Momentum Probability Oscillator

The Momentum Probability Oscillator [SS] indicator is a comprehensive sentiment analysis tool that combines three major oscillators to identify bullish and bearish market regimes through historical probability distributions.

Usage

The Usage section focuses on interpreting the various zones and levels generated by the oscillator's historical data:

• Central Threshold: The yellow line represents the average threshold between bullish and bearish historical data. Trading above this level indicates a prevailing bullish sentiment, while trading below suggests a bearish bias. This line frequently acts as dynamic support and resistance.
• Bullish/Bearish Zones: The oscillator plots max/min ranges and averages. Green-shaded areas represent bullish ranges (max bullish values at the top), while red-shaded areas represent bearish ranges (min bearish values at the bottom).
• Sentiment Assessment: By observing how much time the price spends in specific regions over the lookback period (default 500 bars), traders can ascertain whether the market is cumulatively more bullish or bearish.
• Divergences: Because it is a unified oscillator, it can be used to identify technical divergences against price action.
• Reference Price Targets: The indicator provides an ATR-based calculation of expected price ranges based on the oscillator's position, intended as a general technical reference for potential support or resistance in price terms.

Details

The script functions by taking the average of three core technical indicators: the Relative Strength Index (RSI), Stochastics, and the Money Flow Index (MFI).

It tracks historical "bullish" and "bearish" instances based on price movement relative to the open. A bullish instance is defined as a greater move from open to high than from open to low, and vice versa for bearish. It stores the values of the three oscillators at these instances to calculate historical averages, maximums, and minimums. These values are then projected onto the chart to create a probability-based framework for the current oscillator reading.

Settings

• Length: Sets the lookback period for the historical data arrays and probability calculations.
• Timeframe: Allows the indicator to be calculated based on a different timeframe than the current chart.
• Smoothing: A toggle to apply a 14-period Simple Moving Average (SMA) to the main oscillator line.
• Show Table: Displays a table on the right side of the chart showing the exact RSI, Stochastics, and MFI values for each historical range (Bullish/Bearish Avg, Max, and Min).
• Show Labels: Toggles the visibility of descriptive labels within the oscillator pane.

FAQ

How do I interpret the central yellow line? The yellow line is the "bull-bear average." Prices holding above this level are technically in a bullish regime, while prices below are in a bearish regime. It often serves as a point of mean reversion or a breakout level.

What technical indicators are included in the calculation? The Momentum Probability Oscillator [SS] aggregates the values of the RSI, Stochastics, and MFI into a single unified value.

How can I access the Momentum Probability Oscillator [SS]? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.