Elliot Wave Squeeze Oscillator UPDATED V1.0
The EWO Squeeze indicator is a hybrid tool that fuses momentum analysis with volatility compression signals to pinpoint potential breakout opportunities. It comprises three key elements:
-Histogram Bars: These represent the Elliott Wave Oscillator (calculated as the difference between a fast and a slow moving average of the close) and indicate the strength and direction of momentum.
-Breakout Bands: These are dynamic, recursively updated lines that outline the oscillator’s normal range. When the oscillator breaks out of these bands, it signals an abnormal momentum surge. It has options for both standard deviation and exponential smoothed bands.
-Compression Dots: These appear during periods of low volatility (when Bollinger Bands are fully contained within Keltner Channels) and warn that a significant price move may soon follow.
The overall goal is to alert traders to phases of volatility compression and to provide early signals for potential trend breakouts.
HOW TO USE IT
-For Long Entries: Look for the histogram shifting into positive territory and breaking above the upper breakout band; the compression dots should vanish or switch, indicating the end of a squeeze and the start of an upward impulse.
-For Short Entries: Seek confirmation when the histogram turns negative and breaches below the lower breakout band; again, a change in the compression dots signals a release of low volatility and the potential onset of downward momentum.
-Exits: Consider exiting when the histogram loses momentum, the breakout bands start to reconverge, or when opposing signals appear (such as a reversal in the squeeze condition).
This version is an optimized version of the original trading view script:
https://www.tradingview.com/script/2T3A ... M-Squeeze/
Change Log V1.0
-Performance improvements
-Added Alerts (standard alerts are fired when a bullish histogram breaks the upper band, or a bearish one breaks the lower band. Option to use the squeeze as filter)