== Usage ==
Overbought/sold doesn't mean a trend is about to reverse immediately. It means the *rate of change in direction* of the trend is unsustainably strong.
Overbought signals in an uptrend mean the trend is overheating. It could still continue, but it's most likely, as soon as the overoverbought signals stop, to rest, retrace, or reverse. This is a signal to tighten long stops.
Overbought signals often don't appear at the very top of the trend, by design. A flip to a downtrend is the clearest signal here.
Oversold signals in an uptrend mean the countertrend down is probably finishing. This is a signal to buy the dip/pad a long.
Reverse the above for a downtrend.
This indicator works on any market on any timeframe. Obviously, the lower the timeframe, the more chop.
Don't trade blindly on these signals alone. Use with market structure, support & resistance, and your other favourite indicators.
== Settings ==
Trend Lookback Period - The numbers of bars back to include price action. Higher is smoother and less reactive.
Trend Colour Mode - Classic is red/green/grey. Gradient is a colour gradient according to graduated trend strength.
Trend Upper Neutral Threshold - Defines the upper bound of a zone where trend strength is considered neither bullish nor bearish. Set to to 50 to disable.
Trend Lower Neutral Threshold - Defines the lower bound of a zone where trend strength is considered neither bullish nor bearish. Set to to 50 to disable.
Show Overbought & Oversold? - Flags each bar where price action is overbought or oversold with little triangles.
Overbought/sold Lookback Period - Lower values help pick local tops and bottoms within the overall trend for swinging.
Overbought/sold Adaptive Length - How quickly the overbought/sold threshold adapts to extreme moves and quiet periods. The lower the number, the more adaptive. A very high number approximates a simple average of all peaks/troughs.
== Alerts ==
There are no inbuilt alert conditions for this indicator.
== No Repainting ==
According to my understanding, this indicator does not repaint, meaning, it doesn’t go back and alter any bars in the past. However, until a candle closes, the indicator can only use the current price, and so the drawings, colours and warnings for the current candle (including any lines that join the current candle to the previous one) will change as the price changes. Once the candle closes, they are fixed.
The overbought/sold calculations use Williams Fractals, which by definition cannot be known until some bars afterwards. However, each new Williams Fractal only affects calculations in the future, not the past.
== Credits ==
The idea for using SSMAs to create a price action channel came from @TrueCrypto28's YouTube video Anatomy of a Trade.
All the code is my own.
== Disclaimer ==
No indicator is a substitute for knowing what you’re doing. By using this indicator you agree that it might not do what you or anyone else expects. You retain full responsibility for your trading at all times. Before trading with actual money, first make sure your risk management is professional-level.
== More Information ==
Our other indicators: https://www.tradingview.com/u/SimpleCryp...
⭐️ Pro scripts: https://simplecrypto.life/pro-scripts/
📗 Articles: https://simplecrypto.life/articles/
🙋Get help with Pinescript: https://simplecrypto.life/get-help-with-pinescript/