Price Volatility Divergence with Reliability ScoringPrice–Volatility Divergence with Reliability Scoring
Normally, rising price comes with falling implied volatility — fear drains out of a rally. When price pushes to a new high while fear is also rising (or falls to a new low while fear falls), that disagreement is an anomaly worth flagging. This script builds a "fear" oscillator from an implied-volatility index, marks where it diverges from price, and — the original part — scores in real time whether those divergences have actually been worth trading on your symbol, and which direction is carrying the edge.
Why these components are combined (and how they work together). Three pieces form one pipeline, not three separate signals:
An implied-volatility "fear" series — chosen as raw level, term-slope (vol minus its own trend), or variance-risk-premium (implied minus realized). It's z-scored and negated so price-up/fear-up reads as an ordinary bearish divergence on the line.
Confirmed-pivot divergence between that fear series and price — regular and hidden, with an optional triple-pivot mode.
A binomial-proportion confidence test that asks, for each divergence class, whether the expected move followed more often than a same-zone baseline.
Part 2 only fires where price and fear disagree; part 3 decides whether that disagreement has historically mattered here, per direction. Remove any one and the script can't answer its question — "is this fear divergence worth trading, and which way?"
How to read it. The verdict panel translates the statistics: green = these divergences have beaten a same-spot baseline here; red = they've lost to it (skip, or try another fear measure/timeframe); amber = not established yet; grey = still gathering data. "Best signal" names the direction with the strongest measured edge so you know which side to favour. "Reward : risk" is the average best vs worst move after a signal, in ATR. Optional key-info and per-class tables (off by default) show the full breakdown.
Important — this is a proxy, not literal skew. True option skew needs the full per-strike implied-volatility surface, which charts don't expose. This uses a charted VIX / term-structure proxy, stated plainly so you know exactly what you're reading.
Universal. Needs a price source (the chart) and an implied-volatility index, both set in inputs. Defaults target NIFTY futures with India VIX; change the volatility symbol to VIX, VSTOXX, etc. for other markets.
Outputs for other scripts. Generic EXP_* values (oscillator, signal, probability, edge, edge lower-bound, sample count, regime, implied-vol level, fear percentile) are published to the Data Window for use via input.source().
Concept credits. Implied-volatility index construction — CBOE methodology. Variance-risk-premium — academic options literature. Binomial score confidence interval — E. B. Wilson. Trend-efficiency regime measure — P. Kaufman.
Disclaimer. For research and education only. Not financial advice, not a recommendation, not a guarantee of future results. All figures are in-sample and past-only. Markets carry risk — do your own research and manage your own risk. Indicator
Crypto: Fear & Greed Index [invincible3]Crypto: Fear & Greed Index
Crypto: Fear & Greed Index is a multi-factor sentiment oscillator designed to estimate crypto market risk appetite directly inside PulseWire. Instead of relying on a single RSI or momentum reading, this indicator combines several market proxies into one smoothed 0–100 sentiment index.
The model uses price momentum, volatility behavior, RSI strength, volume pressure, range position, crypto breadth, stablecoin dominance, TOTAL market trend, and BTC dominance context. These factors are auto-normalized into a composite Fear & Greed score.
The oscillator is divided into clear sentiment zones:
0–25: Extreme Fear
25–45: Fear
45–55: Neutral
55–75: Greed
75–100: Extreme Greed
The indicator also includes a market-regime layer to classify conditions as Bull / Risk-On, Bear / Risk-Off, or Mixed / Transition. This helps traders avoid interpreting fear and greed in isolation.
Key features:
• Multi-factor crypto sentiment model
• Auto-normalized Fear & Greed score
• Adaptive dark/light chart colors
• Risk-on / risk-off regime detection
• Crypto breadth using major market symbols
• Stablecoin dominance and BTC dominance context
• TOTAL and TOTAL2 market trend integration
• Fear, Neutral, and Greed oscillator zones
• Dashboard with index value, regime, bias, factor scores, and weights
• Visual Fear-to-Greed meter
• Accumulation, Risk, Trend, and Trim context markers
• Regular bullish and bearish divergence detection
• Divergence plotted on both price chart and oscillator
• Alerts for major sentiment transitions and divergence signals
How to interpret:
Extreme Fear does not automatically mean buy. In a bear regime, fear can continue and price may keep falling. Extreme Fear becomes more useful when the broader regime is improving or when bullish divergence appears.
Extreme Greed does not automatically mean sell. In a strong bull regime, greed can support continuation. However, extreme greed with fading momentum may indicate crowding risk, where trimming or reducing exposure may be considered.
The indicator works best as a sentiment and risk-context tool, not as a standalone buy/sell system. It should be combined with price structure, support and resistance, volume, trend filters, and risk management.
This indicator is designed primarily for crypto markets. It can be applied to BTC, ETH, altcoins, and other crypto symbols. BTC is not the only supported asset; BTC is used as one part of the broader market-context model.
Disclaimer:
This script is for educational and analytical purposes only. It does not provide financial advice. Always use proper risk management and confirm signals with your own trading plan.
Indicator
Advanced Fear & Greed Cycle (Quant Model)## Overview
The **Advanced Fear & Greed Cycle (Quant Model) v6** is a pure quantitative oscillator designed to decode market sentiment by measuring the architectural divergence between smart money accumulation and retail distribution. Fully upgraded to Pine Script v6, this script addresses standard oscillator limitations by implementing dynamic time-frequency normalization ($0-100$ fixed scale).
Unlike standard sentiment proxies, this model filters out price-action noise by isolating volume flows, directional volatility, and mean-reversion extensions simultaneously.
---
## Mathematical Architecture & Core Engines
### 1. Directional Volatility Engine
Standard models treat volatility expansions as pure panic. This algorithm isolates **Directional Volatility**:
- A 14-period Average True Range (ATR) is mathematically normalized over a dynamic 90-day rolling quarter (`lookback`).
- **Trend Filter:** Volatility is converted into the `vol_fear` metric **only** if the closing price is below its 14-period Simple Moving Average (`is_descending`). Upside expansions (bullish breakouts) are correctly filtered out to prevent false panic readings.
### 2. Normalized Volume & Flow Sentiment
Liquidity and order-flow tracking are computed via a three-layered matrix:
- Normalized Volume spikes relative to the quarterly window.
- Inside-candle Selling Pressure ( AMEX:HIGH - Close$ versus the overall candle range).
- A normalized On-Balance Volume (OBV) structure to track mathematical capital inflows and outflows.
### 3. Boundary-Proof Macro Extension (Mayer Proxy)
To track cyclical overextensions, the script calculates the asset's percentage distance from its long-term moving average (SMA 200 on Daily, SMA 40 on Weekly charts).
To solve the scale break-out issue (where different assets experience wildly different percentage extensions), a **MinMax Normalization** is applied. This compresses the structural extension into a bound $0-100\%$ scale (`extension_norm`) based on the rolling quarter's extremes.
---
## The Greed Score Synthesizer
The final plotting line is the **Greed Score**, a mathematically symmetric index calculated as:
$$\text{Greed Score} = \frac{(100 - \text{Fear Index}) + \text{Extension Norm}}{2}$$
This creates a fixed-bound oscillator ($0$ to $100$) that charts three distinct market phases:
- 🟢 **INSTITUTIONAL ACCUMULATION (Green Zone / < 20):** High systemic fear combined with compressed macro price extensions (< 25%). Smart money absorbs panicking retail order flow near historical value areas.
- ⚪ **NEUTRAL REGIME (Gray Line):** Symmetrical equilibrium where supply and demand are balanced.
- 🔴 **RETAIL FOMO / BUBBLE (Red Zone / > 80):** Zero systemic fear combined with extreme quarterly price overextensions. Retail traders buying the top driven by euphoria, highlighting distribution blocks.
---
## Display Dashboard & Custom Parameters
The top-right informational panel provides real-time diagnostic outputs of the quantitative data (Current Cycle State, Exact Greed Score, and Normalized Extension %). Traders can adjust the `Soglia Bolla Normalizzata` input to calibrate the macro-exhaustion scanner to specific asset classes (Equities, Forex, or Cryptocurrencies).
---
Disclaimer: This tool calculates mathematical probabilities based on normalized historical structures. It does not provide definitive buy/sell signals or financial advice. Always integrate sound risk management protocols. Indicator
Indicator
Synthetic IV Rank [UAlgo]Synthetic IV Rank is a volatility analysis indicator that creates a practical proxy for IV Rank when direct options implied volatility data is not available. Instead of reading an options chain, the script estimates a synthetic volatility series from price action using a Yang Zhang style historical volatility model, then normalizes that value into a 0 to 100 rank across a user defined lookback window.
This makes the tool especially useful for traders who want an IV Rank style workflow on instruments or markets where true implied volatility is unavailable, limited, or inconsistent. The indicator can be used on stocks, indices, forex, commodities, and crypto, with a dedicated Crypto Mode for annualization based on 365 days.
The script is built as a separate pane indicator and focuses on clear regime awareness. It plots a smooth IV Rank line, adds visual threshold references for high and low volatility zones, and shows a live status label on the most recent bar with both the current rank and the raw synthetic volatility value. The overall design makes it suitable for fast regime checks, mean reversion context, premium selling style filters, and volatility expansion monitoring.
Important note: This is a synthetic IV Rank approximation based on historical price volatility. It is not a substitute for true options implied volatility from an options chain.
🔹 Features
🔸 1) Synthetic IV Rank Using a Yang Zhang Style Volatility Model
The indicator estimates volatility from price data using a Yang Zhang style framework, then converts that estimate into an IV Rank style percentile scale. This gives users an IV Rank like signal even when broker feeds do not provide options implied volatility.
🔸 2) Engine Based Design with Structured Inputs
The script uses a custom VolatilityEngine type to organize the core calculation parameters:
hv_length for volatility estimation length
lookback_length for IV Rank normalization window
annual_factor for market specific annualization
This structure makes the logic easier to maintain and extend.
🔸 3) Stock and Crypto Annualization Modes
The engine supports two annualization conventions through a simple input toggle:
252 day convention for traditional markets
365 day convention for crypto markets
This is a practical detail because the same raw volatility process can produce different annualized values depending on the asset class.
🔸 4) Robust IV Rank Normalization with Safe Fallback
The script computes IV Rank by comparing the current synthetic volatility value against the lowest and highest values over the selected lookback period. If the range collapses to zero, the script safely assigns a neutral rank of 50 instead of causing a division issue.
This improves reliability in flat or low variance periods.
🔸 5) Clear Regime Visualization
The indicator includes a strong visual layout designed for quick interpretation:
A main IV Rank line
A mid reference line at 50
High and low threshold markers at 80 and 20
Gradient fills that visually emphasize extreme zones
This helps users recognize volatility regime shifts at a glance.
🔸 6) Dynamic Last Bar Status Labels
On the latest bar, the script prints a compact status label that shows:
Current IV Rank value
Regime label such as EXTREME FEAR, COMPLACENCY, or NEUTRAL
It also adds a secondary information label showing the raw Yang Zhang synthetic volatility percentage. This gives both normalized context and raw measurement at the same time.
🔸 7) Practical Regime Classification
The script uses simple but effective thresholds for regime tagging:
Above 80 signals elevated volatility conditions
Below 20 signals compressed volatility conditions
Between 20 and 80 is treated as neutral
These thresholds align with common IV Rank style interpretation used in discretionary and systematic workflows.
🔹 Calculations
1) Engine Initialization
On the first bar, the script initializes the custom volatility engine and stores:
The Yang Zhang calculation length
The IV Rank lookback window
The annualization factor based on asset class mode
If Crypto Mode is enabled, the annual factor uses the square root of 365. Otherwise it uses the square root of 252.
2) Synthetic Volatility Source Series
The indicator computes a Yang Zhang style historical volatility estimate from OHLC data. The model combines multiple variance components so it can capture more market behavior than a simple close to close volatility series.
The script calculates:
A first variance component labeled as overnight in the comments
An open to close variance component
A Rogers Satchell style intraday variance component from high, low, open, and close relationships
3) First Variance Component (Commented as Overnight)
In the current implementation, the first component is built from the logarithmic return of close / close , and its rolling variance is measured over the user defined length.
This is important to note because the code comments describe an overnight style component, while the actual formula uses consecutive closes in the current version.
4) Open to Close Variance Component
The script computes the logarithmic open to close return log(close / open) and then applies a rolling variance over the selected length. This measures intrabar movement relative to the bar open.
5) Rogers Satchell Intraday Variance Component
To improve intraday variance estimation, the script calculates a Rogers Satchell style daily variance term using four logarithmic relationships derived from high, low, open, and close. It then smooths this with a rolling simple average across the same volatility length.
This component is useful because it incorporates more intrabar range information than a simple close based measure.
6) Yang Zhang Weighting Factor
The script computes a weighting coefficient k that depends on the volatility length. This weight balances the contribution of the open to close variance and the Rogers Satchell component in the final combined variance.
The implementation follows the standard Yang Zhang style weighting formula shown in the script comments.
7) Combined Synthetic Volatility and Annualization
After computing the variance components, the script combines them into a single Yang Zhang style variance estimate, takes the square root to obtain volatility, and annualizes the result with the engine annual factor. The final synthetic volatility value is expressed as a percentage.
In practical terms, this output is the raw volatility series that the script later converts into Synthetic IV Rank.
8) IV Rank Calculation
The IV Rank logic measures where the current synthetic volatility sits relative to its historical range over the selected lookback:
It finds the lowest synthetic volatility in the lookback window
It finds the highest synthetic volatility in the lookback window
It scales the current value to a 0 to 100 rank
If the lookback range is flat, the script assigns 50.0 as a neutral fallback.
This normalization step is what makes the output behave like an IV Rank style regime indicator rather than a raw volatility plot.
9) Regime State Classification
On the latest bar, the script assigns a text state from the current IV Rank:
EXTREME FEAR when rank is above 80
COMPLACENCY when rank is below 20
NEUTRAL otherwise
The label color also changes with the state, which improves visual scanning.
10) Visual Layer Logic
The visualization includes:
A plotted IV Rank line
Hidden boundary plots for fill anchors
Visible threshold markers at 80 and 20
A midpoint reference line at 50
Gradient fills for high volatility and low volatility zones
The fill logic visually intensifies as the IV Rank moves deeper into an extreme zone, helping users identify volatility compression and expansion phases quickly.
11) What This Indicator Represents in Practice
This script is best understood as a normalized historical volatility regime tool designed to mimic the workflow of IV Rank when direct implied volatility data is not available. It is excellent for context filtering and regime awareness, but it should not be interpreted as a true options market implied volatility feed. Indicator
Retail Forex Sentiment Fear/Greed CurrencyPairsRetail Forex Sentiment Fear/Greed CurrencyPairs
Overview
The Retail Forex Sentiment Indicator provides sentiment data for major and cross currency pairs. This indicator displays retail trader positioning using retail brokers data, showing what percentage of retail traders are long or short on each forex pair.
Important: Indicator Split Notice
---------------------------------
Due to PulseWire's limitation of 40 data requests per indicator, the original Retail Sentiment Indicator has been split into TWO separate indicators you will find on PulseWire:
1. This indicator - Specialized for Forex currency pairs (30+ pairs)
[2. Retail Sentiment Indicator - Multi-Asset CFD & Fear/Greed Index - For indices, commodities, cryptocurrencies, and Fear/Greed indices
Please look at both indicators to access all available sentiment data.
Methodology and Scale Calculation
---------------------------------
This indicator operates on a **-50 to +50 scale** with zero representing perfect market equilibrium.
Scale Interpretation:
- **Zero (0)**: Market balance - exactly 50% of traders long, 50% short
- **Positive values**: Majority long (buying) pressure
- Example: If 63% of traders are long, the indicator shows +13 (63 - 50 = +13)
- **Negative values**: Majority short (selling) pressure
- Example: If 92% of traders are short, the indicator shows -42 (50 - 92 = -42)
Features
--------
- **Auto-Detection**: Automatically loads sentiment data based on the current chart symbol
- **Manual Selection**: Choose from 30+ supported currency pairs when auto-detection is unavailable
- **Visual Zones**: Clear greed/fear zones with color-coded backgrounds (green for fear zone, red for greed zone - contrarian colors)
- **Daily Updates**: Live sentiment data from retail CFD providers
Supported Currency Pairs
========================
Major Pairs
-----------
- EURUSD (most traded pair globally)
- GBPUSD (Cable)
USD Pairs
---------
- USDJPY, USDCHF, USDCAD
- USDPLN
PLN (Polish Zloty) Pairs
------------------------
- USDPLN, EURPLN, GBPPLN, CHFPLN
EUR Cross Pairs
---------------
- EURJPY, EURCHF, EURCAD, EURAUD, EURNZD, EURGBP
GBP Cross Pairs
---------------
- GBPJPY, GBPCHF, GBPCAD, GBPAUD, GBPNZD
AUD (Australian Dollar) Pairs
-----------------------------
- AUDUSD, AUDJPY, AUDCHF, AUDNZD, AUDCAD
NZD (New Zealand Dollar) Pairs
------------------------------
- NZDUSD, NZDJPY, NZDCHF, NZDCAD
CAD Cross Pairs
---------------
- CADJPY, CADCHF
CHF Cross Pairs
---------------
- CHFJPY
How to Use
----------
1. **Auto Mode** (Default): Enable "Auto-load Sentiment Data" checkbox to automatically display sentiment for the current chart's currency pair
2. **Manual Mode**: Disable auto-load and select from the dropdown menu for specific currency pairs
3. **Interpretation**:
- Values above 0 (green line) indicate retail traders are net long (greed/bullish sentiment)
- Values below 0 (red line) indicate retail traders are net short (fear/bearish sentiment)
- Extreme zones (+35 to +50 and -35 to -50) indicate strong positioning
Trading Strategy & Market Philosophy
====================================
Contrarian Trading Approach
---------------------------
The primary purpose of this indicator is based on the fundamental market principle that **the majority of retail forex traders are wrong most of the time**, and currency pairs typically move opposite to the positions held by the majority of retail participants.
Key Strategy Guidelines:
- **Contrarian Signal**: When the majority of retail traders are positioned on one side, consider opportunities in the opposite direction
- **Trend Exhaustion Signal**: When retail traders finally flip to trade WITH an established trend after being wrong for extended period, this often signals trend exhaustion
Interpretation Examples:
- High greed readings (majority long) -> Consider short opportunities
- High fear readings (majority short) -> Consider long opportunities
- Sudden sentiment flip during established trends -> Potential trend reversal signal
Forex-Specific Notes
====================
Currency Correlations
---------------------
When analyzing forex sentiment, consider that:
- USD pairs often move together (if retail is long EURUSD, they're often short USDJPY)
- Cross pairs can provide confirmation signals
- Comparing sentiment across related pairs can reveal broader positioning
Auto-Detection Support
----------------------
The indicator supports automatic detection of various broker ticker formats including:
- Standard pairs (EURUSD, GBPUSD, etc.)
- CME Futures symbols (6E, 6B, JY, etc.)
- Micro futures (M6E, M6B, MJY, etc.)
This functionality is powered by regex pattern matching. However, for some CME futures pairs—particularly those involving JPY, CAD, and CHF—auto-detection may not work properly. In such cases, disable the auto-load checkbox and manually select the ticker from the dropdown menu.
Technical Notes
---------------
- Built with PineScript v6
- Dynamic symbol detection with fallback options
- Optimized for performance with minimal resource usage
- Color-coded visualization with customizable zones
Data Sources
------------
This indicator uses curated sentiment data from retail CFD providers. Data is updated regularly and sourced from reputable financial data providers.
Data Infrastructure Status
--------------------------
Current Data Upload Process:
Please note that sentiment data uploads may occasionally experience minor interruptions. However, this should not pose significant issues as sentiment data typically changes gradually rather than rapidly.
Acknowledgments
---------------
We extend our gratitude to **PulseWire** for enabling the use of custom data feeds based on GitHub repositories, making this comprehensive forex sentiment analysis possible.
Disclaimer
----------
This indicator is for educational and informational purposes only. Sentiment data should be used as part of a comprehensive trading strategy and not as the sole basis for trading decisions. Past performance does not guarantee future results. The contrarian approach described is a market theory and may not always produce profitable results. Forex trading involves significant risk of loss.
Indicator
Smart Fear & Greed Index [MarkitTick]💡 This comprehensive technical tool is designed to quantify market sentiment on an asset-specific basis, translating complex price action into a singular, normalized gauge of "Fear" and "Greed." While traditional Fear & Greed indices rely on macro-economic data (like put/call ratios or junk bond demand) generally applied to the broad S&P 500, this script calculates a localized index for the specific chart you are viewing. It synthesizes Momentum, Volatility, Volume, and Price Positioning into a bounded 0-100 oscillator, aiming to identify psychological extremes where market reversals are statistically more likely to occur.
✨ Originality and Utility
● Asset-Specific Sentiment Analysis
Most sentiment tools are external to the chart (e.g., news sentiment or broad market indices). The Smart Fear & Greed Index is unique because it internalizes this logic, creating a bespoke psychological profile for any ticker—whether it is Crypto, Forex, or Stocks. It allows traders to see if *this specific asset* is overheated (Greed) or oversold (Fear) relative to its own recent history.
● The "Buy the Fear, Sell the Greed" Logic
The script employs a contrarian color-coding philosophy aligned with the famous investment adage: "Be fearful when others are greedy, and greedy when others are fearful."
When the indicator shows Fear (Low values), it colors the zone Green, signaling a potential buying opportunity (discount).
When the indicator shows Greed (High values), it colors the zone Red, signaling potential downside risk (premium).
● Integrated Divergence Detection
Unlike standard oscillators that leave interpretation entirely to the user, this tool includes an automated divergence engine. It detects discrepancies between the sentiment index and price action, plotting lines and labels to highlight potential exhaustion points before they become obvious on the price chart.
🔬 Methodology and Concepts
The calculation is driven by a custom User-Defined Type (UDT) called QuantEngine , which aggregates four distinct technical "pillars" to form the final Composite Index.
• Pillar 1: Momentum (RSI)
The engine utilizes the Relative Strength Index to measure the velocity and magnitude of directional price movements. High momentum contributes to the "Greed" score, while collapsing momentum contributes to "Fear."
• Pillar 2: Volatility (Inverted Normalized ATR)
This component interprets volatility through a psychological lens.
Low Volatility is interpreted as complacency or "Greed" (steady uptrends often have low vol).
High Volatility is interpreted as "Fear" (panic selling and erratic ranges often spike volatility).
The script normalizes the Average True Range (ATR) and inverts it so that stability adds to the score, and instability subtracts from it.
• Pillar 3: Volume Strength
Volume is analyzed relative to its moving average. However, raw volume isn't enough; the engine applies directional logic.
High relative volume on an Up-Close adds to the Greed score.
High relative volume on a Down-Close subtracts, adding to the Fear score.
• Pillar 4: Price Position (Stochastic)
This calculates where the current close sits relative to the recent High-Low range. Closing near the highs indicates confidence (Greed), while closing near the lows indicates pessimism (Fear).
• The Composite & Smoothing
These four metrics are averaged to create a raw composite, which is then smoothed via an Exponential Moving Average (EMA) to filter out noise and produce the final, readable "Smart Fear & Greed" line.
🎨 Visual Guide
● The Oscillator Line
This is the primary fluctuating line that moves between 0 and 100.
Values > 50 suggest positive sentiment.
Values < 50 suggest negative sentiment.
● Color-Coded Zones
The plot changes color dynamically to reflect the psychological state:
Red (70-100): Extreme Greed. The market may be irrationally exuberant.
Orange (60-70): Greed. Strong bullish conviction.
Yellow (40-60): Neutral. Indecisive or transitionary market.
Light Green (30-40): Fear. Sentiment is turning bearish.
Bright Green (0-30): Extreme Fear. Panic selling, often a precursor to a value bounce.
● Background Highlights
A semi-transparent Red Background appears when the index breaches 75, warning of a potential "Top."
A semi-transparent Green Background appears when the index drops below 25, highlighting a potential "Bottom."
● Divergence Elements
Red Lines/Labels ("Bear"): Bearish Divergence. Price makes a Higher High, but the Index makes a Lower High. This suggests momentum is waning despite rising prices.
Green Lines/Labels ("Bull"): Bullish Divergence. Price makes a Lower Low, but the Index makes a Higher Low. This suggests selling pressure is drying up.
📖 How to Use
• Identifying Reversals
Wait for the oscillator to enter "Extreme" zones. Do not trade immediately upon entry; wait for the line to exit the extreme zone to confirm the reversal. For example, if the line hits 80 (Red) and then crosses back down below 70, it signals that Greed is fading.
• Trend Continuation
In a strong trend, the indicator may hover in the Greed (Orange) or Fear (Light Green) zones for extended periods. In these cases, use the Neutral (Yellow) zone crosses as re-entry signals in the direction of the trend.
• Divergence Confirmation
Use the automated divergence lines as high-conviction triggers. If the background turns Green (Extreme Fear) AND a Bullish Divergence label appears, it provides a stronger technical case for a long position than the zone alone.
⚙️ Inputs and Settings
● Calculation Settings
Global Lookback Period (Default: 21): The core lookback window for RSI, ATR, Volume, and Stochastic calculations. Increasing this makes the index slower and less reactive; decreasing it makes it faster.
Smoothing Length (Default: 5): Determines how smooth the final line is. Higher numbers reduce "whipsaws" but add lag.
Color Main Chart Candles : Colors the chart bars based on Fear/Greed sentiment.
● Divergence Settings
Divergence Lookback (Default: 5): Determines the pivot strength required to register a high or low for divergence checks.
Show Divergence Lines/Labels: Toggles to hide visual clutter if you only want to see the oscillator.
🔍 Deconstruction of the Underlying Scientific and Academic Framework
● Normalization Theory
The core scientific principle here is Min-Max Normalization. The script takes heterogeneous data types—Price (Dollars/Cents), Volume (Shares/Contracts), and Volatility (Points)—and standardizes them into a unit-less distribution between 0 and 100. This allows for the summation of disparate market forces into a single vector.
● Mean Reversion and Oscillator Bounds
The indicator relies on the statistical concept of Mean Reversion. Markets, like elastic bands, can only stretch so far from their average valuation (represented by the 50 line) before snapping back. The "Extreme" zones (Upper and Lower deciles) represent areas of statistical improbability where the likelihood of a continuation decreases and the likelihood of a reversion increases.
● Divergence and Momentum Theory
The divergence logic is grounded in the principle that momentum precedes price. Mathematically, price is the integral of velocity. When the derivative (momentum/sentiment) approaches zero or reverses while the function (price) continues, it signals a non-sustainable anomaly in the data series, often resolved by a price correction.
⚠️ Disclaimer
All provided scripts and indicators are strictly for educational exploration and must not be interpreted as financial advice or a recommendation to execute trades. I expressly disclaim all liability for any financial losses or damages that may result, directly or indirectly, from the reliance on or application of these tools. Market participation carries inherent risk where past performance never guarantees future returns, leaving all investment decisions and due diligence solely at your own discretion. Indicator
VixTrixVixTrix - Because markets move in both directions.
VixTrix was born from a fundamental limitation in traditional volatility indicators: they only measure downside panic, completely missing the greed-driven extremes that form market tops.
How It Works:
Dual-Component Analysis:
vixBear = Panic selling intensity (distance from recent highs)
vixBull = FOMO buying intensity (distance from recent lows)
Oscillator = vixBear - vixBull = Net fear/greed imbalance
When the oscillator is positive, fear dominates (potential bottom forming). When negative, greed dominates (potential top forming).
Professional-Grade Filtering:
The magic happens with the symmetric RMS (Root Mean Square) bands. Unlike fixed percentage bands or standard deviation, RMS:
Creates mathematically symmetric positive/negative thresholds
Naturally adapts to changing volatility regimes
Provides statistical significance to extremes
VixTrix also adds selectable MA smoothing for the RMS calculation:
WMA (default): Balanced – middle-ground approach
VWMA: Volume-weighted – filters low-volume noise
EMA: Responsive – catches quick reversals
SMA: Stable – for swing trading
HMA: Fast and smooth – ideal for day trading
Signals require triple confirmation:
Statistical Extreme: Oscillator beyond RMS band
Price Action Confirmation: Correct candle color (bullish for bottoms, bearish for tops)
Momentum Continuation: Oscillator still moving toward extreme (exhaustion)
This multi-filter approach reduces premature entries and false signals while maintaining early positioning at potential reversal points.
Why This Matters for Your Trading:
In bull markets, traditional fear indicators sit near zero, giving no warning of impending tops.
VixTrix identifies when greed becomes excessive – when FOMO buying reaches statistical extremes that often precede corrections.
In range-bound markets, VixTrix excels at identifying overreactions in both directions, providing high-probability mean reversion opportunities.
During crashes, it captures the panic selling with the same precision as VixFix, but with better timing through its momentum confirmation.
VixTrix spots continuations through:
"No Signal" = Healthy Trend – Oscillator stays between RMS bands (no exhaustion)
Failed Extremes – Touches band but no triple confirmation = trend likely continues
Hidden Divergence – Price makes higher low while oscillator makes shallower low = uptrend continues
Controlled Emotions – Oscillator negative but not extreme in uptrends (greed present but not excessive)
Key Insight: When VixTrix doesn't give a signal during a pullback, institutions aren't panicking – they're just pausing before resuming the trend.
Green columns = Bullish exhaustion (potential bottoms)
Red columns = Bearish exhaustion (potential tops)
Golden RMS bands = Dynamic thresholds adapting to current volatility
Background highlights = Active signal conditions
The Result: A professional-grade oscillator that works in all market conditions – trending up, trending down, or ranging – by measuring the complete emotional spectrum driving price action. Indicator
Ticker Pulse Meter + Fear EKG StrategyDescription
The Ticker Pulse Meter + Fear EKG Strategy is a technical analysis tool designed to identify potential entry and exit points for long positions based on price action relative to historical ranges. It combines two proprietary indicators: the Ticker Pulse Meter (TPM), which measures price positioning within short- and long-term ranges, and the Fear EKG, a VIX-inspired oscillator that detects extreme market conditions. The strategy is non-repainting, ensuring signals are generated only on confirmed bars to avoid false positives. Visual enhancements, such as optional moving averages and Bollinger Bands, provide additional context but are not core to the strategy's logic. This script is suitable for traders seeking a systematic approach to capturing momentum and mean-reversion opportunities.
How It Works
The strategy evaluates price action using two key metrics:
Ticker Pulse Meter (TPM): Measures the current price's position within short- and long-term price ranges to identify momentum or overextension.
Fear EKG: Detects extreme selling pressure (akin to "irrational selling") by analyzing price behavior relative to historical lows, inspired by volatility-based oscillators.
Entry signals are generated when specific conditions align, indicating potential buying opportunities. Exits are triggered based on predefined thresholds or partial position closures to manage risk. The strategy supports customizable lookback periods, thresholds, and exit percentages, allowing flexibility across different markets and timeframes. Visual cues, such as entry/exit dots and a position table, enhance usability, while optional overlays like moving averages and Bollinger Bands provide additional chart context.
Calculation Overview
Price Range Calculations:
Short-Term Range: Uses the lowest low (min_price_short) and highest high (max_price_short) over a user-defined short lookback period (lookback_short, default 50 bars).
Long-Term Range: Uses the lowest low (min_price_long) and highest high (max_price_long) over a user-defined long lookback period (lookback_long, default 200 bars).
Percentage Metrics:
pct_above_short: Percentage of the current close above the short-term range.
pct_above_long: Percentage of the current close above the long-term range.
Combined metrics (pct_above_long_above_short, pct_below_long_below_short) normalize price action for signal generation.
Signal Generation:
Long Entry (TPM): Triggered when pct_above_long_above_short crosses above a user-defined threshold (entryThresholdhigh, default 20) and pct_below_long_below_short is below a low threshold (entryThresholdlow, default 40).
Long Entry (Fear EKG): Triggered when pct_below_long_below_short crosses under an extreme threshold (orangeEntryThreshold, default 95), indicating potential oversold conditions.
Long Exit: Triggered when pct_above_long_above_short crosses under a profit-taking level (profitTake, default 95). Partial exits are supported via a user-defined percentage (exitAmt, default 50%).
Non-Repainting Logic: Signals are calculated using data from the previous bar ( ) and only plotted on confirmed bars (barstate.isconfirmed), ensuring reliability.
Visual Enhancements:
Optional moving averages (SMA, EMA, WMA, VWMA, or SMMA) and Bollinger Bands can be enabled for trend context.
A position table displays real-time metrics, including open positions, Fear EKG, and Ticker Pulse values.
Background highlights mark periods of high selling pressure.
Entry Rules
Long Entry:
TPM Signal: Occurs when the price shows strength relative to both short- and long-term ranges, as defined by pct_above_long_above_short crossing above entryThresholdhigh and pct_below_long_below_short below entryThresholdlow.
Fear EKG Signal: Triggered by extreme selling pressure, when pct_below_long_below_short crosses under orangeEntryThreshold. This signal is optional and can be toggled via enable_yellow_signals.
Entries are executed only on confirmed bars to prevent repainting.
Exit Rules
Long Exit: Triggered when pct_above_long_above_short crosses under profitTake.
Partial exits are supported, with the strategy closing a user-defined percentage of the position (exitAmt) up to four times per position (exit_count limit).
Exits can be disabled or adjusted via enable_short_signal and exitPercentage settings.
Inputs
Backtest Start Date: Defines the start of the backtesting period (default: Jan 1, 2017).
Lookback Periods: Short (lookback_short, default 50) and long (lookback_long, default 200) periods for range calculations.
Resolution: Timeframe for price data (default: Daily).
Entry/Exit Thresholds:
entryThresholdhigh (default 20): Threshold for TPM entry.
entryThresholdlow (default 40): Secondary condition for TPM entry.
orangeEntryThreshold (default 95): Threshold for Fear EKG entry.
profitTake (default 95): Exit threshold.
exitAmt (default 50%): Percentage of position to exit.
Visual Options: Toggle for moving averages and Bollinger Bands, with customizable types and lengths.
Notes
The strategy is designed to work across various timeframes and assets, with data sourced from user-selected resolutions (i_res).
Alerts are included for long entry and exit signals, facilitating integration with PulseWire's alert system.
The script avoids repainting by using confirmed bar data and shifted calculations ( ).
Visual elements (e.g., SMA, Bollinger Bands) are inspired by standard Pine Script practices and are optional, not integral to the core logic.
Usage
Apply the script to a chart, adjust input settings to suit your trading style, and use the visual cues (entry/exit dots, position table) to monitor signals. Enable alerts for real-time notifications.
Designed to work best on Daily timeframe.
Strategy
VIX bottom/top with color scale [Ox_kali]📊 Introduction
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The “VIX Bottom/Top with Color Scale” script is designed to provide an intuitive, color-coded visualization of the VIX (Volatility Index), helping traders interpret market sentiment and volatility extremes in real time.
It segments the VIX into clear threshold zones, each associated with a specific market condition—ranging from fear to calm—using a dynamic color-coded system.
This script offers significant value for the following reasons:
Intuitive Risk Interpretation: Color-coded zones make it easy to interpret market sentiment at a glance.
Dynamic Trend Detection: A 200-period SMA of the VIX is plotted and dynamically colored based on trend direction.
Customization and Flexibility: All colors are editable in the parameters panel, grouped under “## Color parameters ##”.
Visual Clarity: Key thresholds are marked with horizontal lines for quick reference.
Practical Trading Tool: Helps identify high-risk and low-risk environments based on volatility levels.
🔍 Key Indicators
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VIX (CBOE Volatility Index) : Measures market volatility and investor fear.
SMA 200 : Long-term trendline of the VIX, with color-coded direction (green = uptrend, red = downtrend).
Color-coded VIX Levels:
🔴 33+ → Something bad just happened
🟠 23–33 → Something bad is happening
🟡 17–23 → Something bad might happen
🟢 14–17 → Nothing bad is happening
✅ 12–14 → Nothing bad will ever happen
🔵 <12 → Something bad is going to happen
🧠 Originality and Purpose
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Unlike traditional VIX indicators that only plot a line, this script enhances interpretation through visual segmentation and dynamic trend tracking.
It serves as a risk-awareness tool that transforms the VIX into a simple, emotional market map.
This is the first version of the script, and future updates may include alerts, background fills, and more advanced features.
⚙️ How It Works
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The script maps the current VIX value to a range and applies the corresponding color.
It calculates a SMA 200 and colors it green or red depending on its slope.
It displays horizontal dotted lines at key thresholds (12, 14, 17, 23, 33).
All colors are configurable via input parameters under the group: "## Color parameters ##".
🧭 Indicator Visualization and Interpretation
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The VIX line changes color based on market condition zones.
The SMA line shows long-term direction with dynamic color.
Horizontal threshold lines visually mark the transitions between volatility zones.
Ideal for quickly identifying periods of fear, caution, or stability.
🛠️ Script Parameters
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Grouped under “## Color parameters ##”, the following elements are customizable:
🎨 VIX Zone Colors:
33+ → Red
23–33 → Orange
17–23 → Yellow
14–17 → Light Green
12–14 → Dark Green
<12 → Blue
📈 SMA Colors:
Uptrend → Green
Downtrend → Red
These settings allow users to match the script’s visuals to their preferred chart style or theme.
✅ Conclusion
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The “VIX Bottom/Top with Color Scale” is a clean, powerful script designed to simplify how traders view volatility.
By combining long-term trend data with real-time color-coded sentiment analysis, this script becomes a go-to reference for managing risk, timing trades, or simply staying in tune with market mood.
🧪 Notes
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This is version 1 of the script. More features such as alert conditions, background fill, and dashboard elements may be added soon. Feedback is welcome!
💡 Color code concept inspired by the original VIX interpretation chart by @nsquaredvalue on Twitter. Big thanks for the visual clarity! 💡
⚠️ Disclaimer
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This script is a visual tool designed to assist in market analysis. It does not guarantee future performance and should be used in conjunction with proper risk management. Past performance is not indicative of future results. Indicator
Candle Emotion Index (CEI) StrategyThe Candle Emotion Index (CEI) Strategy is an innovative sentiment-based trading approach designed to help traders identify and capitalize on market psychology. By analyzing candlestick patterns and combining them into a unified metric, the CEI Strategy provides clear entry and exit signals while dynamically managing risk. This strategy is ideal for traders looking to leverage market sentiment to identify high-probability trading opportunities.
How It Works
The CEI Strategy is built around three core oscillators that reflect key emotional states in the market:
Indecision Oscillator . Measures market uncertainty using patterns like Doji and Spinning Tops. High values indicate hesitation, signaling potential turning points.
Fear Oscillator . Tracks bearish sentiment through patterns like Shooting Star, Hanging Man, and Bearish Engulfing. Helps identify moments of intense selling pressure.
Greed Oscillator . Detects bullish sentiment using patterns like Marubozu, Hammer, Bullish Engulfing, and Three White Soldiers. Highlights periods of strong buying interest.
These oscillators are averaged into the Candle Emotion Index (CEI):
CEI = (Indecision + Fear + Greed) / 3
This single value quantifies overall market sentiment and drives the strategy’s trading decisions.
Key Features
Sentiment-Based Trading Signals . Long Entry: Triggered when the CEI crosses above a lower threshold (e.g., 0.1), indicating increasing bullish sentiment. Short Entry: Triggered when the CEI crosses above a higher threshold (e.g., 0.2), signaling rising bearish sentiment.
Volume Confirmation . Trades are validated only if volume exceeds a user-defined multiplier of the average volume over the lookback period. This ensures entries are backed by significant market activity.
Break-Even Recovery Mechanism . If a trade moves into a loss, the strategy attempts to recover to break-even instead of immediately exiting at a loss. This feature provides flexibility, allowing the market to recover while maintaining disciplined risk management.
Dynamic Risk Management . Maximum Holding Period: Trades are closed after a user-defined number of candles to avoid overexposure to prolonged uncertainty. Profit-Taking Conditions: Positions are exited when favorable price moves are confirmed by increased volume, locking in gains. Loss Threshold: Trades are exited early if the price moves unfavorably beyond a set percentage of the entry price, limiting potential losses.
Cooldown Period . After a trade is closed, a cooldown period prevents immediate re-entry, reducing overtrading and improving signal quality.
Why Use This Strategy?
The CEI Strategy combines advanced sentiment analysis with robust trade management, making it a powerful tool for traders seeking to understand market psychology and identify high-probability setups. Its unique features, such as the break-even recovery mechanism and volume confirmation, add an extra layer of discipline and reliability to trading decisions.
Best Practices
Combine with Other Indicators . Use trend-following tools (e.g., moving averages, ADX) and momentum oscillators (e.g., RSI, MACD) to confirm signals.
Align with Key Levels . Incorporate support and resistance levels for refined entries and exits.
Multi-Market Compatibility . Apply this strategy to forex, crypto, stocks, or any asset class with strong volume and price action.
Strategy
Candle Emotion Index (CEI)The Candle Emotion Index (CEI) is a comprehensive sentiment analysis indicator that combines three sub-oscillators—Indecision Oscillator, Fear Oscillator, and Greed Oscillator—to provide a single, unified measure of market sentiment. By analyzing bullish, bearish, and indecisive candlestick patterns, the CEI delivers a holistic view of market emotions and helps traders identify key turning points.
How It Works
Indecision Oscillator: Measures market uncertainty using Doji and Spinning Top candlestick patterns. Scores their presence and normalizes the results over a user-defined lookback period.
Fear Oscillator: Measures bearish sentiment using Shooting Star, Hanging Man, and Bearish Engulfing candlestick patterns. Scores their presence and normalizes the results over a user-defined lookback period.
Greed Oscillator: Measures bullish sentiment using Marubozu, Bullish Engulfing, Hammer, and Three White Soldiers candlestick patterns. Scores their presence and normalizes the results over a user-defined lookback period.
Candle Emotion Index Calculation: The CEI is calculated as the average of the Indecision, Fear, and Greed Oscillators: CEI = (Indecision Oscillator + Fear Oscillator + Greed Oscillator) / 3
Plotting: The CEI is plotted as a single line on the chart, representing overall market sentiment.
Reference lines are added to indicate Low Emotion, Neutral, and High Emotion levels.
The Candle Emotion Index provides a unified perspective on market sentiment by blending indecision, fear, and greed into one easy-to-interpret metric. It serves as a powerful tool for traders seeking to gauge market psychology and identify high-probability trading opportunities. For best results, use the CEI in conjunction with other technical indicators to confirm signals. Indicator
Fear/Greed Zone Reversals [UAlgo]The "Fear/Greed Zone Reversals " indicator is a custom technical analysis tool designed for PulseWire, aimed at identifying potential reversal points in the market based on sentiment zones characterized by fear and greed. This indicator utilizes a combination of moving averages, standard deviations, and price action to detect when the market transitions from extreme fear to greed or vice versa. By identifying these critical turning points, traders can gain insights into potential buy or sell opportunities.
🔶 Key Features
Customizable Moving Averages: The indicator allows users to select from various types of moving averages (SMA, EMA, WMA, VWMA, HMA) for both fear and greed zone calculations, enabling flexible adaptation to different trading strategies.
Fear Zone Settings:
Fear Source: Select the price data point (e.g., close, high, low) used for Fear Zone calculations.
Fear Period: This defines the lookback window for calculating the Fear Zone deviation.
Fear Stdev Period: This sets the period used to calculate the standard deviation of the Fear Zone deviation.
Greed Zone Settings:
Greed Source: Select the price data point (e.g., close, high, low) used for Greed Zone calculations.
Greed Period: This defines the lookback window for calculating the Greed Zone deviation.
Greed Stdev Period: This sets the period used to calculate the standard deviation of the Greed Zone deviation.
Alert Conditions: Integrated alert conditions notify traders in real-time when a reversal in the fear or greed zone is detected, allowing for timely decision-making.
🔶 Interpreting Indicator
Greed Zone: A Greed Zone is highlighted when the price deviates significantly above the chosen moving average. This suggests market sentiment might be leaning towards greed, potentially indicating a selling opportunity.
Fear Zone Reversal: A Fear Zone is highlighted when the price deviates significantly below the chosen moving average of the selected price source. This suggests market sentiment might be leaning towards fear, potentially indicating a buying opportunity. When the indicator identifies a reversal from a fear zone, it suggests that the market is transitioning from a period of intense selling pressure to a more neutral or potentially bullish state. This is typically indicated by an upward arrow (▲) on the chart, signaling a potential buy opportunity. The fear zone is characterized by high price volatility and overselling, making it a crucial point for traders to consider entering the market.
Greed Zone Reversal: Conversely, a Greed Zone is highlighted when the price deviates significantly above the chosen moving average. This suggests market sentiment might be leaning towards greed, potentially indicating a selling opportunity. When the indicator detects a reversal from a greed zone, it indicates that the market may be moving from an overbought condition back to a more neutral or bearish state. This is marked by a downward arrow (▼) on the chart, suggesting a potential sell opportunity. The greed zone is often associated with overconfidence and high buying activity, which can precede a market correction.
🔶 Why offer multiple moving average types?
By providing various moving average types (SMA, EMA, WMA, VWMA, HMA) , the indicator offers greater flexibility for traders to tailor the indicator to their specific trading strategies and market preferences. Different moving averages react differently to price data and can produce varying signals.
SMA (Simple Moving Average): Provides an equal weighting to all data points within the specified period.
EMA (Exponential Moving Average): Gives more weight to recent data points, making it more responsive to price changes.
WMA (Weighted Moving Average): Allows for custom weighting of data points, providing more flexibility in the calculation.
VWMA (Volume Weighted Moving Average): Considers both price and volume data, giving more weight to periods with higher trading volume.
HMA (Hull Moving Average): A combination of weighted moving averages designed to reduce lag and provide a smoother curve.
Offering multiple options allows traders to:
Experiment: Traders can try different moving averages to see which one produces the most accurate signals for their specific market.
Adapt to different market conditions: Different market conditions may require different moving average types. For example, a fast-moving market might benefit from a faster moving average like an EMA, while a slower-moving market might be better suited to a slower moving average like an SMA.
Personalize: Traders can choose the moving average that best aligns with their personal trading style and risk tolerance.
In essence, providing a variety of moving average types empowers traders to create a more personalized and effective trading experience.
🔶 Disclaimer
Use with Caution: This indicator is provided for educational and informational purposes only and should not be considered as financial advice. Users should exercise caution and perform their own analysis before making trading decisions based on the indicator's signals.
Not Financial Advice: The information provided by this indicator does not constitute financial advice, and the creator (UAlgo) shall not be held responsible for any trading losses incurred as a result of using this indicator.
Backtesting Recommended: Traders are encouraged to backtest the indicator thoroughly on historical data before using it in live trading to assess its performance and suitability for their trading strategies.
Risk Management: Trading involves inherent risks, and users should implement proper risk management strategies, including but not limited to stop-loss orders and position sizing, to mitigate potential losses.
No Guarantees: The accuracy and reliability of the indicator's signals cannot be guaranteed, as they are based on historical price data and past performance may not be indicative of future results. Indicator
Rich Robin Index, The Crypto Fear & Greed Index with RSI Trend The Relative Strength Index (RSI) is a technical indicator based on price movements that is used to determine whether a particular asset is overbought or oversold. It measures the ratio of rising to falling prices over a certain period of time.
The Fear & Greed Index, on the other hand, is a composite index that tracks the sentiment of the crypto market. It is based on seven indicators, each of which measures a different aspect of market behavior. These indicators are: Safe Haven Demand, Stock Price Breadth, Market Momentum, Stock Price Strength, Put and Call Options, Junk Bond Demand, and Market Volatility.
The combination of the RSI and the Fear & Greed Index can provide valuable insights for crypto traders. The RSI can help identify overbought and oversold conditions, while the Fear & Greed Index can give an overall sense of the sentiment in the market. Together, they can provide a more complete picture of the market conditions. For example, if the RSI is indicating that an asset is overbought, but the Fear & Greed Index is showing that the market is still in a state of fear, it may be a good time to sell. On the other hand, if the RSI is indicating that an asset is oversold, but the Fear & Greed Index is showing that the market is in a state of greed, it may be a good time to buy.
Overall, the combination of the RSI and the Fear & Greed Index can provide useful information for traders to make more informed decisions, by giving a sense of the market conditions, and providing a way to identify overbought and oversold conditions. Indicator
Strategy
Stochastic Vix Fix SVIX (Tartigradia)The Stochastic Vix or Stochastic VixFix (SVIX), just like the Williams VixFix, is a realized volatility indicator, and can help in finding market bottoms as well as tops without requiring bollinger bands or any other construct, as the SVIX is bounded between 0-100 which allows for an objective thresholding regardless of the past.
Mathematically, SVIX is the complement of the original Stochastic Oscillator, with such a simple transform reproducing Williams' VixFix and the VIX index signals of high volatility and hence of market bottoms quite accurately but within a bounded 0-100 range. Having a predefined range allows to find markets bottoms without needing to compare to past prices using a bollinger band (Chris Moody on PulseWire) nor a moving average (Hesta 2015), as a simple threshold condition (by default above 80) is sufficient to reliably signal interesting entry points at bottoming prices.
Having a predefined range allows to find markets bottoms without needing to compare to past prices using a bollinger band (Chris Moody on PulseWire) nor a moving average (Hesta 2015), as a simple threshold condition (by default above 80) is sufficient to reliably signal interesting entry points at bottoming prices.
Indeed, as Williams describes in his paper, markets tend to find the lowest prices during times of highest volatility, which usually accompany times of highest fear.
Although the VixFix originally only indicates market bottoms, the Stochastic VixFix can also indicate good times to exit, when SVIX is at a low value (default: below 20), but just like the original VixFix and VIX index, exit signals are as usual much less reliable than long entries signals, because: 1) mature markets such as SP500 tend to increase over the long term, 2) when market fall, retail traders panic and hence volatility skyrockets and bottom is more reliably signalled, but at market tops, no one is panicking, price action only loses momentum because of liquidity drying up.
Compared to Hesta 2015 strategy of using a moving average over Williams' VixFix to generate entry signals, SVIX generates much fewer false positives during ranging markets, which drastically reduce Hesta 2015 strategy profitability as this incurs quite a lot of losses.
This indicator goes further than the original SVIX, by restoring the smoothed D and second-level smoothed D2 oscillators from the original Stochastic Oscillator, and use a 14-period ZLMA instead of the original 20-period SMA, to generate smoother yet responsive signals compared to using just the raw SVIX (by default, this is disabled, as the original raw SVIX is used to produce more entry signals).
Usage:
Set the timescale to daily or weekly preferably, to reduce false positives.
When the background is highlighted in green or when the highlight disappears, it is usually a good time to enter a long position.
Red background highlighting can be enabled to signal good exit zones, but these generate a lot of false positives.
To further reduce false positives, the SVIX_MA can be used to generate signals instead of the raw SVIX.
For more information on Williams' Vix Fix, which is a strategy published under public domain:
The VIX Fix, Larry Williams, Active Trader magazine, December 2007, web.archive.org
Fixing the VIX: An Indicator to Beat Fear, Amber Hestla-Barnhart, Journal of Technical Analysis, March 13, 2015, ssrn.com
For more information on the Stochastic Vix Fix (SVIX), published under Creative Commons:
Replicating the CBOE VIX using a synthetic volatility index trading algorithm, Dayne Cary and Gary van Vuuren, Cogent Economics & Finance, Volume 7, 2019, Issue 1, doi.org
Note: strangely, in the paper, the authors failed to mention that the SVIX is the complement of the original Stochastic Oscillator, instead reproducing just the original equation. The correct equation for the SVIX was retroengineered by comparing charts they published in the paper with charts generated by this pinescript indicator.
For a more complete indicator, see: Indicator
Levels Of Fear [AstrideUnicorn]"Buy at the level of maximum fear when everyone is selling." - says a well-known among traders wisdom. If an asset's price declines significantly from the most recent highest value or established range, traders start to worry. The higher the drawdown gets, the more fear market participants experience. During a sell-off, a feedback loop arises, in which the escalating fear and price decline strengthen each other.
The Levels Of Fear indicator helps analyze price declines and find the best times to buy an asset after a sell-off. In finance, volatility is a term that describes the degree of variation of an asset price over time. It is usually denoted by the letter σ (sigma) and estimated as the standard deviation of the asset price or price returns. The Levels Of Fear indicator helps measure the current price decline in the standard deviation units. It plots seven levels at distances of 1, 2, 3, 4, 5, 6, and 7 standard deviations (sigmas) below the base price (the recent highest price or upper bound of the established range). In what follows, we will refer to these levels as levels of fear.
HOW TO USE
When the price in its decline reaches a certain level of fear, it means that it has declined from its recent highest value by a corresponding number of standard deviations. The indicator helps traders see the minimum levels to which the price may fall and estimate the potential depth of the current decline based on the cause of the actual market shock. Five-seven sigma declines are relatively rare events and correspond to significant market shocks. In the lack of information, 5-7 sigma levels are good for buying an asset. Because when the price falls that deep, it corresponds to the maximum fear and pessimism in the market when most people are selling. In such situations, contrarian logic becomes the best decision.
SETTINGS
Window: the averaging window or period of the indicator. The algorithm uses this parameter to calculate the base level and standard deviations. Higher values are better for measuring deeper and longer declines.
Levels Stability: the parameter used in the decline detection. The higher the value is, the more stable and long the fear levels are, but at the same time, the lag increases. The lower it is, the faster the indicator responds to the price changes, but the fear levels are recalculated more frequently and are less stable. This parameter is mostly for fine-tuning. It does not change the overall picture much.
Mode: the parameter that defines the style for the labels. In the Cool Guys Mode , the indicator displays the labels as emojis. In the Serious Guys Mode , labels show the distance from the base level measured in standard deviation units or sigmas. Indicator
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