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Confluence Indicator with Dynamic Cooldown
Updated
Confluence Indicator with Dynamic Cooldown
The Confluence Indicator with Dynamic Cooldown evaluates market conditions using a confluence of six powerful indicators. It combines popular mainstream indicators with advanced filters and cooldown logic to deliver high-quality trading signals across all timeframes. Ideal for traders seeking precision, adaptability, and enhanced decision-making.
How It Works:
The indicator calculates a total score from six key indicators:
RSI (Relative Strength Index): Measures momentum and identifies overbought/oversold conditions.
Laguerre RSI: A smoother RSI variation for clearer trend analysis.
MACD Histogram: Tracks momentum shifts and trend reversals.
VWMA (Volume-Weighted Moving Average): Highlights volume-influenced price trends.
200 EMA (Long-Term EMA): Captures the overall market trend for directional filtering.
ATR (Average True Range): Ensures signals occur during active, volatile markets.
These indicators dynamically adjust based on conviction multipliers, assigning higher weights to stronger signals (e.g., extreme overbought/oversold levels or strong momentum).
Key Features:
1. Dynamic Cooldown Period
Automatically adjusts based on the selected timeframe.
Prevents excessive signals on smaller timeframes and allows more frequent signals on larger timeframes.
Default cooldown for daily timeframe: 20 candles (scaled dynamically for other timeframes).
2. Market Top/Bottom Filtering
Suppresses bullish signals near potential market tops (e.g., price extended above the 200 EMA, RSI overbought).
Suppresses bearish signals near potential market bottoms (e.g., price extended below the 200 EMA, RSI oversold).
3. Signal Types
Very Bullish: Green arrow below the candle (strong upward momentum).
Slightly Bullish: Blue triangle at the bottom (moderate upward momentum).
Slightly Bearish: Purple triangle at the top (moderate downward momentum).
Very Bearish: Red arrow above the candle (strong downward momentum).
Advanced Filtering:
Volume Validation: Signals require above-average trading volume.
Candle Size Validation: Filters out signals from candles with unusually small bodies relative to their range.
Volatility Validation: Uses ATR to ensure signals occur in active markets.
Dynamic Cooldown: Prevents repeated signals within a certain number of candles (scaled dynamically).
Ideal For:
Traders seeking actionable, high-confidence signals.
Avoiding excessive signals in smaller timeframes.
Improving accuracy and reliability in technical analysis.
Customizable Inputs:
Lengths for RSI, MACD, Laguerre RSI, VWMA, and EMA.
Base cooldown for daily timeframes, dynamically scaled for other timeframes.
Filters for market tops/bottoms using EMAs, RSI, and price extensions.
Usage Tips:
Combine with support/resistance levels, trendlines, or candlestick patterns for additional context.
Adjust inputs to suit your trading style, market conditions, and timeframe preferences.
Use alongside a broader strategy for confirmation.
Disclaimer:
This indicator is a tool for technical analysis and does not guarantee profitable trades. Always backtest your strategies before using them in live markets.
The Confluence Indicator with Dynamic Cooldown evaluates market conditions using a confluence of six powerful indicators. It combines popular mainstream indicators with advanced filters and cooldown logic to deliver high-quality trading signals across all timeframes. Ideal for traders seeking precision, adaptability, and enhanced decision-making.
How It Works:
The indicator calculates a total score from six key indicators:
RSI (Relative Strength Index): Measures momentum and identifies overbought/oversold conditions.
Laguerre RSI: A smoother RSI variation for clearer trend analysis.
MACD Histogram: Tracks momentum shifts and trend reversals.
VWMA (Volume-Weighted Moving Average): Highlights volume-influenced price trends.
200 EMA (Long-Term EMA): Captures the overall market trend for directional filtering.
ATR (Average True Range): Ensures signals occur during active, volatile markets.
These indicators dynamically adjust based on conviction multipliers, assigning higher weights to stronger signals (e.g., extreme overbought/oversold levels or strong momentum).
Key Features:
1. Dynamic Cooldown Period
Automatically adjusts based on the selected timeframe.
Prevents excessive signals on smaller timeframes and allows more frequent signals on larger timeframes.
Default cooldown for daily timeframe: 20 candles (scaled dynamically for other timeframes).
2. Market Top/Bottom Filtering
Suppresses bullish signals near potential market tops (e.g., price extended above the 200 EMA, RSI overbought).
Suppresses bearish signals near potential market bottoms (e.g., price extended below the 200 EMA, RSI oversold).
3. Signal Types
Very Bullish: Green arrow below the candle (strong upward momentum).
Slightly Bullish: Blue triangle at the bottom (moderate upward momentum).
Slightly Bearish: Purple triangle at the top (moderate downward momentum).
Very Bearish: Red arrow above the candle (strong downward momentum).
Advanced Filtering:
Volume Validation: Signals require above-average trading volume.
Candle Size Validation: Filters out signals from candles with unusually small bodies relative to their range.
Volatility Validation: Uses ATR to ensure signals occur in active markets.
Dynamic Cooldown: Prevents repeated signals within a certain number of candles (scaled dynamically).
Ideal For:
Traders seeking actionable, high-confidence signals.
Avoiding excessive signals in smaller timeframes.
Improving accuracy and reliability in technical analysis.
Customizable Inputs:
Lengths for RSI, MACD, Laguerre RSI, VWMA, and EMA.
Base cooldown for daily timeframes, dynamically scaled for other timeframes.
Filters for market tops/bottoms using EMAs, RSI, and price extensions.
Usage Tips:
Combine with support/resistance levels, trendlines, or candlestick patterns for additional context.
Adjust inputs to suit your trading style, market conditions, and timeframe preferences.
Use alongside a broader strategy for confirmation.
Disclaimer:
This indicator is a tool for technical analysis and does not guarantee profitable trades. Always backtest your strategies before using them in live markets.
Release Notes
INVERSE THE TRADING INDICATOR AND YOU WILL FIND PERIODS OF OVEREXTED AND OVERSOLD PRICE ACTION 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.
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Disclaimer
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