuring the move?

This is the question the indicator lives or dies on. The psychological line asks how many of the last N bars rose. The same window can be asked how much it rose in total — the close against the close N bars back, which is momentum.

The two answer differently. They disagreed on the direction on 23.2% to 25.9% of bars (periods 12 and 26, both years, 15-minute and hourly). Of the bars where the count said up, 14.8% to 19.7% sat below where price was N bars earlier. The correlation between the two ran 0.58 to 0.69.

So does counting help? The midline cross was run against the sign of momentum over the same period, across 36 cells of timeframe × year × period.

M15H1H4above the line = counting won (16 of 36)

Over all 36 cells:

• Fewer trades in 36 of 36
• Higher win rate in 34 of 36
• More net pips in only 16 of 36

Counting halves the trading and lifts the win rate, and then loses the coin flip on net pips. The equivalent comparison in the CCI article came out at 25 of 36, so this does not even reach that.

Throwing the size away does do something — a small move only ever counts as one vote, so the line reverses on noise less often. Whether the trades it removes were the bad ones is not something this test could answer.

Filters, stops and cost

ADX

The direction does not hold. Hourly 2025 gets worse, 15-minute 2024 gets better. No filter moved both years the same way.

Session

Tokyo hours (UTC 0–8) improved the midline in three of four cells.

The one cell it hurt was the most profitable one. London and New York hours improved one of four. Part of what Tokyo did was simply trade less: 15-minute 2025 fell from 1,551 trades to 605.

Stops and targets

On the hourly midline, a 30-pip stop with a 90-pip target took 2025 from +272.6 to +899.9 and 2024 from +1,169.5 to +1,927.4 — one of the few changes that helped in both years. On 15-minute bars it lifted 2025 from −1,099.2 to −396.8, still a loss.

Cost

Net pips were exactly linear in the spread. Pips lost = trade count × spread held without error on all five settings.

The hourly midline breaks even at 0.98 pips, so it does not survive a one-pip spread. The fade sell's 8.45 looks comfortable until you notice it comes from 28 trades a year.

Note that the 15-minute midline and band break lose money at zero spread. Trade count is not the explanation there.

Settings that never fire

Push the level far enough and the line stops reaching it. Settings with fewer than five trades in 2025:

On 4-hour bars, four out of ten fade settings never became a system. Period 20 with level 90 never fired on any timeframe — which follows from the ladder, since at period 20 a level of 90 asks for 19 bars out of 20.

What this test supports

1. The level you type is not the percentage you get. Across periods 6, 10, 12, 14, 20 and 26, "above 75" never meant 75%. At period 12, 75 through 83 are one rule and 74 is a different one. It shows up in the results too: 5,760 combinations produced 3,548 distinct outcomes
2. The distribution is a coin's. The thirteen rungs differ from the binomial by 0.97 points in total (15-minute, 2025), and an up bar is followed by another only 1 to 3 points less often than a down bar is
3. The comparison operator matters more than the level. The same 75 gives 1.76% with "above" and 7.02% with "at or above"
4. Mean reversion won, but only in the flat year. The share left after removing the drift was +4.83 pips a trade in 2025 (77 of 81 settings positive) and −46.40 on 4-hour bars in 2024 (49 of 57 negative)
5. Counting bars did not beat measuring the move. Fewer trades in 36 of 36 and a higher win rate in 34 of 36, but more net pips in only 16

Related reading

• CCI settings — the same "is the indicator doing anything" test, where CCI's zero line turned out to be a moving average crossover
• RSI settings — the original template for reading one line as two opposite systems
• Bollinger band settings — where splitting a band into "fade the touch" and "follow the break" started
• Moving average cross settings — the measuring-the-move side of the comparison above
• Heikin Ashi settings — the same comparison again, where the transform did clear a coin flip on net pips
• Renko chart settings — another indicator confined to a ladder, where the ladder's own position is not a setting either

Limits of this test

• One pair, two years. The psychological line came out of equity markets, and a different instrument's bar-size distribution changes which rungs appear at all
• 2024 rose 1,632 pips and 2025 fell 56 — completely different market characters. The reversal edge survived only in the flat one, and that is two years, one of each
• Many fade settings barely trade (about 25 a year on hourly bars, about 10 on 4-hour). Some show a 100% win rate off five trades, and 48 to 74 of 180 settings fired fewer than five times
• The spread is fixed at 0.3 pips. The hourly midline breaks even at 0.98, so that assumption is doing real work
• Exits are on the opposite signal. A 30-pip stop with a 90-pip target helped in both years; nothing else did
• The two up-bar definitions could not be separated on results — 47.1% against 52.9% across 2,134 settings. They are different lines (0.68% to 1.24% of bars disagree), so the choice still needs to be made and kept