Simplified Market Forecast

Simplified Market Forecast Indicator

This indicator pairs nicely with the Contrarian 100 MA and can be located here:

Overview

The "Simplified Market Forecast" (SMF) indicator is a streamlined technical analysis tool designed for traders to identify potential buy and sell opportunities based on a momentum-based oscillator. By analyzing price movements relative to a defined lookback period, SMF generates clear buy and sell signals when the oscillator crosses customizable threshold levels. This indicator is versatile, suitable for various markets (e.g., forex, stocks, cryptocurrencies), and optimized for daily timeframes, though it can be adapted to other timeframes with proper testing. Its intuitive design and visual cues make it accessible for both novice and experienced traders.

How It Works

The SMF indicator calculates a momentum oscillator based on the price’s position within a specified range over a user-defined lookback period. It then smooths this value to reduce noise and plots the result as a line in a separate lower pane. Buy and sell signals are generated when the smoothed oscillator crosses above a user-defined buy level or below a user-defined sell level, respectively. These signals are visualized as triangles either on the main chart or in the lower pane, with a table displaying the current ticker and oscillator value for quick reference.

Key Components
Momentum Oscillator: The indicator measures the price’s position relative to the highest high and lowest low over a specified period, normalized to a 0–100 scale.

Signal Generation: Buy signals occur when the oscillator crosses above the buy level (default: 15), indicating potential oversold conditions. Sell signals occur when the oscillator crosses below the sell level (default: 85), suggesting potential overbought conditions.

Visual Aids: The indicator includes customizable horizontal lines for buy and sell levels, shaded zones for clarity, and a table showing the ticker and current oscillator value.

Mathematical Concepts
Oscillator Calculation: The indicator uses the following formula to compute the raw oscillator value:

c1I = close - lowest(low, medLen)
c2I = highest(high, medLen) - lowest(low, medLen)
fastK_I = (c1I / c2I) * 100

The result is smoothed using a 5-period Simple Moving Average (SMA) to produce the final oscillator value (inter).

Signal Logic:
A buy signal is triggered when the smoothed oscillator crosses above the buy level (ta.crossover(inter, buyLevel)).

A sell signal is triggered when the smoothed oscillator crosses below the sell level (ta.crossunder(inter, sellLevel)).

Entry and Exit Rules
Buy Signal (Blue Triangle): Triggered when the oscillator crosses above the buy level (default: 15), indicating a potential oversold condition and a buying opportunity. The signal appears as a blue triangle either below the price bar (if plotted on the main chart) or at the bottom of the lower pane.

Sell Signal (White Triangle): Triggered when the oscillator crosses below the sell level (default: 85), indicating a potential overbought condition and a selling opportunity. The signal appears as a white triangle either above the price bar (if plotted on the main chart) or at the top of the lower pane.

Exit Rules: Traders can exit positions when an opposite signal occurs (e.g., exit a buy on a sell signal) or based on additional technical analysis tools (e.g., support/resistance, trendlines). Always apply proper risk management.

Recommended Usage

The SMF indicator is optimized for the daily timeframe but can be adapted to other timeframes (e.g., 1H, 4H) with careful testing. It performs best in markets with clear momentum shifts, such as trending or range-bound conditions. Traders should:

Backtest the indicator on their chosen asset and timeframe to validate signal reliability.

Combine with other indicators (e.g., moving averages, support/resistance) or price action for confirmation.

Adjust the lookback period and buy/sell levels to suit market volatility and trading style.

Customization Options
Intermediate Length: Adjust the lookback period for the oscillator calculation (default: 31 bars).

Buy/Sell Levels: Customize the threshold levels for buy (default: 15) and sell (default: 85) signals.

Colors: Modify the colors of the oscillator line, buy/sell signals, and threshold lines.

Signal Display: Toggle whether signals appear on the main chart or in the lower pane.

Visual Aids: The indicator includes dotted horizontal lines at the buy (green) and sell (red) levels, with shaded zones between 0–buy level (green) and sell level–100 (red) for clarity.

Ticker Table: A table in the top-right corner displays the current ticker and oscillator value (in percentage), with customizable colors.

Why Use This Indicator?

The "Simplified Market Forecast" indicator provides a straightforward, momentum-based approach to identifying potential reversals in overbought or oversold markets. Its clear signals, customizable settings, and visual aids make it easy to integrate into various trading strategies. Whether you’re a swing trader or a day trader, SMF offers a reliable tool to enhance decision-making and improve market timing.


Tips for Users
Test the indicator thoroughly on your chosen asset and timeframe to optimize settings.
Use in conjunction with other technical tools for stronger trade confirmation.
Adjust the buy and sell levels based on market conditions (e.g., lower levels for less volatile markets).
Monitor the ticker table for real-time oscillator values to gauge market momentum.

Happy trading with the Simplified Market Forecast indicator!