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Pure Price Action Momentum Oscillator

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Complete Trading Guide: Pure Price Action Momentum Oscillator

1. Script Overview
What It Does
Tracks real-time momentum strength (bullish/bearish acceleration)

Identifies dynamic support/resistance zones for momentum (not price)

Alerts when momentum breaks or holds critical levels

What It Doesn’t Do
Predict long-term trends (use with trend indicators)

Replace price-based S/R levels (use alongside them)

Work well in extreme choppiness (adjust settings or avoid)

2. Key Features & Components
Feature Purpose Visual Cue
Momentum Histogram Shows strength/direction of price acceleration Color-coded bars
Zero Line Bullish/bearish momentum baseline Gray line (0 level)
Support Zone (Blue) Momentum floor where bounces happen Blue horizontal line
Resistance Zone (Orange) Momentum ceiling where pullbacks start Orange horizontal line
Stateful Alerts Persistent signals until conditions reverse Green/Red labels
3. Best Timeframes & Markets
Market Recommended Timeframe Notes
Stocks 5min - 1H Works best with high liquidity
Forex 15min - 4H Avoid during major news spikes
Crypto 1H - 4H Use with volume confirmation
Futures 5min - 1H Ideal for intraday momentum trades
❌ Avoid: Tick charts, <1min (too noisy), >Daily (loses sensitivity).

4. Confirmation Tools (Must-Use Combos)
A. Trend Confirmation
200 EMA (Price Chart)

Only trade longs if price > 200 EMA + momentum supports

Only trade shorts if price < 200 EMA + momentum confirms

ADX (14)

Use when ADX > 25 (strong trend) + momentum aligns

B. Volume Confirmation
Volume Profile

Enter longs only if momentum breaks resistance at high-volume nodes

VWAP

Buy pullbacks when momentum holds support and price is above VWAP

C. Price Structure
Fibonacci Retracements

Look for momentum breaks at 61.8% Fib levels for high-probability trades

Market Structure (Higher Lows/Lower Highs)

Momentum breakouts work best when price confirms trend

5. Trading Signals & Execution Rules
A. Breakout Trades (High Momentum)
Signal Conditions Action
Resistance Broken Histogram > Orange Zone + Price > Key S/R Enter Long
Support Broken Histogram < Blue Zone + Price < Key S/R Enter Short
Stop Loss:

Longs: 1 tick below nearest swing low

Shorts: 1 tick above nearest swing high

Take Profit:

Trail using the opposite zone (exit long when momentum drops below support)

B. Reversal Trades (Momentum Exhaustion)
Signal Conditions Action
Resistance Holding Histogram rejects Orange Zone + Bearish candle Short Entry
Support Holding Histogram bounces off Blue Zone + Bullish candle Long Entry
Stop Loss:

Beyond the recent swing high/low

Take Profit:

At next key S/R level

6. Advanced Interpretation
A. Divergence Trading
Hidden Bullish Divergence:

Price makes higher low, but momentum makes lower low → Potential reversal up

Hidden Bearish Divergence:

Price makes lower high, but momentum makes higher high → Potential reversal down

B. Session-Based Trading
London Open (3 AM EST): Watch for momentum breaks with volume surge

NY Midday (10 AM - 12 PM EST): Best for trend continuation

Crypto (UTC Midnight): Often sees volatility spikes

7. Risk Management & Position Sizing
Risk per trade: 1-2% of account

Leverage: ≤5x for intraday, ≤2x for swing

Avoid trading:

First 15 mins after major news

Low-volume periods (e.g., forex after 5 PM EST)

8. Pro Tips for Consistency
✅ Wait for Close: Don’t trade wicks, wait for candle close beyond zones.
✅ Combine with Price Action: Only trade if momentum aligns with candlestick patterns (e.g., pin bars, engulfing).
✅ Adjust Lookback: Increase in choppy markets, decrease in trends.


9. Limitations & Fixes
Issue Solution
Whipsaws in choppy markets Increase Min Lookback to 30+
Slow reaction in trends Reduce Max Lookback to 50
False breakouts Require volume confirmation
Final Verdict
This script is best used as a momentum filter – not a standalone system. Combine with:
✔ Trend indicators (200 EMA, ADX)
✔ Volume analysis (VWAP, Volume Profile)
✔ Price structure (S/R, Fibs)

Penafian

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