Emotion Line with Volume Confirmation by langshen

How to Use It?
Add the Indicator:

Copy the code into TradingView's Pine Script editor.
Save and add the indicator to your chart.
Understand the Lines:

Emotion Line (Green): Represents the current market sentiment.
MA Emotion Line (Red): A smoothed version of the Emotion Line.
Horizontal Lines:
20% (Gray): Indicates potential positive sentiment (Attention Zone).
40% (Orange): Suggests strong market sentiment (Entry Zone).
80% (Red): Signals overly optimistic sentiment (Reduce Position Zone).
Interpret the Signals:

When the Emotion Line crosses above 20%, it may indicate a positive shift in sentiment.
When the Emotion Line crosses above 40%, it suggests a strong market sentiment, which could be a potential entry point.
When the Emotion Line crosses above 80%, it may indicate an overbought market, signaling a potential reduction in positions.
When the Emotion Line crosses below the MA Emotion Line, it may indicate a weakening sentiment, signaling an exit.
Customize the Inputs:

N Period: Adjust the period for calculating the Emotion Line (default is 7).
MA Period: Adjust the period for the moving average of the Emotion Line (default is 6).
Logic Explanation
Ray Calculation:

The Ray is a smoothed price value calculated as the simple moving average (SMA) of (2 * close + high + low) / 4.
Close Line (CL):

The CL is derived from the Ray and represents the core price trend.
Directional Change (DlR1):

Measures the absolute difference between the current CL and its value two bars ago (CL[2]).
Volume in Range (VlR1):

Sums the absolute differences between the current CL and its previous value (CL[1]) over a specified period.
Efficiency Ratio (ER1):

Calculates the ratio of directional change (DlR1) to volume in range (VlR1), representing the efficiency of price movement.
Cumulative Strength (CS1):

Simplified as the efficiency ratio (ER1).
Cumulative Quotient (CQ1):

Squares the cumulative strength (CS1) to amplify its effect.
Adjusted Moving Average (AMA5):

A dynamic moving average that adjusts based on the CQ1 value, simulating a responsive trend line.
Cost (7-day SMA of AMA5):

The 7-period SMA of the AMA5.
Composite Line (CLX):

The average of AMA5 and Cost.
Emotion Line:

Calculated as the percentage of days where the CLX is higher than its previous value over the last N periods.
MA Emotion Line:

The moving average of the Emotion Line, smoothing out its fluctuations.
Key Features
Trend Identification: Helps identify shifts in market sentiment.
Customizable Periods: Adjust N and M to fit your trading style.
Visual Cues: Horizontal lines provide clear levels for attention, entry, and reduce position signals.
Best Practices
Use this indicator in conjunction with other tools (e.g., RSI, MACD) for confirmation.
Adjust the N and M periods based on your trading timeframe (e.g., shorter periods for scalping, longer periods for swing trading).
Combine the indicator with volume analysis to confirm signals.
This indicator is designed to be simple yet powerful, providing clear insights into market sentiment while adhering to TradingView's coding standards.