Cycle Swing Momentum

Adaptive Ultra-Smooth Momentum indicator

The Cycle-Swing-Indicator "CSI" provides an optimized "momentum" oscillator based on the current dominant cycle by looking at the swing of the dominant cycle instead of the raw source momentum. Offering the following improvements:

  • Smoothness
  • Zero delay
  • Sharpness at turning points
  • Robust and adaptable to market conditions
  • Accurate deviation detection

The following common problems with standard indicators are solved by this indicator:

First, normal indicators introduce a lot of false signals due to their noisy signal line. Second, to compensate for the noise, one would normally try to add some smoothing. But this only results in adding more delay to the indicator, which makes it almost useless. Third, standard indicators require a length adjustment to derive reliable signals. However, you never know how to set the right length.

All three problems described above are solved by the developed adaptive cyclic algorithm.

The above chart shows current Bitcoin 4h data from the last days as of writing with the proposed signal reading for this indicator. The standard momentum indicator is included for comparison.

The indicator works without any parameter and can be applied to any chart and any time-frame. It will adapt automatically to the Dominant Cycle and use the dominant cycle of the source data to derive the ultra smooth momentum curve. Adaptive upper/lower bands are included and highlight areas with extreme readings. Automatic divergence detection can be turned off/on.

The indicator can be used like any oscillator. In addition, it provides adaptive high and low bands.
* Look for turns above the upper/lower bands
* Look for divergences between source and signals line

Further reading/Original source:
The indicator uses the dominant cycle to optimize signal, smoothing and cyclic memory. To get more in-depth information on the Cycle Swing Indicator, please read Chapter 10 "Cycle Swing Indicator: Trading the swing of the dominant cycle" of the book "Decoding the Hidden Market Rhythm, Part 1" available at your favorite book store.

Related ideas:
Please also check the cyclic RSI indicator which also uses cyclic information to improve the signal.

Lars von Thienen

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