LRI Momentum Cycles

The LRI Momentum Cycles tool identifies market momentum shifts by combining trend normalization with linear regression analysis to detect bullish and bearish cycles.

Usage

The indicator is primarily used to visualize the strength and direction of market momentum. Traders can observe the trend line's color and position relative to the zero baseline:

• Bullish Momentum: Indicated by green coloring and an increasing normalized trend value. This suggests a strengthening upward cycle.
• Bearish Momentum: Indicated by red coloring and a decreasing normalized trend value. This suggests a strengthening downward cycle.
• Trend Reversals: A change in color from red to green (or vice-versa) signals a potential shift in market regime. These shifts can be used to time entries or exits in both swing trading and intraday strategies.

The script also includes built-in alert conditions that trigger specifically when the momentum state switches, allowing users to stay informed of critical moves without constant chart monitoring.

Details

The LRI Momentum Cycles indicator calculates the underlying trend direction by applying linear regression to a specified price source over a chosen length. To determine the momentum "score," it performs a comparative analysis of these linear regression values across a historical lookback period.

The resulting trend value is then normalized based on the total possible number of comparative combinations. This ensures that the output remains within a consistent scale (typically between -1 and 1), allowing for easier interpretation across different assets and timeframes. The visual output uses a gradient fill to represent the intensity of the normalized trend, providing a clearer picture of whether momentum is accelerating or decelerating.

Settings

Calculation Parameters

• Lookback Period: The number of historical bars used to analyze and compare trend shifts.
• Linear Regression Source: The price data (e.g., Close, HL2) used for the linear regression calculation.
• Linear Regression Length: The number of bars used to calculate the individual linear regression points.

Appearance Settings

• Bullish Color: Sets the color used for positive momentum and upward cycles.
• Bearish Color: Sets the color used for negative momentum and downward cycles.

FAQ

How do I interpret the zero line?

The zero line acts as a baseline. When the normalized trend is above zero and rising, it indicates a bullish regime. When below zero and falling, it indicates a bearish regime.

Can I use this for intraday trading?

Yes, the LRI Momentum Cycles indicator is effective for both intraday and swing trading as the linear regression and normalization logic adapt to the timeframe currently displayed on the chart.

How can I access the LRI Momentum Cycles?

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