Price Action Trading System v0.3 with modifications

The Price Action Trading System v0.3 with modifications indicator is a comprehensive technical analysis tool that integrates multiple momentum and trend-following oscillators to identify high-probability price action setups. It combines elements of the Commodity Channel Index (CCI), Average Directional Index (ADX), Relative Strength Index (RSI), and WaveTrend Oscillator to provide a multi-layered view of market conditions directly on the chart.

Usage

The indicator uses a variety of visual cues to signal market states and potential entries:

• Trend Direction: The background color is determined by the MACD; green indicates a positive MACD (bullish), while red indicates a negative MACD (bearish).
• Momentum Overlays: Green crosses at the top of the chart appear when +DI > -DI and ADX > 20. Red crosses appear when -DI > +DI and ADX > 20.
• Strong Trends: Upward green arrows at the bottom of the chart signify an increasing ADX slope during a bullish DI configuration, while downward red arrows signify the same for a bearish configuration.
• WaveTrend Signals: Green diamonds above the chart suggest potential buy opportunities when the WaveTrend oscillator is below -45 and rising. Red diamonds appear below the chart for potential sell opportunities when the oscillator is above 50 and falling.
• Potential Reversals: Green flags (top) and red flags (bottom) indicate significant WaveTrend slope changes that haven't yet reached extreme threshold levels.
• CCI Price Action: Olive and red triangles represent CCI-based setups filtered by RSI and MACD confirmation.

Details

This script is a composite system based on the Price Action Trading System v0.3, further modified with:

1. ADX/DI Integration: Used to filter for trending environments and identify increasing momentum.
2. WaveTrend Oscillator: Based on the LazyBear implementation, used to identify extreme overbought or oversold conditions and momentum shifts.
3. Price Action Channel: A specialized channel consisting of EMA Low, EMA High, and EMA Median lines to define the immediate trading range.
4. MACD/RSI Filtering: Optional confirmation filters that ensure price action signals align with broader momentum and strength.

Settings

• CCI Length/Levels: Configures the period and thresholds for the Commodity Channel Index.
• MACD Lengths: Adjusts the Fast, Slow, and Signal periods for the background trend detection.
• RSI Settings: Sets the length and limit levels for the Relative Strength Index filter.
• Filter Toggles: Options to enable/disable MACD, RSI, and Trend direction filters for price action signals.
• ADX/DI Length: Controls the smoothing period for the directional movement index.
• WaveTrend Settings: Adjusts the channel and average lengths for the WaveTrend Oscillator component.

FAQ

How do I interpret the background colors?

The background color highlights the current MACD status: green for bullish momentum and red for bearish momentum, providing an immediate context for the trend.

What do the diamonds and flags represent?

Diamonds indicate extreme oversold or overbought conditions on the WaveTrend oscillator, while flags highlight sharp momentum shifts that may precede a larger move.

How can I access this indicator?

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