Elastic Volume-Weighted Momentum 🔥

Elastic Volume-Weighted Momentum (EVWM) is a hybrid oscillator that measures the "force" of a price move by combining distance from the mean (elasticity) with relative trading volume. Unlike standard momentum indicators that only look at price speed, EVWM assumes that volume is the fuel for sustainable trends.

The indicator calculates a baseline (default: Hull Moving Average) and measures how far price stretches away from it, normalized by market volatility (ATR). This "elasticity" is then multiplied by a Volume Factor. The result is a histogram and signal line that distinguishes between high-conviction moves (high volume) and weak speculation (low volume).

How to Use

The EVWM is designed to filter false breakouts and identify mean-reversion opportunities through three distinct signal types:

1. Ignition Signals (Triangles) These occur when the momentum breaks outside the standard deviation bands with high volume.

Signal: Yellow Triangles.

Interpretation: This represents a valid breakout. The market has stretched away from the average with significant participation. This is often a signal to enter in the direction of the breakout.

2. Zombie Signals (X Marks) These occur when the momentum breaks outside the bands with low volume.

Signal: Grey "X".

Interpretation: This is a "fakeout" or a trap. The price moved, but there is no volume supporting it. Traders should exercise caution or consider fading the move, as it lacks the energy to sustain the trend.

3. Snap-Back Signals (Circles) These occur when the momentum line returns inside the bands after being overextended.

Signal: Red/Green Circles.

Interpretation: The "rubber band" is snapping back. This is a classic mean-reversion signal, often used to take profits on an existing position or to enter a counter-trend trade targeting the baseline.

4. Divergences The indicator includes an optional feature to detect discrepancies between price action and momentum.

Bearish Divergence: Price makes a higher high, but EVWM makes a lower high.

Bullish Divergence: Price makes a lower low, but EVWM makes a higher low. These patterns often precede a trend reversal.

Configuration Guide

Lookback Length: Controls the speed of the indicator. Use lower values (21) for scalping and higher values (50+) for swing trading.

Baseline Type: Selects the moving average used as the center of gravity. "Hull MA" is the default for its responsiveness, while "SMA" offers a smoother, slower baseline.

Trend Filter: A safety mechanism that checks a higher timeframe (e.g., 4-hour or Daily). If enabled, the indicator will block "Buy" signals if the higher timeframe trend is bearish, helping traders stay on the right side of the market.

Volume Threshold: Adjusts what defines "High Volume." Increasing this value makes "Ignition" signals rarer but potentially more reliable.


Disclaimer: This indicator is provided for educational purposes only. Past performance does not guarantee future results.