Normalized Quantitative Qualitative Estimation nQQE

The Normalized Quantitative Qualitative Estimation tool provides a zero-centered version of the traditional QQE indicator to help traders identify trend direction and momentum while minimizing false signals caused by RSI divergences.

Usage

The Usage section describes how the script can be used to identify market phases and potential entry or exit points. The indicator consists of a fast line, a slow trailing line, and a color-coded histogram.

• Trend Identification: The histogram colors indicate the current market regime based on the normalized values.
  • Uptrend: When the histogram is green, the nQQE is above the +10 threshold, suggesting strong bullish momentum.
  • Downtrend: When the histogram is red, the nQQE is below the -10 threshold, suggesting strong bearish momentum.
  • Sideways: When the histogram is neutral (gray/yellow), the values are fluctuating between -10 and 10, suggesting a ranging or consolidating market.
• Crossover Signals: Traders can use the interaction between the Blue (Fast) line and the White (Slow) line. A crossover of the Fast line above the Slow line indicates a potential bullish reversal, while a cross under indicates a potential bearish reversal.
• Zero-Line Cross: Since the indicator is normalized around zero, crossing the 0 level acts as a baseline confirmation for sentiment shifts.

Details

The Normalized Quantitative Qualitative Estimation (nQQE) is an evolution of the classic QQE developed by Paul Quantrall. The original QQE uses a smoothed RSI and two volatility-based trailing stop lines (Fast and Slow) typically oscillating between 0 and 100.

The normalization process involves subtracting 50 from the final QQE values: nQQE = QQE - 50

This adjustment centers the oscillator at 0 rather than 50. This mathematical shift allows for clearer visualization of overbought/oversold conditions and trend strength relative to a static baseline. The indicator employs a Wilders Mean Absolute Price (Welles Wilder's smoothing technique) to calculate the volatility components, ensuring the trailing levels react dynamically to market volatility while filtering out minor price noise.

Settings

• Source: Determines the price data used for the RSI calculation (default is Close).
• RSI Length: Sets the lookback period for the underlying Relative Strength Index calculation.
• SF RSI Smoothing Factor: Defines the smoothing factor (EMA) applied to the RSI before calculating the trailing levels.
• Show Crossing Signals?: Toggles the visibility of "Buy" and "Sell" labels on the chart whenever the Fast and Slow lines cross.

FAQ

How do I interpret the histogram colors?

The histogram turns green when the fast line is above 10, indicating an established uptrend, and red when it is below -10, indicating a downtrend. Values between -10 and 10 remain neutral to signify sideways price action.

What is the difference between nQQE and standard QQE?

The nQQE is mathematically shifted by 50 units to fluctuate around a zero axis. This helps in identifying trend exhaustion and momentum shifts more intuitively compared to the traditional 0-100 scale.

How can I access the Normalized Quantitative Qualitative Estimation?

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