Arc Momentum Oscillator

The Arc Momentum Oscillator indicator tracks directional price commitment through an acceleration-driven arc engine that adaptively chases momentum based on volatility-scaled offsets rather than fixed thresholds. It provides a dynamic framework for trend detection, conviction measurement, and divergence identification by evaluating the relationship between a smoothed RSI-based momentum line and a trailing arc.

Usage

The Usage section focuses on interpreting the relationship between the momentum line and the trailing arc to identify trend regimes and conviction levels.

• Trend Identification: A bullish trend state (green) is active when momentum stays above the arc. A bearish trend state (red) is active when momentum stays below the arc. Trend flips are triggered when momentum breaches the arc by a volatility-scaled buffer.
• Momentum Conviction: The distance between the arc and the momentum line, visualized through the cloud fill, indicates the strength of the current move. A wide gap suggests strong conviction, while convergence between the two indicates a maturing trend or potential reversal.
• Extreme Zones: Gradient-filled strength bands and background highlights indicate when momentum has reached statistically elevated territory. These zones act as warnings for overextended conditions.
• Divergence Signals: The script automatically detects regular bullish and bearish divergences. These appear when price makes a new high/low that is not confirmed by the oscillator, often preceding a trend flip.
• Main Chart Context: Users can enable trend candles and flip arrows on the price chart to align their entries with the oscillator's regime without needing to monitor the sub-pane constantly.

Details

The Arc Momentum Oscillator is built on an acceleration-based logic that adapts to the current market environment.

• Momentum Engine: It utilizes a centered RSI (shifted by -50) that is smoothed via an EMA to create a clean oscillation between positive and negative territory.
• Adaptive Scaling: The system calculates a rolling 100-bar standard deviation of momentum. This "adaptive unit" determines the arc's starting distance, the flip buffer, and the acceleration step size, ensuring the indicator reacts proportionally to current volatility.
• Arc Mechanics: Upon a trend flip, the arc resets to a specific distance from momentum. As the trend persists, the arc accelerates toward the momentum line. This acceleration increases the sensitivity of the indicator as a trend ages, making it more likely to signal a flip if momentum begins to stall.
• Divergence Logic: The script scans pivot highs and lows to identify structural disagreements between price and momentum, providing secondary confirmation for reversals.

Settings

Momentum Configuration

• RSI Length: The period for the underlying RSI calculation. Higher values create slower, more stable momentum readings.
• Momentum Smoothing: The EMA period applied to the centered RSI to reduce market noise.

Arc Engine

• Arc Speed: Controls the base acceleration rate. Higher values cause the arc to converge with momentum more quickly.
• Start Distance (σ×): The initial offset of the arc from momentum on a trend flip, measured in standard deviations.
• Arc Smoothing: The period used to smooth the arc curve for a cleaner visual output.
• Arrow Offset: Adjusts the vertical position of flip markers on the price chart.

Visuals & Divergence

• Show Cloud Fill: Toggles the gradient area between the arc and momentum.
• Highlight Extremes: Enables background tinting when momentum exceeds the threshold.
• Extreme Threshold: The absolute level (e.g., 30) that defines overextended territory.
• Calculate Divergences: Enables the detection of price-oscillator divergence.
• Pivot Left/Right: The number of bars required to confirm a pivot point for divergence detection.
• Min/Max Pivot Distance: Defines the lookback range for comparing oscillator pivots.

FAQ

How do I reduce the number of false signals in choppy markets? You can increase the "Start Distance" to give the arc more breathing room or increase "Momentum Smoothing" to filter out minor price fluctuations.

What does it mean when the arc is very close to the momentum line? This indicates a mature trend where momentum is slowing down. Because the arc accelerates over time, a tight gap means a trend flip can occur with very little counter-trend movement.

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