Trend Meter
Nov 19, 2019
The Trend Meter indicator provides a multi-layered visualization of market momentum and trend alignment by aggregating multiple technical filters into a single dashboard to confirm high-probability trade entries.
Usage
The Trend Meter is primarily used as a confluence tool to verify the strength of a trend before entering a position. It displays three individual Trend Meters and two Trend Bars that change color based on specific technical conditions.
- Trend Confirmation: Traders look for alignment across all three Trend Meters. When all meters are the same color (e.g., all green for bullish or all red for bearish), it signals a strong trend agreement across different lookback periods or calculation methods.
- Momentum Setups: The indicator identifies "Positive" or "Negative" pressure. Positive pressure occurs when the RSI and Wave Trend are oversold and turning upward, while Negative pressure occurs when they are overbought and turning downward.
- Entry Strategy: A common application involves identifying a Trend Meter signal where all three meters align, then looking for price to break above (for longs) or below (for shorts) the setup bar while respecting key support and resistance levels.
Details
The script integrates several classic momentum and trend-following concepts to determine the state of each meter.
- Trend Meters 1-3: These can be customized to track MACD crossovers (standard 12, 26, 9 or fast 8, 21, 5), RSI thresholds (above/below 50), RSI signal line crosses, or "Trend Candles" based on Heikin Ashi price action. It also includes "Mom Dad" crosses, a concept from Top Dog Trading.
- Trend Bars: These focus on Moving Average (MA) relationships. Users can select between MA crossovers or the directional slope of a Fast/Slow MA.
- Wave Trend Logic: The indicator utilizes a Wave Trend calculation based on the EMA of the typical price (HLC3) to detect overbought and oversold extremes, providing an additional layer of momentum filtering.
- Visual Optimization: The tool is designed to be displayed in a separate pane, providing a clean "stoplight" style interface that does not clutter the main price chart.
Settings
Signals
- Pos / Neg Pressure: Enables signals based on the confluence of RSI(14) and Wave Trend extremes.
- Trend Meter Signal: Highlights instances where all three primary Trend Meters align in direction.
- Wave Trend Alignment: Filters signals based on whether a Wave Trend crossover agrees with the Trend Meter status.
Trend Meters
- Trend Meter 1-3: Dropdown menus to select the underlying logic (MACD, RSI, Mom Dad Cross, Trend Candles, or MA Crossover).
Trend Bars
- Trend Bar 1 & 2: Toggles for displaying the MA-based bars and selecting their logic (Crossover vs. Direction).
- Fast/Slow MA Lengths: Sets the periods for the Moving Averages used in the Trend Bars.
- MA Types: Allows selection between EMA (Exponential Moving Average) and SMA (Simple Moving Average) for all four MA inputs.
FAQ
How do I interpret the colors on the Trend Meter? Green segments indicate bullish momentum or a positive crossover, while red segments indicate bearish momentum or a negative crossover. Blue or neutral colors typically signify a non-directional state or lack of trend agreement.
Can I customize which indicators drive the signals? Yes, the settings menu allows you to choose from various technical indicators including MACD, RSI, and different Moving Average configurations to suit your specific trading strategy.
How can I access the Trend Meter? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
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