TwV Market Signals

18 Jan 2023

Signals Indicator
Summary

This indicator allows traders to have in handy short and long signals and estimate the trend of the market.
The indicator draws Long and Short signals depending on the trend analysis. The indicators also use meaningful colors for traders to be able to visually understand the graphs, such us fillings on EMAs, so the possible trend is represented.

The colors used are light green for bullish, red for bearish, dark green for possible bearish to bullish change and purple for possible bullish to bearish change. These colors are applicable to all fillings and summary box.

How to use this indicator

The use of EMAs 10,20 and 50 draw the medium to long term trends, therefore avoiding signals against the trend. Furthermore the EMAs will advise possible change in trends, specially considering the 10 and 20 cross, considering that crossing the 10,20 and 50, might confirm the change in med to long term trend change of the price. This is completely visual in the chart as it tints green for positive trend and yellow to red for negative trend.
The 200 SMA is included as it also gives better confirmation to the trend, the basics tell that when the EMAs mentioned above are below the 200 SMA then the likelihood for entries in long positions are not the best and vice versa for short.

Therefore, the trader shall filter Long and Short Signals accordingly as this EMAs are not used to send Long and Short signals considering that they confirm the trend in a slow pace and not reactively to the price volatility.
There are two strategies built-in within the indicator:

Strategy 1 – Longer time trades and high volatility handling
The Long and Short Signals are based on 14 and EMAs (by default). This two Mas are used to send signals based on their crossovers as they are way more reactive to the price movement.

Trader shall consider that EMAs are used for higher timeframes, therefore the indicator has the possibility to adjust the EMAs and use SMAs or WMAs instead for one or the two parameters (14 and 21).

WMAs react faster to the price volatility so the trader shall adjust this according to the timeframe being used. (Lower timeframes suggested).

This strategy is used for trades that might keep running for longer periods of times.

For reference on what the SMAs, EMAs and WMAs are, please see below sections in the description.

Strategy 2 - Shorter time trades and unhandled high volatility
The Long and Short Signals are bases on HMA. HMAs (Hull Moving Averages) track the price movement and volatility way faster that SMAs, EMAs and WMAs, therefore as the HMA follow the price quicker, it is intended for short time trades even in higher timeframes.

Scalping is not suggested using this strategy as HMA do not handle high volatility even on higher timeframes.

One of the biggest differences from the first strategy is that there is no more than a single HMA length to work with, which is 24 as default.

HMAs calculation is different to other MAs, therefore combining various HMAs lengths looking for crossovers become trend identification a lot less precise. HMAs are not intended to be used with different length crossovers.

Exit points = The use of Stochastic and VRVP

Stochastic RSI

It is well known that when Stochastic RSI resets when overbought or oversold therefore traders have within a summary box the possibility to check whether the K & D lines in the Stochastic RSI hace crossed over bullish or bearish.
Although the crossover is not mandatory for a change trend, the crossover might be used by the trader to exit a position considering that the price might move on the opposite direction.
Traders shall look at the summary box, where bullish and bearish crossovers are shown, so they evaluate their position exit.

Visible Range Volume Profile

The use of the VRVP is to find support and resistance on the price movements. Although high and lows are used as possible supports and resistances, VRVP shows an area of confluence on the order book, where volume of positions are accumulated and that might act as support or resistance depending on the price direction.

Traders can visually activate the VRVP to see the Point of Control (POC) directly on the chart as a line (similar as how a support or resistance would be drawn). Moreover, traders have the ability to see within the summary box, whether to see if the price is above or below the POC, so they clearly know if it is acting as support or resistance.

Price Direction

Trade the market trend is well know to be used to identify possible price direction. It is important not to confuse the longer time trend drawn by the EMAs with the TTM Trend bar color. The TTM trend colors bars according to the price direction, helping traders not to confuse when a red bar appears on an up trend or green bars on a down trend.

This coloring helps traders not to exit trades based on bar coloring, which might psychologically affect when scalping or short-term trading specially.

Originally, the TTM trend is used considering the ADX in and indicator called TTM Squeeze, where the strength of the movement is measured, therefore although candle colors help with the price direction, ADX provides the trader the ability to see whether the direction is losing momentum and then catch the best possible exit before the direction change.

How to use Summary

1. Receive the Long or Short Signals using strategy 1 or 2, depending on the selected in the main menu of the indicator.
2. Evaluate the trend based on the 10,20, 50 and 200 MAs. Filter the Long and Short signals accordingly.
3. Monitor constantly the TTM Trend and the ADX for the direction and strength of the position entered and review if the momentum is being lost, considering step 4 or other possible reasons that might lead to exiting the position.
4. Once entered to a position evaluate constantly the Stochastic RSI bearish or bullish crossover or POC value on screen or summary box to exit the position.

Terminology basics

Trend indicators

• Exponential Moving Average (EMAs): The base indicator is composed of moving averages of 10, 20 and 55 exponential periods, to determine a possible bullish or bearish trend (EMA Crossing)
  
• Simple Moving Average (SMA): The base indicator is composed of a moving average of 200 simple periods, which in conjunction with the EMAs can lead to estimate potential upward or downwards moves, as well as possible resistances. (SMA Positioning)
  
• Weighted moving average (WMA): It is a technical indicator that traders use to generate trade direction and make a long or short position. It assigns greater weighting to recent data points and less weighting on past data points. (WMA Crossing)
  

Strength and S/R indicators

• VPVR (Volume Profile Visible Range): It allows to determine the Point of Control (POC) which is the node with the highest volume profile. This can be used as an important retest point or to calculate potential support and resistance. The POC level is represented with a red dotted line in the graph.
  The VPVR is a simplified version of the “TwV Multi-timeframe Dynamic VRVP” that you can find for free use in my profile. This version calculates the main’s timeframe POC and also has the possibility to be fixed range if the trader enables it from the menu. (Dynamic range by default).
  
• ADX (Average Directional Index): The ADX helps the indicator to estimate the strength of the movement, always considering the DI+ and DI- to not go against the trend strength. This is represented as summary text in a table.
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  • Exit indicator
    • Stochastic RSI: It is an indicator used in technical analysis that ranges between zero and a hundred and is created by applying the Stochastic oscillator formula to a set of relative strength index (RSI) values rather than to standard price data. Using RSI values within the Stochastic formula gives traders an idea of whether the current RSI value is overbought or oversold (Exit zones)
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      • Summary Panel
        This panel allows the trader to have a summary of the current status (bearish or bullish) of some of the most determinant indicators within the strategy. It has the following characteristics:
        
        • It is placed on the right bottom side of the chart by the default. Traders can change its position or hidden it through the main menu of the indicator.
          
        • Its colors change according to the indicator’s values and constant change for easier detection.
          
        • The summary box shows the projection for each of the indicators (Trend, Stochastic, EMA, VPVR and ADX).
          
        • The summary box is multi-language (English and Spanish), which can be changes in the main menu of the indicator
          
        Alerts
        Within the indicator’s menu, you can set up alerts for all long, short, close long and close short signals, which might come in handy when the trader would like to have notifications on the Trading View website, desktop app or phone apps. Furthermore, there are also signals for possible exit points, which can also be activated from the indicator’s menu.
        

29 Mac 2023

Nota Keluaran

Update 03/29/2023

• Implemented an additional confirmation option for long and short entries (for those who want to be more conservative)
  {*] Implemented a drawing TP and SL boxes for the last signal sent, to help traders on an idea to set up trades on a 1:1 Ratio (Only)