OPEN-SOURCE SCRIPT
HMM Regime Indicator
HMM Regime Indicator
Overview:
The HMM Regime Indicator is designed to help traders identify market regimes by analyzing trend strength, momentum, and price deviation. It uses a combination of the Average Directional Index (ADX), Relative Strength Index (RSI), and Commodity Channel Index (CCI) to classify market conditions into three distinct regimes: Bullish, Bearish, and Sideways.
Key Features:
ADX (Average Directional Index): Measures the strength of a trend. A high ADX value indicates a strong trend, while a low value suggests a weak or non-existent trend.
RSI (Relative Strength Index): Identifies overbought or oversold conditions. An RSI above 70 typically indicates overbought conditions, while an RSI below 30 suggests oversold conditions.
CCI (Commodity Channel Index): Evaluates the price deviation from its average. High CCI values indicate that prices are well above their average, while low values suggest prices are below their average.
Regime Detection:
Bullish Regime: Identified when the ADX indicates a strong trend, and both RSI and CCI suggest overbought conditions. This regime is marked with a green background on the chart.
Bearish Regime: Detected when the ADX shows a strong trend, and both RSI and CCI indicate oversold conditions. This regime is highlighted with a red background.
Sideways Regime: Occurs when neither bullish nor bearish conditions are met, suggesting a lack of strong directional movement. This regime is shown with a blue background.
Usage:
This indicator is useful for traders looking to understand the current market environment and adjust their strategies accordingly. By identifying the prevailing market regime, traders can make more informed decisions about entering or exiting trades.
Customization:
Users can adjust the input parameters for ADX, RSI, and CCI to better fit their trading style and the specific asset being analyzed. The default settings are optimized for general use but can be tailored to suit individual preferences.
Overview:
The HMM Regime Indicator is designed to help traders identify market regimes by analyzing trend strength, momentum, and price deviation. It uses a combination of the Average Directional Index (ADX), Relative Strength Index (RSI), and Commodity Channel Index (CCI) to classify market conditions into three distinct regimes: Bullish, Bearish, and Sideways.
Key Features:
ADX (Average Directional Index): Measures the strength of a trend. A high ADX value indicates a strong trend, while a low value suggests a weak or non-existent trend.
RSI (Relative Strength Index): Identifies overbought or oversold conditions. An RSI above 70 typically indicates overbought conditions, while an RSI below 30 suggests oversold conditions.
CCI (Commodity Channel Index): Evaluates the price deviation from its average. High CCI values indicate that prices are well above their average, while low values suggest prices are below their average.
Regime Detection:
Bullish Regime: Identified when the ADX indicates a strong trend, and both RSI and CCI suggest overbought conditions. This regime is marked with a green background on the chart.
Bearish Regime: Detected when the ADX shows a strong trend, and both RSI and CCI indicate oversold conditions. This regime is highlighted with a red background.
Sideways Regime: Occurs when neither bullish nor bearish conditions are met, suggesting a lack of strong directional movement. This regime is shown with a blue background.
Usage:
This indicator is useful for traders looking to understand the current market environment and adjust their strategies accordingly. By identifying the prevailing market regime, traders can make more informed decisions about entering or exiting trades.
Customization:
Users can adjust the input parameters for ADX, RSI, and CCI to better fit their trading style and the specific asset being analyzed. The default settings are optimized for general use but can be tailored to suit individual preferences.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.