CM_Williams_Vix_Fix_V3_Upper_Text Plots

The CM_Williams_Vix_Fix_V3_Upper_Text Plots tool identifies potential market bottoms by applying Larry Williams' VIX Fix calculation directly to price charts via visual text labels and arrows. This script serves as an overlay companion to the traditional oscillator, providing clear actionable signals for trend exhaustion and entry points based on volatility expansion and mean reversion.

Usage

The indicator is used to spot market "climax" lows where volatility peaks relative to recent price action. Users can interpret the signals through four distinct plot types:

• WVF Is True: Appears when the VIX Fix calculation exceeds the Bollinger Band or the historical percentile high, indicating a high-volatility exhaustion zone.
• WVF Was True Now False: Signals that the volatility spike has peaked and is now receding, often used as an early confirmation of a local bottom.
• Filtered Entry: A more conservative signal that requires price action confirmation (Close > X bars back) and specific trend conditions to validate a reversal.
• Aggressive Entry: A faster entry signal that triggers when volatility is still high but price action begins to show signs of internal strength (e.g., closing higher than the open and previous close).

Settings allow users to toggle these specific labels on or off to clean up the chart or focus on a specific trading style, such as waiting for the "Filtered Entry" for higher probability setups.

Details

The script implements the Williams Vix Fix formula, which synthesizes a synthetic VIX by measuring the percentage relationship between the highest close over a lookback period and the current low. To determine "high volatility" zones, the script applies two primary statistical thresholds:

1. Bollinger Bands: A standard deviation envelope is calculated on the VIX Fix values; when the value crosses the upper band, a spike is detected.
2. Percentile Highs: The script looks back at a specific window (e.g., 50 bars) and identifies the 85th-99th percentile high to create a dynamic resistance level for volatility.

The filtered entry logic incorporates price action by checking if the current bar closes higher than it did a specific number of bars ago (defined by the Strength setting) and ensuring the price is relatively low compared to medium or long-term lookback periods to avoid buying at the top of a trend.

Settings

Core Parameters

• LookBack Period Standard Deviation High: Sets the window for the highest price used in the VIX Fix calculation.
• Bollinger Band Length: The period used to calculate the moving average and standard deviation of the VIX Fix.
• Bollinger Band Standard Deviation Up: The multiplier for the upper band width.
• Look Back Period Percentile High: The number of bars used to determine the historical volatility range.
• Highest Percentile: The threshold (e.g., 0.85 for 85%) used to define extreme volatility peaks.

Text Plot Visibility

• Show Text Plot if WVF WAS True and IS Now False: Toggles the label for receding volatility spikes.
• Show Text Plot if WVF IS True: Toggles the label for active volatility peaks.
• Show Text Plot For Filtered Entry: Toggles the conservative reversal signal.
• Show Text Plot For AGGRESSIVE Filtered Entry: Toggles the aggressive reversal signal.

Filter Criteria

• Long-Term/Medium-Term Look Back: Determines the price thresholds the current bar must close below to qualify as a "bottom."
• Entry Price Action Strength: Defines the number of bars back the current close must be higher than to trigger a filtered entry.

Alerts

• Show Alert [Criteria]?: These toggles enable the logic for specific alert conditions to be processed by the platform's alerting system.

FAQ

How do I interpret the "Filtered Entry" vs "Aggressive Entry"? The Filtered Entry requires more price confirmation and a specific drop in volatility, making it slower but often more reliable. The Aggressive Entry triggers while volatility is still elevated, provided the price shows an immediate bullish response.

Can this indicator be used on any timeframe? Yes, the Williams Vix Fix logic is mathematically sound across various timeframes, though it is most commonly used on Daily and Hourly charts to identify significant swing lows.

How do I access this indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.