Momentum Arrows

The Momentum Arrows indicator provides a visual representation of price momentum directly on the chart by utilizing arrows derived from popular oscillators including Stochastic, RSI, and WaveTrend. This tool aims to help traders identify the strength and direction of a trend by calculating the divergence or displacement within these oscillators and projecting it as directional arrows on the price action.

Usage

The indicator can be used to spot potential trend reversals or continuations based on the appearance and size of the arrows. Users can choose between three different momentum sources in the settings to suit their trading style.

• Stochastic Mode: Arrows are plotted based on the difference between the %K and %D lines. A green arrow appears when %K is above %D, and its length reflects the magnitude of the gap.
• RSI Mode: Arrows represent the RSI's distance from the 50 level. Green arrows signify the RSI is above 50 (bullish momentum), while red arrows signify it is below 50 (bearish momentum).
• WaveTrend Mode: Based on the WaveTrend oscillator, arrows are determined by the difference between the primary wave (wt1) and the signal wave (wt2).

Traders typically look for the first appearance of a colored arrow as a signal of a momentum shift, while the length of the arrow provides a quick visual cue regarding the intensity of that specific move.

Details

The script functions by calculating three distinct types of momentum values, though only one is active based on user selection.

• Stochastic Calculation: Uses a standard %K calculation smoothed by a Simple Moving Average (SMA), followed by a second SMA for the %D line.
• RSI Calculation: Standard Relative Strength Index calculation. The "momentum" value is derived by subtracting 50 from the RSI value to center the baseline at zero.
• WaveTrend Calculation: Inspired by @LazyBear, this uses an Exponential Moving Average (EMA) of the typical price (HLC3) and its mean deviation to create a Commodity Channel Index-like oscillator, which is then smoothed.

Settings

• Source: Determines the input data used for the RSI calculation (default is Close).
• Momentum Arrow Source: A dropdown menu to select between STOCH, RSI, or WAVE as the calculation basis.
• Stoch Length: The lookback period for the Stochastic calculation.
• %K Smooth: The smoothing period for the Stochastic %K line.
• %D Smooth: The smoothing period for the Stochastic %D line.
• RSI Length: The lookback period for the RSI calculation.
• WT Channel Length: The period used for the EMA of price in the WaveTrend calculation.
• WT Average Length: The period used for the EMA of the absolute deviation in WaveTrend.
• WT Smooth Factor: The period for the SMA applied to the WaveTrend signal line.

FAQ

How do I access Momentum Arrows?

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

What does the length of the arrows represent?

The length of the arrow is proportional to the strength of the momentum. For example, in RSI mode, a longer green arrow indicates the RSI is significantly above the 50 level.

Can I set alerts for momentum changes?

Yes, the script includes alert conditions for "Bullish Momentum" and "Bearish Momentum," which trigger when the chosen momentum source crosses above or below its zero-line/signal-line.