This Buy and Sell (non-repainting) indicator uses signals based on the combined CCI/Momentum and RSI indicators and optional regular divergence.
The idea of the indicator is to look for a potential reversal after the price reached extreme points (overbought or oversold) and signals an entry when the price shows signs of momentum for reversal.
Optionally, it considers finding a divergence while RSI is at the extreme levels to improve the predictability of a possible reversal.
Additionally, the indicator includes a simple Mean Reversion visual on the chart to assist users in identifying extreme price levels and potential reversal opportunities. It features upper and lower bands that can be optionally plotted, showing calculated values where price bounces at those extreme levels.
The purpose of these bands is to help traders avoid getting trapped in the middle of a trend and to guide them to buy low and sell high. (It's important to note that this is purely a visual aid and does not impact the generation of trade signals.)
By utilizing the Mean Reversion bands alongside the entry conditions, traders can gain insights into potential price reversals and make more informed decisions about when to enter or exit trades.
Buy and Sell Entry conditions: • The indicator looks at the CCI/Momentum indicator to turn positive (if buy) or negative (if sell) after the RSI was overbought or oversold in the recent past. • It also checks if there is a 3-period regular bullish divergence in the RSI (if buy), or regular bearish divergence (if sell) and consider these in the entry condition. • If these conditions are met, this indicator suggests that it may be a good time to enter a trade.
In summary this is how this indicator works: • The indicator takes input settings such as the choice between using CCI or Momentum as the entry signal source, length parameters for CCI/Momentum, RSI levels for overbought and oversold conditions, RSI length, and options to plot mean reversion bands on the chart. • It calculates the CCI and Momentum and RSI values based on user-defined length.. • It checks for regular bullish and bearish divergences (3 periods) in the RSI if the option is enabled. • The script plots shapes on the chart to indicate the buy and sell signals based on the entry conditions. • If the mean reversion bands option is enabled, it calculates the mean reversion, standard deviation, upper band, and lower band values. • It also plots the upper band, mean reversion line, and lower band on the chart if the mean reversion bands option is enabled. • This indicator includes alert conditions to generate alerts for the buy and sell signals. • On top of that, users can opt to use only one alert for both buy and sell signals. (This can save Trading view subscribers with limited alerts.)
Important! Please do not consider everything you read here as financial advice. Additionally, do not rely solely on indicators for making your trading decisions. It is important to note that no indicator or strategy is perfect. Therefore, it is always recommended to backtest everything and practice proper risk management.
I appreciate your feedback on this indicator. As I am new to script development, I am open to comments and suggestions to improve it. If you encounter any issues while using this indicator, please let me know in the comments section. If you find it helpful, I kindly ask for your support in boosting it. Thank you for your cooperation.
Is a really good indicator! Thank you!!! I am having some problems converting it to strategy so I can do BackTests and add Alerts for the various BOTs. Is there a guide or any advice you can give me?
thanks in advance
spudow
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@Licono, message me in chat, ill share to you the strategy version of this.
jchaps37919
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I've had issues with many scripts/strats I've found on TV and Lux Algo because my broker is not connected with TV so I trade on MT4 which always seems to run on a lag. your script here seems to be working fairly well with price action on my MT4, however the video suggested using a 1 or 5m TF, but I've only been able to detect 2 signals all day and across 12 different forex pairs. The YT vid i watched must not have the optimal setup and I cannot seem to locate the idea usage for this script Thank you for this btw, it seems very promising!
spudow
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@jchaps37919, any indicator doesn't work on its own, anybody need to use this with couple of other technical tools, eg. volume, smc, s&r for more informed trading decisions.
katse56
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Really interesting, will use it with my own DCA bots. Thank you.