Didi index alerts

The Didi index alerts indicator provides a comprehensive signaling system based on the Didi Index to help traders identify high-probability trend reversals and momentum shifts through "needle" patterns.

Usage

The script is designed to identify specific convergences between three moving averages (Fast, Normal, and Slow) normalized around a central zero line. Traders can use the indicator to spot four primary signals:

• Long Needles: Occur when the Fast average crosses above the Normal average while the Slow average simultaneously crosses below it (or meets proximity criteria), signaling bullish momentum.
• Short Needles: Occur when the Fast average crosses below the Normal average while the Slow average simultaneously crosses above it, signaling bearish momentum.
• Fake Long/Short: These signals act as filters to warn traders when a crossover occurs but the underlying trend or momentum is not supportive, potentially preventing false entries.

It is recommended to use these alerts in conjunction with trend filters like the DMI or volatility measures like Bollinger Bands to confirm the context of the needle signals.

Details

The indicator calculates three Simple Moving Averages (SMA). The "Normal" average acts as the baseline (0 line), while the Fast and Slow averages are plotted relative to it as percentage deviations.

A unique feature of this tool is its use of trigonometric projections to detect "needles." Traditional Didi Index signals require exact simultaneous crossovers. This script uses retroactive projection to determine how many bars ago a crossover occurred (or would have occurred). If these projections fall within the user-defined "Minimum and Maximum needle distances," a signal is triggered even if the averages do not cross at the exact same price tick. This allows for the detection of patterns like the "Spider Woman's Kiss" or "Queijo Minas," where averages pinch together tightly without a perfect cross.

Settings

Didi index config

• Fast average: Sets the period for the fast-moving average (default is 3).
• Normal average: Sets the period for the baseline moving average (default is 8).
• Slow average: Sets the period for the slow-moving average (default is 20).

Minimum needle distance

• Fast average: The minimum number of previous bars where the projected fast crossover occurred to be considered a needle.
• Slow average: The minimum number of previous bars where the projected slow crossover occurred to be considered a needle.

Maximum needle distance

• Fast average: The maximum lookback for the projected fast crossover.
• Slow average: The maximum lookback for the projected slow crossover.

FAQ

How do I use the Didi index alerts?

You can add the indicator to your chart and set alerts by pressing Alt+A. Select the indicator from the condition dropdown and choose between Long Needle, Short Needle, Fake Long, or Fake Short alerts.

What are "Fake" signals?

Fake signals occur when a crossover happens, but the direction of the Slow average or the relative position of the averages suggests the move lacks genuine momentum, serving as a warning to traders.

How can I get access to Didi index alerts?

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