Momentum Reversal / Dip Buyer [Score Based]

The Momentum Reversal / Dip Buyer [Score Based] indicator is a quantitative reversal engine designed to identify exhausted price moves and signal potential dip-buying or rally-fading opportunities based on a composite scoring system. By analyzing multiple momentum and context factors simultaneously, it provides a comprehensive view of market exhaustion and trend alignment for liquid instruments.

Usage

The indicator generates a "Momentum Score" for every bar, which is used to trigger entry signals when specific thresholds are met alongside a CCI confirmation.

• Long Signals: Occur when the Momentum Score is low (indicating a "depressed" or oversold state) and the CCI crosses up from its oversold level.
• Short Signals: Occur when the Momentum Score is high (indicating an "elevated" or overbought state) and the CCI crosses down from its overbought level.

The tool is particularly effective on intraday timeframes (1-minute or 5-minute) and features a visual dashboard that displays the current Momentum Score, remaining daily trades, and CCI status.

Details

The core logic relies on a weighted scoring mechanism that evaluates nine distinct market factors:

• Price Location: Checks price relative to the 100 SMA, 1000 EMA, and VWAP to determine the current regime.
• Momentum Oscillators: Incorporates RSI, Stochastics, and CCI to gauge short-term exhaustion.
• Volume & Flow: Uses Volume-Weighted Momentum (VWMO), Money Flow Index (MFI), and Cumulative Delta to confirm if aggressive buyers or sellers are entering.
• Trend & Volatility: Filters signals using ADX for trend strength and an ATR-based regime filter to distinguish between high and low volatility environments.

Settings

Risk & Limits

• Max Daily Trades: Limits the number of entries per day to prevent overtrading.
• Hard Stop %: A fixed percentage-based stop loss calculated from the entry price.
• Target ATR Multiplier: Sets the profit target based on a multiple of the main ATR.
• Main ATR Length: The period used for calculating the primary ATR for targets and breakeven.

Advanced Stops

• Enable Breakeven Stop: Activates logic to move the stop to the entry price after a certain profit threshold.
• Breakeven Trigger: The multiple of ATR required to move the stop to breakeven.
• Enable Trailing Stop: Activates an ATR-based trailing stop.
• Trailing ATR Length: Allows for a separate, more reactive ATR period for trailing logic.

Trading Window

• Enable Trading Window: Restricts signals to a specific time range.
• Force Close At Session End: Automatically flattens any open positions when the trading session expires.

Indicator Settings

• SMA/EMA/VWMO Lengths: Adjusts the periods for the various moving averages and oscillators used in the scoring system.
• RSI/Stoch/CCI Thresholds: Configures the overbought and oversold levels for the constituent indicators.

FAQ

How do I access Momentum Reversal / Dip Buyer [Score Based]?

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

Which markets work best with this indicator?

While applicable to many assets, it is optimized for highly liquid instruments such as CME E-mini futures (ES) and major forex pairs on intraday timeframes.

Can I customize the scoring weights?

The weights are internally calculated based on the provided logic; however, you can adjust the periods and thresholds of the underlying indicators in the settings to influence how the score reacts to price action.