WaveTrend Oscillator w/ Short/Long/Close Alerts - WIP

The WaveTrend Oscillator w/ Short/Long/Close Alerts indicator provides a comprehensive oscillator-based framework for identifying trend reversals, overbought/oversold conditions, and specific entry/exit points across various timeframes.

Usage

The indicator is primarily used to spot momentum shifts and exhaustion points in the market. Traders can interpret the visual signals as follows:

• Long Entries: Indicated by green triangles/circles when the oscillator crosses in the oversold region.
• Short Entries: Indicated by red triangles/circles when the oscillator crosses in the overbought region.
• Exit Signals: The script provides specific close alerts to manage risk. A yellow circle appearing after a green circle suggests a long exit, while a blue circle appearing after a red circle suggests a short exit.
• LSMA Filter: The included Least Squares Moving Average (LSMA) line on the oscillator can be used to gauge the underlying trend direction of the momentum itself.

Details

This script is an evolution of the classic WaveTrend algorithm. It calculates the relationship between price (HLC3) and its exponential moving average to derive a "TCI" (Trend Confidence Index). Two lines, wt1 and wt2, are plotted; their crossovers in extreme territory generate the primary trade signals. This version integrates specific "Close" logic based on secondary overbought/oversold levels (OB Level 2 and OS Level 2) to help traders capture profits before a full trend reversal occurs.

Settings

Core Parameters

• Channel Length: Controls the EMA period used for the initial price calculation.
• Average Length: Determines the smoothing period for the TCI calculation.
• Over Bought Level 1 & 2: Sets the upper thresholds for primary short signals and secondary exit signals.
• Over Sold Level 1 & 2: Sets the lower thresholds for primary long signals and secondary exit signals.

Additional Filters

• AO Fast/Slow EMA Length: Adjusts the internal Awesome Oscillator calculation used for trend color-coding.
• LSMA Length: Sets the period for the Least Squares Moving Average plotted over the oscillator.
• LSMA Offset: Shifts the LSMA plot forward or backward in time.

FAQ

How do I use the exit signals effectively?

Exit signals are designed to identify momentum deceleration. A yellow circle suggests closing a long position when the oscillator reaches a secondary overbought threshold, while a blue circle suggests closing a short when it reaches a secondary oversold threshold.

Which timeframe works best for this indicator?

While the WaveTrend Oscillator is functional on any timeframe, it generally provides more reliable signals on higher timeframes (e.g., 1H, 4H, Daily) where market noise is reduced.

How can I access the WaveTrend Oscillator w/ Short/Long/Close Alerts?

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