Relative Wave: Volatility Included

For the setup shown, it is best used with the following scripts I have written:
1. Indicator: Volatility Candle Based
2. Multi-Period Charts (use 2 of them): @ 30m and 1H settings
3. Relative Wave: Volatility Included.

Indicator Description: Relative Wave: Volatility Included (RW: Vol)
Pine Script v6 – Technical Overview

🔍 Purpose
The Relative Wave: Volatility Included (RW: Vol) is a custom oscillator designed to measure price position relative to dynamic upper and lower bounds that are influenced by volatility. It incorporates trend filtering, momentum smoothing, and zone detection, providing a composite view of price waves and potential reversal signals.

🧠 How It Works
1. Core Concept: Relative Position within Volatility Bands
The indicator calculates a Relative Wave Index, which measures where the current price sits between recent upper and lower bands derived from standard deviation. These bounds are sorted over a historical window to filter for sensitivity.

2. Sensitivity & Smoothing
Trend Length (Historical_Bar_Count): Defines how many bars are used to build the volatility-adjusted trend range.

Sensitivity Control: Adjusts how reactive the index is to recent price changes.

EMA Smoothing: Custom exponential moving averages are used to smooth values for fast, slow, and overall momentum.

3. Components & Visuals
RW Short-Term Fast Line: Plotted as colored circles indicating quick changes in trend.

RW Short-Term Slow Line: A smoother trend line for signal filtering.

RW Overall Momentum Line: Step-style line measuring broader directional trend.

RW Wave Line: A smoothed average of recent crests and troughs, acting as a cyclical midline reference.

Zone Lines (5/20/50/80/95): Visual thresholds often used as overbought/oversold regions.

⚙️ Key Inputs & Their Effects
Trend Length: Longer = smoother but laggy trends; shorter = more responsive but volatile.

Sensitivity: Higher values = less sensitivity; lower = more reactive.

Signal Lengths (Fast/Slow/Overall): Control the degree of smoothing for each plotted line.

Crest/Trough Lookback: Determines how crests and troughs are calculated from past wave behavior.

✅ Trade Signal Logic
The script defines bullish and bearish conditions based on the interaction of:

RW Wave direction

Overall Momentum direction

Slow Line behavior

Relative positioning (e.g., below or above 50)

Bullish Example:

RW Wave and Momentum are both rising

Values are below 50 (potential upside room)

Slow Line may be falling or just crossed upward

Bearish Example:

RW Wave and Momentum are falling

Values are above 50 (potential downside room)

Slow Line rising or crossed downward

🎨 Visual Aids & Colors
Green: Bullish momentum

Red: Bearish momentum

Blue/Purple Circles: Transition points and fast line status

White/Midrange Lines: Reference zones (like RSI levels)

📈 Best Use Cases
Identifying shifts in market direction before price breakout

Confirming trend strength using wave/momentum alignment

Spotting oversold/overbought zones with volatility context

Combining with other indicators (e.g., price action or volume)

How the Relative Wave Indicator, Volatility-Based Candle Signals, and Multi-Time Period Charts Work Together
This strategy combines three core components—Relative Wave, Volatility Candle Signals, and Multi-Time Period Analysis—to build a layered, high-probability trading framework.

🔷 1. Relative Wave Indicator (used on 3-minute chart)
The Relative Wave Indicator is a momentum and volatility-based oscillator that tracks price movement within a defined range using historical highs and lows derived from standard deviation bands. It smooths price action using fast and slow custom EMAs to identify underlying trend strength and reversals.

Key Features:

Tracks short-term wave structure

Detects momentum shifts based on rising/falling conditions

Uses color-coded momentum signals to help spot turning points early

The wave line and overall momentum line help confirm the quality of trend setups

🔶 2. Volatility Candle-Based Indicator (used on 3-minute chart)
The Volatility Candle Signal highlights significant price action based on expanding or contracting volatility. This tool helps identify moments of potential breakout or reversal by evaluating candle size, wick structure, and deviation from recent ranges.

Key Purpose:

Pinpoints actionable moments when volatility is entering or exiting the market

Works in tandem with Relative Wave to validate whether a momentum shift is strong enough to act on

🕰 3. Multi-Time Period Chart Confirmation (30-minute & 2-hour)
To avoid false signals and ensure alignment with broader market context, two higher timeframes (30m and 2h) are used as confirmation filters.

How They Integrate:

The 30-minute chart provides mid-range trend direction—ideal for intraday bias

The 2-hour chart offers broader trend context and helps avoid trading against dominant macro trends

These are used as overlays or separate indicators that mirror Relative Wave or other trend-detection tools to show whether the short-term setup aligns with bigger picture momentum

✅ Optimal Setup
Execution Timeframe: 3-minute chart

Confirmation Timeframes: 30-minute and 2-hour charts

Ideal Conditions for Trade Entry:

Relative Wave shows bullish/bearish alignment (e.g., wave and momentum lines rising with value <50 for bulls, >50 for bears)

Volatility candles indicate a breakout or reversal

Both the 30m and 2h multi-timeframe indicators confirm the trend direction or support a momentum shift

This integrated approach minimizes noise and increases confidence in each trade setup by ensuring that short-term signals are supported by volatility behavior and broader market context.