Momentum Candle V3

The Momentum Candle V3 indicator identifies high-conviction market momentum by analyzing the body-to-wick ratio and total range of individual candles on specific assets and timeframes.

Usage

The Momentum Candle V3 is specifically designed for XAUUSD (Gold) and USDJPY on the M5 and M15 timeframes. It highlights significant price movements where the closing price strongly outweighs the retracement shown by the wicks.

• Bullish Signal: A green triangle appears below the bar when a candle closes higher than it opened, has a body size exceeding the user-defined threshold, and maintains a total wick length that is less than 30% of the total candle range.
• Bearish Signal: A red triangle appears above the bar when a candle closes lower than it opened (or meets specific bearish criteria), satisfies the minimum body size requirements, and possesses minimal wicks.

Traders can use these signals to confirm momentum in trending markets or as triggers for scalping strategies. It is best used in conjunction with support/resistance levels or higher timeframe trend analysis.

Details

The indicator calculates momentum by comparing the absolute distance between the Open and Close (body) against the total High-Low range. For a signal to trigger, two conditions must be met:

1. Size Requirement: The candle body must meet a minimum "pip" value which varies depending on the asset (XAUUSD or USDJPY) and the timeframe (M5 or M15).
2. Efficiency Requirement: The "Short Wick" logic ensures that the wicks do not exceed 30% of the candle's total activity, indicating that the move was decisive and didn't face significant rejection.

Settings

XAUUSD Minimum Body (pip)

• XAUUSD M5: Sets the minimum required body size in pips for Gold on the 5-minute timeframe.
• XAUUSD M15: Sets the minimum required body size in pips for Gold on the 15-minute timeframe.

USDJPY Minimum Body (pip)

• USDJPY M5: Sets the minimum required body size in pips for USDJPY on the 5-minute timeframe.
• USDJPY M15: Sets the minimum required body size in pips for USDJPY on the 15-minute timeframe.

FAQ

How do I access Momentum Candle V3?

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

Which pairs does this indicator work on?

While it can be adapted, the logic is pre-configured with specific pip-value calculations optimized for XAUUSD and USDJPY.

What do the triangles on the chart represent?

The triangles represent "Momentum Candles" where the price moved significantly in one direction with very little price rejection (short wicks), suggesting a strong continuation of the current trend.