Trend-Range IdentifierTrend trading algorithms fail in ranging market and Swing trading algorithm fail in trending market. Purpose of this indicator is to identify if the instrument is trending or ranging so that you can apply appropriate trading algorithm for the market.
Process:
ATR is calculated based on the input parameter atrLength
Range/Channel containing upLine and downLine is calculated by adding/subtracting atrMultiplier * atr to close price.
This range/channel will remain same until the price breaks either upLine or downLine.
Once price crosses one among upLine and downLine, then new upLine/downLine is calculated based on latest close price.
If price breaks upLine, the trend is considered to be up until the next line break or no lines are broken for rangeLength bars. During this state, candles are colored in lime and upLine/downLine are colored in green.
If price breaks downLine, the trend is considered to be down until the next line break or no lines are broken for rangeLength bars. During this state, candles are colored in orange and upLine/downLine are colored in red.
If close price does not break either upLine or downLine for rangeLength bars, then the instrument is considered to be in range. During this state, candles are colored in silver and upLine/downLine are colored in purple.
In ranging duration, we display one among Keltner Channel, Bollinger Band or Donchian Band as per input parameter : rangeChannel . Other parameters used for calculation are rangeLength and stdDev
I have not fully optimized parameters. Suggestions and feedback welcome.
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PercentX Trend Follower [Trendoscope]"Trendoscope" was born from our trading journey, where we first delved into the world of trend-following methods. Over time, we discovered the captivating allure of pattern analysis and the exciting challenges it presented, drawing us into exploring new horizons. However, our dedication to trend-following methodologies remains steadfast and continues to be an integral part of our core philosophy.
Here we are, introducing another effective trend-following methodology, employing straightforward yet powerful techniques.
🎲 Concepts
Introducing the innovative PercentX Oscillator , a representation of Bollinger PercentB and Keltner Percent K. This powerful tool offers users the flexibility to customize their PercentK oscillator, including options for the type of moving average and length.
The Oscillator Range is derived dynamically, utilizing two lengths - inner and outer. The inner length initiates the calculation of the oscillator's highest and lowest range, while the outer length is used for further calculations, involving either a moving average or the opposite side of the highest/lowest range, to obtain the oscillator ranges.
Next, the Oscillator Boundaries are derived by applying another round of high/low or moving average calculations on the oscillator range values.
Breakouts occur when the close price crosses above the upper boundary or below the lower boundary, signaling potential trading opportunities.
🎲 How to trade a breakout?
To reduce false signals, we employ a simple yet effective approach. Instead of executing market trades, we use stop orders on both sides at a certain distance from the current close price.
In case of an upper side breakout, a long stop order is placed at 1XATR above the close, and a short stop order is placed at 2XATR below the close. Conversely, for a lower side breakout, a short stop order is placed at 1XATR below the close, and a long stop order is placed at 2XATR above the ATR. As a trend following method, our first inclination is to trade on the side of breakout and not to find the reversals. Hence, higher multiplier is used for the direction opposite to the breakout.
The script provides users with the option to specify ATR multipliers for both sides.
Once a trade is initiated, the opposite side of the trade is converted into a stop-loss order. In the event of a breakout, the script will either place new long and short stop orders (if no existing trade is present) or update the stop-loss orders if a trade is currently running.
As a trend-following strategy, this script does not rely on specific targets or target levels. The objective is to run the trade as long as possible to generate profits. The trade is only stopped when the stop-loss is triggered, which is updated with every breakout to secure potential gains and minimize risks.
🎲 Default trade parameters
Script uses 10% equity per trade and up to 4 pyramid orders. Hence, the maximum invested amount at a time is 40% of the equity. Due to this, the comparison between buy and hold does not show a clear picture for the trade.
Feel free to explore and optimize the parameters further for your favorite symbols.
🎲 Visual representation
The blue line represents the PercentX Oscillator, orange and lime colored lines represent oscillator ranges. And red/green lines represent oscillator boundaries. Oscillator spikes upon breakout are highlighted with color fills.
HTF Trend FilterTrend filter based on higher timeframe candles. Can be used as entry filters.
Checks if last 3 higher timeframe candles are in fully ascending order or fully descending order. Additionally you can also check if close price is above min of last two highs or below max of last two lows.
Lime and Orange candles imply partial trend in higher timeframe. (only last 3 candles align)
Green and Red candles imply complete trend. (last 3 candles align along with current close price).
Just an experiment. Can be further improved,
Auto TrendLines [HeWhoMustNotBeNamed]I started off with the intention of creating script to identify Wolfe wave projection. But, soon ran into problem with loops. Realized drawing wedge is more difficult than drawing converging triangle. Hence, took a step back and started working on wedges and triangle identification. Ended up with a messy output which looked like this.
Had to take another step back and hence decided to make Trendlines detection script and here we are :)
⬜ Process
▶ Scan pivots which are in trend. This means, series of pivot Highs or pivot lows either in ascending order or descending order.
▶ Draw trend line between each of the pivots in the trend series. For example, if there are 5 pivot high uptrend pivots, draw mXn lines between each of these points.
▶ Select the trend line which is more accurate or stronger. Accuracy is measured by number of candles/wicks touching the line and number of candles which fall outside the line. Stronger trendlines will touch more candles and pivots with less overflow.
▶ Remove all lines except the most accurate one for each direction.
At any point of time, you will see upto 4 trend lines in this script.
▶ Trendline joining pivot highs in uptrending condition
▶ Trendline joining pivot lows in uptrending condition
▶ Trendline joining pivot highs in downtrending condition
▶ Trendline joining pivot lows in downtrending conditions
The older line will remain until the new one comes through of same type. Hence, you will still be able to see uptrending high and low trend lines for downtrending instruments which are created way back!! Also, new trendlines replace old ones only if they are more stronger (connect to more pivots with less overflow)
⬜ Settings
Settings are simple.
User can select preferred Zigzag Length and Search Depth. Higher numbers for these two parameters will present longer term trends whereas lower numbers will display shorter ones.
Trend Lines controlls will allow users to enable/disable specific type of trend line, set color and line style to it.
⬜ Few Examples
▶ Uptrending Market : NASDAQ:NDX
▶ Downtrending Market : NYSE:BABA
▶ Ranging Market : NYSE:PLTR
Master Supertrend [Trendoscope]Are you a fan of supertrend? Me too!! Here is a supertrend indicator which provides multiple variation options to chose from.
🎲 Introduction
Supertrend is a popular technical indicator used by traders to identify potential trend reversals and determine entry and exit points in financial markets. It is a trend-following indicator that combines price and volatility to generate its signals. Generally supertrend is calculated based on ATR and multiplier value which is used for calculation of stops. In these adaptions, we look to provide few variations to classical methods.
🎲 Variations
Following variations are provided in the form of settings.
🎯 Range Type
Instead of ATR, different types of ranges can be used for stop calculation. Here is the complete list used in the script.
Plus/Minus Range - Calculates plus range and minus range for each candle and uses them for different sides of stop calculation
Ladder ATR - Based on the existing concept of Ladder ATR defined in Supertrend-Ladder-ATR
True Range - True range derived from standard function ta.tr
Standard Deviation - Standard deviation of close prices
🎯 Applied Calculation
In standard ATR, rma of TR is used for calculations. But, the application calculation provides option to users to use different mechanisms. It can be a type of moving average or few other types of calculations.
Available values are
sma
ema
hma
rma
wma
high
median
medianHigh (Highest of the last N medians)
medianLow (Lowest of the last N medians)
🎯 Other options
Few other options provided are
Use Close Price - If selected stops are calculated based on the close price instead of high/low prices
Wait for Close If selected, change of supertrend direction is calculated based on close price instead of high/low prices
Diminishing Stop Distance - When selected, stop distance for the trend direction can only reduce and cannot increase. This option is useful for keeping the tight stops on strong trends.
🎯 Plus Minus Range
One of the range type used is Plus/Minus Range. What it means and how are these ranges calculated? Let's have a look.
Plus Range is an upward movement of a candle from its last price or open price whichever is lower.
Minus Range is a downward movement of a candle from its last price or open price whichever is higher.
This divides True Range into two separate range for positive and negative side.
Here are the simple settings in nutshell which reflects the same.
Donchian Channel - trend filterTrend filter created based on donchian channel. I am using my custom donchian channel as base for this indicator:
Concept is simple.
We count how many times price is hitting donchian channel top or bottom without hitting the other side and keep counter for both. Thus:
upCount is the number of times price hits donchian channel top without hitting bottom
downCount is the number of times price hits donchian channel bottom without hittin top
trendCountLimit is the minimum value of upCount or downCount to call it uptrend or downtrend.
Divergence Indicator [Trendoscope®]🎲 New Divergence Indicator by Trendoscope
Our latest Divergence Indicator revolutionizes the way traders identify market trends and potential reversals. Built upon the robust foundation of the Zigzag Trend Divergence Detector and inline with our recent implementation of the Divergence Goggles indicator, this tool is designed to be intuitive yet powerful, making it an essential addition to any trader's toolkit.
We received several queries on extending the Divergence Goggles to last N bars instead of using an interactive widget. Though it is possible, we thought the better approach is to enable the indicator to use any oscillator and trend indicator in order to define the divergence.
🎯 Key Features
Flexible Oscillator Integration : Choose from a wide range of built-in oscillators or import your own, including options like the innovative Multiband Oscillator. This versatility extends to using volume indicators like OBV for divergence calculations, broadening the scope of analysis.
Trend Identification Versatility : Utilize built-in methods like Zigzag and MA Difference, or integrate external trend indicators. Our system adapts to various methods, ensuring you have the right tools for precise trend identification.
Customizable Zigzag Sensitivity : Adjust the Zigzag based on your chosen oscillator's sensitivity to ensure divergence lines are accurate and visually coherent.
Repainting vs. Delayed Signals : Tailor the indicator to your strategy by choosing between immediate repainting signals and slightly delayed but more stable signals.
🎯 Understanding Divergence: Key Rules
Bullish Divergence
Happens only in downtrend
Observed on Pivot Lows
Price makes lower low whereas oscillator makes higher low, indicating weakness and possible reversal
Bearish Divergence
Happens only in uptrend
Observed on Pivot Highs
Price makes higher high whereas oscillator makes lower high, indicating weakness and possible reversal
Bullish Hidden Divergence
Happens only in uptrend
Observed on Pivot Lows
Price makes higher low, whereas indicator makes lower low due to price consolidation. In bullish trend, this is considered as bullish as the price gets a breather and get ready to surge further.
Bearish Hidden Divergence
Happens only in downtrend
Observed on Pivot Highs
Price makes lower high whereas oscillator makes higher high due to price consolidation. In bearish trend, this is considered as bearish as the price gets a breather and get ready to fall further.
🎯 Visual Insights: Divergence and Hidden Divergence
For a clearer understanding, refer to our visual guides:
🎲 Using the Divergence Indicator: A Step-by-Step Guide
🎯 Step 1 - Selecting the Oscillator
Customize your analysis by choosing from a variety of oscillators or importing your preferred one. Options are available to select a range of built-in oscillators and the loopback length. However, if the oscillator that user want to use is not in the list, they can simply load the oscillator from the indicator library and use it as an external signal.
In our current example, we are using a custom oscillator called - Multiband Oscillator
This also means, the indicator option is not limited to oscillators. Users can even make use of volume indicators such as OBV for the calculation of divergence.
🎯 Step 2 - Choosing the Trend Identification Method
Select from our built-in methods or integrate an external indicator to accurately identify market trends. Trend is one of the key parameters of divergence type identification. Trend can be identified mathematically by various methods. Some of them are as simple as above or below 200 moving average and some can follow trend based indicators such as supertrend and others can be very complex.
To cater for a wider audience, here too we have provided the option to use an external trend indicator. The simple condition for the external trend indicator is that it should return positive value for uptrend and negative value for downtrend.
Other than that, we also have 2 built in trend identification methods.
Zigzag - The trend is defined by the starting pivot of divergence line. If the starting pivot is Higher High or Higher Low, then it is considered uptrend. And if the starting pivot is either Lower Low or Lower High, then we consider it as downtrend.
MA Difference - In this case, the difference between the moving average of pivots joining the divergence line will determine the trend. It is considered uptrend if the moving average increased from starting pivot to ending pivot of the divergence line, and it is considered downtrend if the moving average decreased from starting pivot to the ending pivot of the divergence line.
🎯 Step 3 - Adjusting Zigzag Sensitivity
Fine-tune the Zigzag to match the oscillator's sensitivity, ensuring divergence lines are accurate and visually coherent.
🎯 Step 4 - Managing Repainting
Understand the implications of repainting in the last pivot of the Zigzag and choose between immediate or delayed signals based on your trading strategy. The last pivot of the zigzag repaint by design. This is not necessarily a bad thing. Users can just choose not to use the last pivot, but instead use the last but one for all the calculations. But, this also means, the signals will be delayed.
Indicator provides option to use repainting signal vs delayed signal. If you select the repaint option, the signals are shown immediately as and when they occur. But, there is a possibility that these signals change when the new price candles change zigzag pivot.
If you chose not to select the repaint option, then the divergence signals may lag by a few bars.
Band-Zigzag - TrendFollower Strategy [Trendoscope]Strategy Time!!!
Have built this on my earlier published indicator Band-Zigzag-Trend-Follower . This is just one possible implementation of strategy on Band-Based-Zigzag .
🎲 Notes
Experimental prototype. Not financial advise and strategy not guaranteed to make money despite backtest results
Not created or tested for any specific instrument or timeframe
Test and adopt with own risk
🎲 Strategy
This is trend following strategy built based on Bands and Zigzag. Traits of trend following strategies are
Lower win rate (Yes, thats right)
High risk reward (Compensates low win rate)
Higher drawdown
If market is choppy, trend following methods suffer.
The script implements few points to overcome the negatives such as lower win rate and higher drawdown by actively assessing pivots on the direction of trend along. This helps us take regular profits and exit on time during the end of trend. Most of the other concepts are defined and explained in indicator - Band-Zigzag-Trend-Follower and Band-Based-Zigzag
Defining a trend following method is simple. Basic rule of trend following is Buy High and Sell Low (Yes, you heard it right). To explain further - methodology involve finding an established trend which is flying high and join the trend with proper risk and optimal stop. Once you get into the trade, you will not exit unless there is change in the trend. Or in other words, the parameters which you used to define trend has reversed and the trend is not valid anymore.
🎯 Using bands
When price breaks out of upper bands (example, Bollinger Band , Keltener Channel, or Donchian Channel), with a pre determined length and multiplier, we can consider the trend to be bullish and similarly when price breaks down the lower band, we can consider the trend to be bearish .
🎯 Using Pivots
Simple logic using zigzag or pivot points is that when price starts making higher highs and higher lows, we can consider this as uptrend. And when price starts making lower highs and lower lows, we can consider this as downtrend. There are few supertrend implementations I have published in the past based on zigzags and pivot points .
Drawbacks of both of these methods is that there will be too many fluctuations in both cases unless we increase the reference length. And if we increase the reference length, we will have higher drawdown.
🎯 Band Based Zigzag Method
Here we use bands to define our pivot high and pivot low - this makes sure that we are identifying trend only on breakouts as pivots are only formed on breakouts
Our method also includes pivot ratio to cross over 1.0 to be able to consider it as trend. This means, we are waiting for price also to make new high high or lower low before making the decision on trend. But, this helps us ignore smaller pivot movements due to the usage of bands.
I have also implemented few tricks such as sticky bands (Bands will not contract unless there is breakout) and Adaptive Bands (Band will not expand unless price is moving in the direction of band). This makes the trend following method very robust.
To avoid fakeouts, we also use percentB of high/low in comparison with price retracement to define breakout.
🎲 Settings
Settings are fairly simpler and are explained as below. You will find most of the required information in tooltips.
Rolling Angled Volume Profile [Trendoscope®]🎲 Volume Profile Indicators
🎯Traditional Volume Profile
Volume profile indicators visually represent the distribution of volume across price levels. These indicators typically operate on horizontal price levels, making them effective in identifying supply and demand zones in ranging markets. However, they are less useful in trending markets where price movements follow a slope.
🎯The Need for Angled Volume Profiles
Just as support and resistance levels differ from trendlines, volume profile indicators require an equivalent method to account for volume distribution along a sloped trajectory. This would enable more accurate volume analysis in trending markets.
We identified the need of Angled Volume profile and have already published few indicators that implements the concept.
Angled Volume Profile calculates volume distribution along a slope. Users interact with the indicator by selecting the starting point, after which the volume profile is calculated for the selected trajectory.
Volume Forks is another tool that extends angled volume profile analysis, aligning volume profiles along the trajectory of pitchforks.
🎲 Rolling Volume Profile Indicator
The Rolling Volume Profile offers a new approach to angled volume profile calculations, addressing some limitations of earlier implementations:
🎯 Rolling Calculation
The volume profile is calculated for the last N bars of the instrument
The slope of the profile lines is determined by the closing prices of the starting and ending bars
Profiles are drawn in the direction of price movement between the start and end bars.
🎯 Dynamic Updates
As new bars are added, the calculations are updated, and the profile is redrawn based on the latest data.
This dynamic behavior earns it the name "Rolling Volume Profile."
🎯 Advantages Over Earlier Versions
Unlimited Profile Lines : Unlike previous implementations limited to 500 profile lines, this indicator uses polyline objects, overcoming the restriction.
Live Updates : Previous angled volume profile tools lacked real-time updates when new bars appeared. This limitation is resolved in the Rolling Volume Profile Indicator.
The Rolling Volume Profile provides an efficient and scalable solution for analyzing volume in trending markets.
🎯 Indicator Settings
Simple settings include few customisable options
Zigzag Tails [Trendoscope®] 🎲 Introducing Zigzag Tails Indicator by Trendoscope.
The Zigzag Tails Indicator, a groundbreaking tool from Trendoscope, redefines technical analysis by seamlessly integrating anchored VWAPs (Volume Weighted Average Prices) and Average Price calculations with Zigzag pivot points. This advanced indicator recalculates Average Price or VWAP from one Zigzag pivot to the next, offering unparalleled insights into market movements.
🎯 Innovative Design
Each Zigzag pivot can feature up to three distinct tails, corresponding to the high, low, and close prices of each candle. Users have the flexibility to select between Average Price and VWAP for display on their charts. By default, the indicator plots all three tails, but individual tail visibility is customizable via the settings panel.
Average Price Mode: When selected, tails depict the average price across a specified number of bars.
VWAP Mode: In this mode, tails represent the VWAP, calculated for a given price over a set number of bars.
🎯 Dynamic Dotted Tail
The Zigzag Tails Indicator features dotted tails that extend from the last Zigzag pivot to the current bar. These dotted tails dynamically adapt to market changes and are subject to repainting with the emergence of new Zigzag pivots.
When repainting is enabled, the dotted tails originate from the last unconfirmed Zigzag pivot, extending to the current bar. This setting offers a more immediate, albeit tentative, visual representation of market trends.
With repainting disabled, the dotted tails will be anchored from the last confirmed Zigzag pivot to the current bar, providing a more stable but slightly delayed market analysis.
Irrespective of the repaint option, the dotted dynamic tails is always expected to repaint.
🎯 Practical Applications
The Zigzag Tails Indicator provides more accurate support and resistance levels than traditional VWAP, rolling VWAP, or moving averages. Its precision makes it an invaluable tool for identifying trends, as well as potential trend continuations or reversals.
🛠 Indicator Settings
Zigzag Configuration:
Zigzag Length determines the loopback length for the foundational Zigzag calculation.
Number of Bars represent the calculation distance. This limitation is added to avoid runtime errors on lower timeframes. The calculations run through lots of loops. Hence, if it is run across too many bars, we may get timeout issues.
Repaint: Activating this will also display the last, unconfirmed Zigzag pivot. Since the last pivot is inherently tentative, it may repaint with the arrival of new bars. A pivot is confirmed only when a subsequent unconfirmed pivot emerges on the chart.
Tail Configuration
Tail Type: Choose between average and VWAP for the tail calculation. The average option plots a simple average, while the VWAP option calculates an anchored VWAP from pivot to pivot.
Display Options: Tailored display options for High, Low, Close prices, with customizable colors for each tail type.
Inspired by the ideas of @KioseffTrading's implementation of Zigzag Anchored VWAP
Volume Forks [Trendoscope]🎲 Volume Forks - Advanced Price Analysis with Recursive Auto-Pitchfork and Angled Volume Profile
The Volume Forks Indicator is a comprehensive research tool that combines two innovative techniques, Recursive Auto-Pitchfork and Angled Volume Profile . This indicator provides traders with valuable insights into price dynamics by integrating accurate pitchfork drawing and volume analysis over angled levels. The indicator does following things
Detects Pitchfork formations automatically on the chart over Recursive Zigzag
Instead of drawing forks based on fib levels, volume distribution over ABC of pitchfork is calculated and drawn in the direction of the handle.
🎲 Brief about Pitchfork
Pitchfork is drawn when price forms ABC pattern. Pitchfork draws a series of parallel lines in the direction of trend which can be used for support and resistance.
There are many methods of drawing pitchfork. In all cases, a line joining BC will make the base of pitchfork and fork lines are drawn from different points of the base. All the fork lines will be parallel. But, the handle of the base defines the direction of fork lines. Classification of pitchfork is mainly based on the starting and ending points of the handle.
🎲 Regular Types
Here, end of the handle is always fixed and it will be the mid point of B and C.
🎯 Andrews Pitchfork
Handle starts from A and joins the base at mid of B and C.
Forks are drawn based on fib ratios from the handle
🎯 Schiff Pitchfork
Handle starts from Bar of A and price of middle of AB and joins the base at mid of B and C
Forks are drawn based on fib ratios from the handle
🎯 Modified Schiff Pitchfork
Handle starts from mid of A and B and joins the base at mid of B and C
Forks are drawn based on fib ratios from the handle
🎲 Inside Types
Here, C will act as end of the handle which joins the Base BC .
🎯 Andrews Pitchfork (Inside)
Handle starts from A and joins the base at C
Forks are drawn based on fib ratios from the handle
🎯 Schiff Pitchfork (Inside)
Handle starts from Bar of A and price of (A+B)/2 and joins the base at C
Forks are drawn based on fib ratios from the handle
🎯 Modified Schiff Pitchfork (Inside)
Handle starts from mid of A and B and joins the base at C
Forks are drawn based on fib ratios from the handle
🎲 Brief about Pitchfork
The Angled Volume Profile technique expands on the concept of volume profile by measuring volume distribution levels over angled levels rather than just horizontal levels. By selecting a starting point and angle interactively, traders can assess volume distribution within specific price trends. This feature is particularly useful for analysing volume dynamics in trending markets.
🎲 Settings
Indicator settings include few things which determine the scanning of pitchforks and few which determines drawing of volume profile lines.
Please note that, due to pine limitations of 500 lines, if there are too many formations on the chart, volume profile may not appear correctly. If that happens, please reduce the number of volume forks per formation.
Breakout Trend Trading Strategy - V1Strategy in nutshell:
This strategy is made to be used in daily time-frames. Works better on trending instruments where volume is available. Hence, this is more suitable for trending shares rather than currencies, commodities and indexes where volume data is either not present or not reliable.
Breakout signifies the continuation of trend. Hence, trade in the direction of breakouts. Breakouts are calculated based on high volume and price movement in a day. This will be combined with few other conditions to generate buy and sell signals along with stop and compound targets. Supertrend is used for trend bias. Our buy and sell targets do not directly depend on the bias. But, entry criteria in opposite trend is made much difficult than that of trend direction. Further explanation of method and input parameters are explained below.
Backtesting parameters :
Capital and position sizing : Capital and position sizing parameters are set to test investing 2000 wholly on certain stock without compounding.
Initial Capital : 2000
Order Size : 100% of equity
Pyramiding : 1
ExitOnSignal : If unchecked exit is triggered solely on trailing stop
Trade Direction : Long, Short or All. Short condition is riskier than long conditions and often results in losses as per my observation. On most of the stocks trending up, strategy will not generate any short signals. This is achieved by comparing yearly high lows to previous two years to decide whether to allow short or long entries.
allowImmediateCompound : Applicable only if compounding/pyramiding is enabled in trade. If checked allows to place compounding orders immediately. If unchecked, it waits for stopline to cross order price before placing next compound.
Display Mode :
Targets : Whenever breakout happens, show marker for upTarget and downTarget
TargetChannel : Show up target and downtarget as a channel
Target With Stop : Along with targets, show also stop levels for breakouts
Up Channel : Channel created from UpTarget and respective stops
Down Channel : Channel created from DownTarget and respective stops
ShowTrailingStop : Shows trailing stop and compound lines when there is a trading position.
ShowTargetLevels : Shows Buy Sell target levels along with stop and compound lines. Trades are done as market orders. Hence, target levels are displayed after strategy makes the trade. Since only one order allowed per side without compounding, target, stop and compound levels are shown sometimes even without trade being made. These can be considered as entry levels if there is no existing position.
ShowPreviousLevels : Shows previous buy/sell target levels. When enabled, layout can look messy.
StopMultiplyer: To Set trailing stop loss.
BacktestYears: Number of years to include in backtest
So far my test cases are:
Positive : AAPL, AMZN, TSLA, RUN, VRT, ASX:APT
Negative Test Cases: WPL, WHC, NHC, WOW, COL, NAB (All ASX stocks)
Special test case: WDI
Negative test cases still show losses in backtesting. I have attempted including many conditions to eliminate or reduce the loss. But, further efforts has resulted in reduction in profits in positive cases as well. Still experimenting. Will update whenever I find improvements. Comments and suggestions welcome :)
ABCD Projection [Trendoscope®]Over the years, we have extensively explored and published numerous scripts centered around various chart patterns, including Harmonic Patterns, Reversal Patterns, Elliott Waves, and more. Our expertise in these areas has led to frequent requests for an indicator based on the ABCD pattern. Although we didn't include it as part of our Harmonic Patterns collection, the development of a dedicated ABCD Projection Indicator has always been a priority for us.
🎲 Overview of the ABCD Projection Indicator
The ABCD Projection Indicator is designed to identify and project ABCD patterns using a Zigzag-based approach. This pattern, characterized by alternating pivot highs and lows labeled as A, B, C, and D, is particularly significant in trending markets where it signifies trend continuation following deep pullbacks.
The indicator works by confirming the ABC pivots and projecting the D pivot based on the established price swings. Since ABCD patterns are most effective in trending environments, the indicator focuses on filtering patterns where the retracement from the C pivot has not compromised the trade's potential. Specifically, it ensures that the starting point (S)—where the pattern is detected—has not retraced beyond a defined threshold, preserving the opportunity to execute a trade with the goal of reaching the projected D pivot.
Additionally, the ABCD Projection Indicator considers the retracement ratio from the C pivot, which plays a crucial role in risk management. A higher retracement ratio reduces the stop distance (from pivot A to the entry point S) while increasing the distance to the target (pivot D), thereby enhancing the reward/risk ratio for trades.
🎲 Components of the ABCD Projection Indicator
The ABCD Projection Indicator comprises several key components:
A, B, C Pivots and Zigzag Wave : These elements form the foundational structure of the ABCD pattern.
S Point : This is the location where the pattern is identified, positioned a few bars away from the confirmed C pivot.
Estimated D Pivot : The D pivot is projected based on the A, B, and C price levels. The time or distance to the D pivot is influenced by the starting point S.
Mini Stats Table : Located in the top right corner, this table displays win/loss ratios and risk/reward data for both bullish and bearish scenarios.
Fibonacci Levels : Calculated from the C to D pivots, these levels are provided as a reference for additional analysis.
🎲 Indicator Settings
The settings for the ABCD Projection Indicator are minimal and intuitive, with tooltips provided to guide users through the configuration process.
Flags and Pennants [Trendoscope®]🎲 An extension to Chart Patterns based on Trend Line Pairs - Flags and Pennants
After exploring Algorithmic Identification and Classification of Chart Patterns and developing Auto Chart Patterns Indicator , we now delve into extensions of these patterns, focusing on Flag and Pennant Chart Patterns. These patterns evolve from basic trend line pair-based structures, often influenced by preceding market impulses.
🎲 Identification rules for the Extension Patterns
🎯 Identify the existence of Base Chart Patterns
Before identifying the flag and pennant patterns, we first need to identify the existence of following base trend line pair based converging or parallel patterns.
Ascending Channel
Descending Channel
Rising Wedge (Contracting)
Falling Wedge (Contracting)
Converging Triangle
Descending Triangle (Contracting)
Ascending Triangle (Contracting)
🎯 Identifying Extension Patterns.
The key to pinpointing these patterns lies in spotting a strong impulsive wave – akin to a flagpole – preceding a base pattern. This setup suggests potential for an extension pattern:
A Bullish Flag emerges from a positive impulse followed by a descending channel or a falling wedge
A Bearish Flag appears after a negative impulse leading to an ascending channel or a rising wedge.
A Bullish Pennant is indicated by a positive thrust preceding a converging triangle or ascending triangle.
A Bearish Pennant follows a negative impulse and a converging or descending triangle.
🎲 Pattern Classifications and Characteristics
🎯 Bullish Flag Pattern
Characteristics of Bullish Flag Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a short descending channel or a falling wedge
Here is an example of Bullish Flag Pattern
🎯 Bearish Flag Pattern
Characteristics of Bearish Flag Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a short ascending channel or a rising wedge
Here is an example of Bearish Flag Pattern
🎯 Bullish Pennant Pattern
Characteristics of Bullish Pennant Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a converging triangle or ascending triangle pattern.
Here is an example of Bullish Pennant Pattern
🎯 Bearish Pennant Pattern
Characteristics of Bearish Pennant Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a converging triangle or a descending converging triangle pattern.
Here is an example of Bearish Pennant Pattern
🎲 Trading Extension Patterns
In a strong market trend, it's common to see temporary periods of consolidation, forming patterns that either converge or range, often counter to the ongoing trend direction. Such pauses may lay the groundwork for the continuation of the trend post-breakout. The assumption that the trend will resume shapes the underlying bias of Flag and Pennant patterns
It's important, however, not to base decisions solely on past trends. Conducting personal back testing is crucial to ascertain the most effective entry and exit strategies for these patterns. Remember, the behavior of these patterns can vary significantly with the volatility of the asset and the specific timeframe being analyzed.
Approach the interpretation of these patterns with prudence, considering that market dynamics are subject to a wide array of influencing factors that might deviate from expected outcomes. For investors and traders, it's essential to engage in thorough back testing, establishing entry points, stop-loss orders, and target goals that align with your individual trading style and risk appetite. This step is key to assessing the viability of these patterns in line with your personal trading strategies and goals.
It's fairly common to witness a breakout followed by a swift price reversal after these patterns have formed. Additionally, there's room for innovation in trading by going against the bias if the breakout occurs in the opposite direction, specially when the trend before the formation of the pattern is in against the pattern bias.
🎲 Cheat Sheet
🎲 Indicator Settings
Custom Source : Enables users to set custom OHLC - this means, the indicator can also be applied on oscillators and other indicators having OHLC values.
Zigzag Settings : Allows users to enable different zigzag base and set length and depth for each zigzag.
Scanning Settings : Pattern scanning settings set some parameters that define the pattern recognition process.
Display Settings : Determine the display of indicators including colors, lines, labels etc.
Backtest Settings : Allows users to set a predetermined back test bars so that the indicator will not time out while trying to run for all available bars.
RSI-Divergence Goggles [Trendoscope®]🎲 Introducing the RSI-Divergence Goggle
🎯 Revolutionizing Divergence Analysis in Trading
While the concept of divergence plays a crucial role in technical analysis, existing indicators in the community library have faced limitations, particularly in simultaneously displaying divergence lines on both price and oscillator graphs. This challenge stems from the fact that RSI and other oscillators are typically plotted in a separate pane from the price chart. Traditional Pine Script® indicators are confined to a single pane, thus restricting comprehensive divergence analysis.
🎯 Our Innovative Solution: RSI on the Price Pane
The RSI-Divergence Goggle breaks through these limitations. Our innovative approach involves plotting the RSI directly onto the price pane within a movable and resizable widget. This groundbreaking feature allows for the simultaneous drawing of zigzag patterns on both price and the oscillator, enabling the effective calculation and visualization of divergence lines on both.
🎯 The Foundation: Our Divergence Research and Rules
Our journey into divergence research began three years ago with the launch of the "Zigzag Trend Divergence Detector." The foundational rules established with this script remain pertinent and form the basis of all our subsequent divergence-based indicators.
🎯 Understanding Divergence: Key Concepts
Divergence Varieties : We identify two main types - Bullish Divergence (and its hidden counterpart) occurs at pivot lows, while Bearish Divergence (and its hidden version) appears at pivot highs.
Contextual Occurrence : Bullish divergence is a phenomenon of downtrends, whereas bearish divergence is unique to uptrend. Conversely, hidden bullish divergence arises in uptrends, and hidden bearish divergence in downtrends.
Oscillator Behavior : In standard divergence scenarios, the oscillator lags behind price, signaling potential reversals. In hidden divergence cases, the oscillator leads, suggesting trend continuation.
🎯 Visual Insights: Divergence and Hidden Divergence
For a clearer understanding, refer to our visual guides:
🎯 A Word of Caution
While divergence is a powerful tool, it's not a standalone guarantee of trend reversals or continuations. We recommend using these patterns in conjunction with support and resistance levels, as demonstrated in our "Divergence Based Support Resistance" implementation.
🎯 Using the RSI-Divergence Goggles
Upon applying the indicator to your chart, you'll be prompted to select two corner points, defining the widget's placement and size. This widget is the stage for your RSI plotting and divergence calculations. Choose these points carefully to ensure they encompass your area of interest without overlapping important price bars.
An example as below.
🎯 Innovative Features:
Plotting RSI: RSI values are scaled from 0 to 100 within the widget. This unique plotting may not align with individual bar values, but pivot labels and tooltips provide detailed RSI and retracement ratio information.
Zigzag and Pivots: Our adjusted RSI plots determine the zigzag pivot highs and lows, which may not always correspond with visible price pivots. However, calculations based on close prices ensure minimal deviation.
Divergence Display: Divergence types are identified following our established rules, with a simple moving average employed to discern the prevailing trend.
🎯 Trend Detection Mechanism
A simple moving average is used as base for determining the trend. If the difference between moving averages of the alternate pivots is positive, then the sentiment is considered to be uptrend. Else, we consider the sentiment to be in downtrend.
This is a simple method to identify trend, implemented via this indicator. The indicator does not provide alternative methods to identify trend. This is something that we can explore in the future.
🎯 Interactive and Customizable
The RSI-Divergence Goggle isn't just a static tool; it's an interactive feature on your chart. You can move or resize the widget, allowing for dynamic analysis and focused study on different chart segments.
Oscillator Volume Profile [Trendoscope®]The Oscillator Volume Profile indicator is designed to construct a volume profile based on predefined oscillator levels. It integrates volume data with oscillator readings to offer a unique perspective on market dynamics.
🎲 Selectable Oscillators:
Users can select from an array of oscillator options for the basis of the volume profile, including:
Relative Strength Index (RSI)
Chande Momentum Oscillator (CMO)
Center of Gravity (COG)
Money Flow Index (MFI)
Rate of Change (ROC)
Commodity Channel Index (CCI)
Stochastic Oscillator (Stoch)
True Strength Index (TSI)
Williams %R (WPR)
The length parameters - Length, Fast Length, Slow Length allows users to define the period over which the chosen oscillator is calculated, tailoring the sensitivity of the indicator to their trading strategy.
🎲 Dynamic Overbought/Oversold Ranges:
This indicator enhances traditional concepts by introducing dynamic overbought and oversold levels. These adaptable thresholds are calculated using various methods, including:
🎯 Highest/Lowest Range Method : This method establishes the range based on the highest and lowest values of the oscillator within the last N bars.
🎯 Moving Average Range Method : The range is derived from a moving average of the oscillator, providing a smoothed threshold that reflects more recent market conditions.
In addition to these methods, the indicator incorporates a unique 'Sticky Border' feature:
🎯 Sticky Border: With this option enabled, the dynamic ranges maintain their levels until the oscillator breaks out of the range. Once a breakout occurs, the levels are recalculated and updated. This mechanism ensures that the borders remain consistent and relevant, only adjusting to significant market movements that warrant a recalculation.
Users can select their preferred method for determining dynamic ranges, allowing for a customized approach that aligns with their analysis and trading strategy. The sticky border feature further refines this functionality, offering continuity until a decisive market move occurs.
🎲 Volume Profile Calculation Parameters:
🎯 Trend Filter: The indicator provides a versatile trend filter with four selectable options:
Uptrend: The volume profile is calculated when the oscillator indicates an uptrend.
Downtrend: The volume profile is calculated when the oscillator indicates a downtrend.
Any: The volume profile is calculated regardless of the trend.
External: Users can input values from an external indicator. The volume profile is then calculated only when the external indicator's value is non-zero, integrating external analysis into the volume profile construction.
🎯 Precision: Users have the option to define the precision for calculating the volume profile, which is crucial due to the varying scales of different oscillators (e.g., some oscillators range from 0 to 100, while others from -1 to 1). Selecting an appropriate precision ensures that the volume profile is accurately aligned with the minimal price range significant to the chosen oscillator. This setting requires user intervention for optimal configuration, as automatic calculation is not feasible due to the diverse nature of oscillator ranges.
🎯 Number of Bars: Users can select a specific number of bars for volume profile calculation, or opt to include all available historical bars for a comprehensive profile.
🎲 Selecting the right precision:
Users must select the right precision based on their choice of indicator. For example, RSI values range from 0-100. Hence, the default precision of 1 work fine on RSI as the volume profiles are plotted from 0 to 100 at the interval of 0.1
But, the default precision of 1 will not be ok on TSI because TSI values range from -1 to 1. Hence, using 1 as precision will result in very less volume profile lines as shown below.
Due to this, it is necessary to increase the precision for oscillators such as TSI where the range between highest and lowest value is far less. Once we set the precision to 2, we can see more appropriate volume profile division.
🎲 Note of thanks:
This publication uses polyline feature for drawing volume profiles. The advantage of using polyline is that we can overcome max 500 lines issue that we face by using the regular line objects. More details of polyline can be found in the tradingview blog post
Further, using polyline for display of volume profiles is inspired by the publications of fikira and KioseffTrading
ABC on Recursive Zigzag [Trendoscope]There are several implementations of ABC pattern in tradingview and pine script. However, we have made this indicator to provide users additional quantifiable information along with flexibility to experiment and develop their own strategy based on the patterns.
🎲 Highlights of this indicator over other ABC implementations are:
Implementation is based on recursive multi level zigzag allows bigger as well as smaller patterns to be identified
Allows users to set their trading rules with respect to entry, target and stop ratios, experiment and build their own strategy based on the ABC pattern.
Back test summary including win ratio and risk reward will help users understand the profitability based on different settings being used.
🎲 Concept of ABC Pattern
The ABC pattern, also known as the "Corrective Wave" or "Zigzag Pattern," is a fundamental concept in Elliott Wave Theory, which is widely used in technical analysis to identify and predict price movements in financial markets.
The ABC pattern is a three-wave corrective pattern that typically occurs within the context of a larger impulse or trending wave. It consists of two smaller waves in the opposite direction (A and C) separated by a corrective wave (B). These waves are labeled alphabetically and represent price movements.
Wave A (Impulse Wave): Wave A is the first leg of the ABC pattern and is characterized by a strong price move in the opposite direction of the prevailing trend. It is often driven by a fundamental or sentiment-driven event that temporarily disrupts the trend.
Wave B (Corrective Wave): Wave B is the corrective wave that follows Wave A. It represents a partial retracement of Wave A's price movement. Wave B can take various forms, such as a simple correction or a complex correction (e.g., a triangle or a flat correction). It typically doesn't retrace the entire length of Wave A.
Wave C (Impulse Wave): Wave C is the final leg of the ABC pattern and is characterized by a strong price move in the same direction as the prevailing trend. It often surpasses the starting point of Wave A and confirms the resumption of the larger trend.
🎲 Indicator Components
Upon loading the indicator on the chart, we can observe the following components on the chart.
Pattern Drawings is the graphical representation of present patterns. Please note that it is not necessary for patterns to be there on the chart all the time. Patterns will appear on the chart when price makes the patterns.
Trade Box is the box representing trade signals of the pattern. These trade levels are generated based on the user settings.
Summary Table is the back test summary containing details of historical pattern performance including Win Ratio and Risk Reward.
🎲 Indicator Settings
Details of each user settings are provided in the tooltips. Below is the snapshot of it.
🎲 Alerts
Basic level of alerts are built in the script using alert function to highlight the following conditions:
New ABC Pattern
Updates to existing Pattern
Both conditions will alert simple text messages. There is not much customization provided as part of this indicator. We will consider providing more options in future versions based on the interest and demand shown by users.
Master Supertrend Strategy [Trendoscope]Here is the strategy version of the indicator - Master Supertrend
Options and variations are same throughout.
🎲 Variations
Following variations are provided in the form of settings.
🎯 Range Type
Instead of ATR, different types of ranges can be used for stop calculation. Here is the complete list used in the script.
Plus/Minus Range* - Calculates plus range and minus range for each candle and uses them for different sides of stop calculation
Ladder ATR - Based on the existing concept of Ladder ATR defined in Supertrend-Ladder-ATR
True Range - True range derived from standard function ta.tr
Standard Deviation - Standard deviation of close prices
🎯 Applied Calculation
In standard ATR, rma of TR is used for calculations. But, the application calculation provides option to users to use different mechanisms. It can be a type of moving average or few other types of calculations.
Available values are
sma
ema
hma
rma
wma
high
median
🎯 Other options
Few other options provided are
Use Close Price - If selected stops are calculated based on the close price instead of high/low prices
Wait for Close If selected, change of supertrend direction is calculated based on close price instead of high/low prices
Diminishing Stop Distance - When selected, stop distance for the trend direction can only reduce and cannot increase. This option is useful for keeping the tight stops on strong trends.
🎯 Plus Minus Range*
One of the range type used is Plus/Minus Range. What it means and how are these ranges calculated? Let's have a look.
Plus Range is an upward movement of a candle from its last price or open price whichever is lower.
Minus Range is a downward movement of a candle from its last price or open price whichever is higher.
This divides True Range into two separate range for positive and negative side.
Note : Effectiveness on daily charts are quire visible. However, if you want to use it for lower timeframes, please play around with settings before settling on suitable configuration.
Angled Volume Profile [Trendoscope]Volume profile is useful tool to understand the demand and supply zones on horizontal level. But, what if you want to measure the volume levels over trend line? In trending markets, the feature to measure volume over angled levels can be very useful for traders who use these measures. Here is an attempt to provide such tool.
🎲 How to use
🎯 Interactive input for selecting starting point and angle.
Upon loading the script, you will be prompted to select
Start time and price - this is a point which you can select by moving the maroon highlighted label.
End price - though this is shown as maroon bullet, this is price only input. Hence, when you click on the bullet, a horizontal line will appear. Users can move the line to use different End price.
Start and End price are used for identifying the angle at which volume profile need to be calculated. Whereas start time is used as starting time of the volume profile. Last bar of the chart is considered as ending bar.
🎯 Other settings.
From settings, users can select the colour of volume profile and style. Step multiplier defines the distance at which the profile lines needs to be drawn. Higher multiplier leads to less dense profile lines whereas lower multiplier leads to higher density of profile lines.
🎲 Limitations
🎯 Max 500 lines
Pinescript only allows max 500 lines on an indicator. Due to this, if we set very low multiplier - this can lead to more than 500 profile lines. Due to this some lines can get removed.
On the contrary, if multiplier is too high, then you will see very few lines which may not be meaningful.
Hence, it is important to select optimal multiplier based on your timeframe
🎯 No updates on new bar
Since the profile can spawn many bars, it is not possible to recalculate the whole volume profile when price creates new bars. Hence, there will not be visual update when new bars are created. But, to update the chart, users only need to make another movement of Start or ending point on interactive input.
Band-Zigzag Based Trend FollowerWe defined new method to derive zigzag last month - which is called Channel-Based-Zigzag . This script is an example of one of the use case of this method.
🎲 Trend Following
Defining a trend following method is simple. Basic rule of trend following is Buy High and Sell Low (Yes, you heard it right). To explain further - methodology involve finding an established trend which is flying high and join the trend with proper risk and optimal stop. Once you get into the trade, you will not exit unless there is change in the trend. Or in other words, the parameters which you used to define trend has reversed and the trend is not valid anymore.
Few examples are:
🎯 Using bands
When price breaks out of upper bands (example, Bollinger Band, Keltener Channel, or Donchian Channel), with a pre determined length and multiplier, we can consider the trend to be bullish and similarly when price breaks down the lower band, we can consider the trend to be bearish.
Here are few examples where I have used bands for identifying trend
Band-Based-Supertrend
Donchian-Channel-Trend-Filter
🎯 Using Pivots
Simple logic using zigzag or pivot points is that when price starts making higher highs and higher lows, we can consider this as uptrend. And when price starts making lower highs and lower lows, we can consider this as downtrend. There are few supertrend implementations I have published in the past based on zigzags and pivot points.
Adoptive-Supertrend-Pivots
Zigzag-Supertrend
Drawbacks of both of these methods is that there will be too many fluctuations in both cases unless we increase the reference length. And if we increase the reference length, we will have higher drawdown.
🎲 Band Based Zigzag Method
Band Based Zigzag will help overcome these issues by combining both the methods.
Here we use bands to define our pivot high and pivot low - this makes sure that we are identifying trend only on breakouts as pivots are only formed on breakouts.
Our method also includes pivot ratio to cross over 1.0 to be able to consider it as trend. This means, we are waiting for price also to make new high high or lower low before making the decision on trend. But, this helps us ignore smaller pivot movements due to the usage of bands.
I have also implemented few tricks such as sticky bands (Bands will not contract unless there is breakout) and Adaptive Bands (Band will not expand unless price is moving in the direction of band). This makes the trend following method very robust.
To avoid fakeouts, we also use percentB of high/low in comparison with price retracement to define breakout.
🎲 The indicator
The output of indicator is simple and intuitive to understand.
🎯 Trend Criteria
Uptrend when last confirmed pivot is pivot high and has higher retracement ratio than PercentB of High. Else, considered as downtrend.
Downtrend when last confirmed pivot is pivot low and has higher retracement ratio than PercentB of High. Else, considered as uptrend.
🎯 Settings
Settings allow you to select the band type and parameters used for calculating zigzag and then trend. Also has few options to hide the display.
Harmonic Patterns Based Trend FollowerEarlier this week, published an idea on how harmonic patterns can be used for trend following. This script is an attempt to implement the same.
🎲 Process
🎯 Derive Zigzag and scan harmonic patterns for last 5 confirmed pivots
🎯 If a pattern is found, highest point of pattern will become the bullish zone and lower point of the pattern will become bearish zone.
🎯 Since it is trend following method, when price reaches bullish zone, then the trend is considered as bullish and when price reaches bearish zone, the trend is considered as bearish.
🎯 If price does not touch both regions, then trend remains unchanged.
🎯 Bullish and bearish zone will change as and when new patterns are formed.
🎲 Note
Patterns are not created on latest pivot as last pivot will be unconfirmed and moving. Due to this, patterns appear after certain delay - patterns will not be real time. But, this is expected and does not impact the overall process.
When new pattern formed
When price breaks over the zones
🎲 Output
🎯 Patterns formed are drawn in blue coloured lines. Due to pine limitation of max 500 lines, older patterns automatically get deleted when new ones come.
🎯 Bullish Zone and Bearish Zone are plotted in green and red colours and the zone will change whenever new pattern comes along.
🎯 Bar colors are changed according to calculated trend. Trend value can be 1 or -1 based on the current trend. You can also find the value in data window.
🎯 For simplicity purpose, input option for selection of specific patterns are not provided and also pattern names are not displayed on the chart.
Extreme Trend Reversal Points [HeWhoMustNotBeNamed]Using moving average crossover for identifying the change in trend is very common. However, this method can give lots of false signals during the ranging markets. In this algorithm, we try to find the extreme trend by looking at fully aligned multi-level moving averages and only look at moving average crossover when market is in the extreme trend - either bullish or bearish. These points can mean long term downtrend or can also cause a small pullback before trend continuation. In this discussion, we will also check how to handle different scenarios.
🎲 Components
🎯 Recursive Multi Level Moving Averages
Multi level moving average here refers to applying moving average on top of base moving average on multiple levels. For example,
Level 1 SMA = SMA(source, length)
Level 2 SMA = SMA(Level 1 SMA, length)
Level 3 SMA = SMA(Level 2 SMA, length)
..
..
..
Level n SMA = SMA(Level (n-1) SMA, length)
In this script, user can select how many levels of moving averages need to be calculated. This is achieved through " recursive moving average " algorithm. Requirement for building such algorithm was initially raised by @loxx
While I was able to develop them in minimal code with the help of some of the existing libraries built on arrays and matrix , I also thought why not extend this to find something interesting.
Note that since we are using variable levels - we will not be able to plot all the levels of moving average. (This is because plotting cannot be done in the loop). Hence, we are using lines to display the latest moving average levels in front of the last candle. Lines are color coded in such a way that least numbered levels are greener and higher levels are redder.
🎯 Finding the trend and range
Strength of fully aligned moving average is calculated based on position of each level with respect to other levels.
For example, in a complete uptrend, we can find
source > L(1)MA > L(2)MA > L(3)MA ...... > L(n-1)MA > L(n)MA
Similarly in a complete downtrend, we can find
source < L(1)MA < L(2)MA < L(3)MA ...... < L(n-1)MA < L(n)MA
Hence, the strength of trend here is calculated based on relative positions of each levels. Due to this, value of strength can range from 0 to Level*(Level-1)/2
0 represents the complete downtrend
Level*(Level-1)/2 represents the complete uptrend.
Range and Extreme Range are calculated based on the percentile from median. The brackets are defined as per input parameters - Range Percentile and Extreme Range Percentile by using Percentile History as reference length.
Moving average plot is color coded to display the trend strength.
Green - Extreme Bullish
Lime - Bullish
Silver - range
Orange - Bearish
Red - Extreme Bearish
🎯 Finding the trend reversal
Possible trend reversals are when price crosses the moving average while in complete trend with all the moving averages fully aligned. Triangle marks are placed in such locations which can help observe the probable trend reversal points. But, there are possibilities of trend overriding these levels. An example of such thing, we can see here:
In order to overcome this problem, we can employ few techniques.
1. After the signal, wait for trend reversal (moving average plot color to turn silver) before placing your order.
2. Place stop orders on immediate pivot levels or support resistance points instead of opening market order. This way, we can also place an order in the direction of trend. Whichever side the price breaks out, will be the direction to trade.
3. Look for other confirmations such as extremely bullish and bearish candles before placing the orders.
🎯 An example of using stop orders
Let us take this scenario where there is a signal on possible reversal from complete uptrend.
Create a box joining high and low pivots at reasonable distance. You can also chose to add 1 ATR additional distance from pivots.
Use the top of the box as stop-entry for long and bottom as stop-entry for short. The other ends of the box can become stop-losses for each side.
After few bars, we can see that few more signals are plotted but, the price is still within the box. There are some candles which touched the top of the box. But, the candlestick patterns did not represent bullishness on those instances. If you have placed stop orders, these orders would have already filled in. In that case, just wait for position to hit either stop or target.
For bullish side, targets can be placed at certain risk reward levels. In this case, we just use 1:1 for bullish (trend side) and 1:1.5 for bearish side (reversal side)
In this case, price hit the target without any issue:
Wait for next reversal signal to appear before placing another order :)
Motive Wave Scanner [Trendoscope®]Motive Wave Scanner is a simple algorithm to find out motive waves as per the rules of Elliott Wave theory.
It is an extension to our previous open source script Interactive Motive Wave Checklist which provides interactive capability to select six points of a five wave formation. Once users select them, the rules of motive waves are applied to manually selected points to highlight them as either diagonal wave, motive wave or none.
This indicator does the same. But, instead of requesting the pivots manually from the user, the indicator automatically picks and scans them through zigzag.
We have already published a similar script as protected source. But, due to some changes in the pine engine, there have been few issues in the runtime. In this publication, we not only address those runtime issues but also making it open source for the users to make use of the source code and enhance it further.
🎲 What are motive waves
Motive waves are strong upward or downward movement with 5 subwaves.
Motive Wave in the upward direction will start with Swing High, Ends with Swing High and consists of 3 Higher Highs and 2 Higher Lows representing strong upward trend.
Motive Wave in the downward direction will start with Swing Low, Ends with Swing low and consists of 3 Lower Lows and 2 Lower Highs representing strong downward trend.
🎲 Types of Motive Waves
Motive Waves are broadly classified by two types:
Impulse Waves
Diagonal Waves
Diagonal Waves are further classified into Contracting and Expanding Diagonals. These can fall into the category of either leading diagonal and ending diagonal.
🎲 Rules of Motive Waves
🎯 Generic Rule of any motive waves are as follows
Should consist of 5 alternating waves. (Swing High followed by Swing low and vice versa)
This can start from Swing High and end in Swing High or start from Swing Low and end in Swing Low of a zigzag.
Wave-2 should not move beyond Wave-1. This means, the Wave-2 is always shorter than Wave-1 with respect to distance between the price of start and end.
Wave-3 always moves beyond Wave-1. This means, the Wave-3 is always longer than Wave-2 in terms of price
Among Wave-1, Wave-3, and Wave-5, Wave-3 is never the shortest one. This means, either Wave-1 or Wave-5 can be longer than Wave-3 but not both. Wave-3 can also be longest among the three.
Here is the pictorial representation of the rules of the Motive Waves
For a wave to be considered as motive wave, it also needs to follow the rules of either impulse or diagonal waves.
🎯 Rules for a 5 wave pattern to be considered as Impulse Wave are:
Wave-4 never overlaps with Wave-1 price range
Wave-1, Wave-3 and Wave-5 should not be either expanding or contracting. Meaning, we cannot have Wave-1 > Wave-3 > Wave-5 , and we cannot have Wave-1 < Wave-3 < Wave-5
Pictorial representation of the impulse wave rules are as below:
🎯 Rules for the Diagonal Waves are as follows
Contrary to the first rule of impulse wave, in case of diagonal wave, Wave-4 always overlaps with Wave-1 price range. But, it will not go beyond Wave-3
Waves are progressively expanding or contracting - Wave1 > Wave3 > Wave5 and Wave2 > Wave4 to be contracting diagonal. Wave1 < Wave3 < Wave5 and Wave2 < Wave4 to be expanding diagonal wave.
Pictorial representation of the Contracting Diagonal Wave is as below. Here, the Wave-1, Wave-3 and Wave-5 are in contracting formation.
Pictorial representation of the Expanding Diagonal Wave is as below. Here, the Wave-1, Wave-3 and Wave-5 are in expanding formation.
🎲 Indicator Settings
Indicator settings are defined as below:
Repaint Warning : If Repaint is selected, the indicator will throw a runtime error after certain bars or when alerts are set. This is due to some pine internal issue. At present, we do not have any solution for this until the internal issue is resolved by Tradingview Pine Team.
