Trend, Stoch, Price Action (TSP)

The Trend, Stoch, Price Action (TSP) indicator combines trend direction, momentum, and price action dynamics into a single oscillator to help traders identify market shifts and potential reversal points.

Usage

The indicator consists of three primary components plotted on an oscillator scale:

• Trend (Thick Green/Red Line): This line represents the primary market trend based on multiple moving averages and position relative to price. It changes color from green (bullish) to red (bearish) based on its slope.
• Stochastic (Solid Blue Line): A momentum component based on the Stochastic oscillator logic, smoothed with a linear regression. It helps identify overbought and oversold conditions relative to the high and low bounds.
• Price Action (Light Blue Line): A faster-moving component that calculates price dynamics such as close vs. open, range expansion/contraction, and relative highs/lows.

Traders can look for convergences where all three elements align or use the zero-line crossovers of the Trend line as a signal for directional changes.

Details

The script executes several distinct calculations to derive its values:

1. Price Action (t1): Analyzes the current candle's range, the relationship between open/close, and movement relative to the previous candle's range.
2. Trend Component (t2): Utilizes a series of moving averages (SMA and EMA) with lengths derived from the primary input. It evaluates whether price is above/below these averages and if the averages themselves are sloping upward or downward.
3. Stochastic (k): Based on the standard Stochastic formula, normalized to a -100 to 100 scale and smoothed using linear regression to filter out minor noise.

Settings

• Length 1: The primary lookback period used to derive all subsequent moving average lengths.
• Stoch Length: The period used for the Stochastic calculation (highest high and lowest low).
• K Length: The smoothing period applied to the Stochastic and Price Action components.
• High Bound: The upper threshold for overbought conditions (default is 75).
• Low Bound: The lower threshold for oversold conditions (default is -75).

FAQ

How do I use the Trend, Stoch, Price Action indicator?

You can use it to identify trend reversals when the thick line changes color or crosses the zero level, while using the Stochastic line to find optimal entry points within that trend.

What do the colors signify?

The thick line is green when the trend slope is positive and red when it is negative. The solid blue line represents momentum, and the light blue line tracks immediate price action volatility.

How can I access this tool?

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