WaveTrend Oscilator

Wavetrend Oscillator – Indicator Description

The Wavetrend Oscillator is a momentum-based technical indicator that helps traders identify overbought and oversold conditions, trend strength, and potential trade entry/exit points. It is particularly effective for scalping and swing trading, as it incorporates multi-timeframe (MTF) analysis by integrating higher timeframe trend confirmation.

📌 Key Features

✔️ WT1 & WT2 Crossover System – Identifies momentum shifts and potential trade signals.
✔️ WT3 (Higher Timeframe Confirmation) – Uses H4 trend filtering to improve accuracy.
✔️ Dynamic Support/Resistance – Based on EMA calculations of price movement.
✔️ Color-Coded Histogram (WT3 Pos/Neg) – Clearly differentiates bullish and bearish conditions.
✔️ Overbought/Oversold Levels – Detects potential reversals with customizable thresholds.

📊 How It Works

1️⃣ WT1 (Green) & WT2 (Red) – Main Oscillator Lines

• A WT1 crosses WT2 upwards → Bullish Signal
• A WT1 crosses WT2 downwards → Bearish Signal

2️⃣ WT3 (Blue Histogram) – Trend Confirmation from Higher Timeframe (H4)

• WT3 > 0 (Lime) → Higher TF confirms an uptrend (favoring long trades).
• WT3 < 0 (Red) → Higher TF confirms a downtrend (favoring short trades).

3️⃣ Overbought & Oversold Zones

• Above 50 (Overbought) → Potential reversal or trend continuation.
• Below -50 (Oversold) → Possible buying opportunity.

📈 Trading Strategy

🔹 Buy Signal:
✔️ H4 WT3 is Positive (Green Histogram)
✔️ WT1 crosses above WT2
✔️ WT1 & WT2 above Oversold (-50) level
✔️ Entry: On next candle close after confirmation.

🔹 Sell Signal:
✔️ H4 WT3 is Negative (Red Histogram)
✔️ WT1 crosses below WT2
✔️ WT1 & WT2 below Overbought (+50) level
✔️ Entry: On next candle close after confirmation.

🔹 Exit Strategy:
✔️ Exit at previous resistance/support or opposite WT1-WT2 crossover.

⚙️ Customizable Inputs

• Higher_TF (Default = H4) → Change higher timeframe for trend filtering.
• Channel_Length & Average_Length → Adjust for sensitivity.
• Signal_Length → Determines how reactive the signal line is.
• Overbought/Oversold Levels → Fine-tune reversal detection.

📌 Why Use This Indicator?

✅ Reduces false signals by filtering through higher timeframe trends.
✅ Combines momentum and trend confirmation for higher accuracy.
✅ Works on multiple assets including Forex, Stocks, Crypto, and Indices.
✅ Ideal for scalping & swing trading with fast-reacting signals.