Trend & Momentum V2

The Trend & Momentum V2 indicator is a trend-following tool that combines moving average filters with Relative Strength Index (RSI) analysis to identify high-probability trading opportunities. It aims to declutter charts by providing a unified visual representation of trend direction and momentum shifts through dynamic bar coloring and signal triggers.

Usage

The indicator can be used to identify potential entry points and maintain a clear perspective on the current market bias. A bullish bias is established when the price is trading above the selected moving average, the moving average is sloping upwards, and the RSI is above its signal line. Conversely, a bearish bias is established when the price is below the moving average, the moving average is sloping downwards, and the RSI is below its signal line.

• Long Entry: Occurs when a bullish bias is confirmed and the current price closes above the previous bar's high.
• Short Entry: Occurs when a bearish bias is confirmed and the current price closes below the previous bar's low.
• Visual Cues: If "Color Bars" is enabled, green bars represent a bullish bias, red bars represent a bearish bias, and gray bars indicate neutral or non-conforming conditions.

Details

The script functions by evaluating two primary components:

1. Trend Component: Users can choose between various Moving Average types (SMA, EMA, DEMA, RMA, WMA). The trend is considered bullish if the price is above the MA and the MA value is higher than its previous value.
2. Momentum Component: The script calculates an RSI and compares it to a Simple Moving Average (SMA) of that RSI. If the RSI is above its SMA, momentum is considered bullish.

The final signals are only triggered when both trend and momentum align, ensuring that traders are positioned on the right side of market dynamics. The inclusion of a breakout filter (closing above/below the previous bar's extreme) serves as a confirmation mechanism to avoid false starts.

Settings

• Price Source: Determines the price data used for the moving average calculation (default is Close).
• Moving Average Type: Allows selection between DEMA, EMA, SMA, RMA, and WMA.
• Moving Average Length: The lookback period for the selected trend filter.
• RSI Length: The lookback period used to calculate the Relative Strength Index.
• RSI Moving Average Length: The period for the SMA applied to the RSI, used to determine momentum direction.
• Color Bars: When enabled, paints the chart bars based on the current detected bias (Bullish, Bearish, or Neutral).
• Display Moving Average On Chart: Toggles the visibility of the underlying trend line.

FAQ

How do I interpret the gray bars on my chart?

Gray bars indicate neutral market conditions where the trend and momentum components are not in alignment, or the price action does not meet the trend slope requirements.

Can I set alerts for the signals?

Yes, the script includes alert conditions for "Long Signal", "Short Signal", and "Bias Switches" (Long or Short), which can be configured via the TradingView alerts menu.

How can I access Trend & Momentum V2?

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