Composite Fear & Greed Index

Composite Fear & Greed Index

This is an advanced, professional-grade sentiment analysis engine designed to quantify market psychology. Unlike standard oscillators that rely on a single metric, this script uses a weighted composite of four distinct technical components to generate a holistic "Fear & Greed" score.

It includes Multi-Timeframe (MTF) capabilities, proprietary FOMO/Panic detection logic, and Zero-Lag trend analysis.

1. Unique Mathematical Methodology
This script is not a simple overlay of existing indicators. It uses a Composite Normalization Engine to blend four distinct metrics into a single, bounded 0-100 oscillator.

The "Mashup" Problem Solved: Standard indicators like MACD are "unbounded" (they can go to infinity), while RSI is "bounded" (0-100). You cannot simply average them.

Our Solution: This script calculates the Z-Score of the MACD histogram relative to its historical deviation and normalizes it into a 0-100 percentile. This allows for a mathematically valid combination with RSI and Bollinger Bands.

The Component Logic:

Momentum (RSI): (Weight: 30%) Pure price velocity.

Volatility (Bollinger %B): (Weight: 25%) Relative position within volatility bands.

Trend Strength (Normalized MACD): (Weight: 25%) Uses the custom Z-Score logic described above.

Trend Integrity (ZLEMA): (Weight: 20%) We replaced the standard SMA with a custom Zero-Lag Exponential Moving Average (ZLEMA) algorithm. This removes the "lag" associated with traditional sentiment analysis, allowing the index to react to crypto volatility in real-time.

The Calculation: These raw values are weighted and smoothed to produce the final Index Value.

Greater than 80: Extreme Greed (High risk of reversal)

Less than 20: Extreme Fear (Potential accumulation zone)

2. Unique Features
A. FOMO & Panic Event Detection The script does not just track price; it tracks behavior.

FOMO (Fear Of Missing Out): Triggered when Price breaks the Upper Bollinger Band + RSI is Overbought + Volume spikes > 2.5x the average. This often marks local tops.

PANIC: Triggered when Price drops significantly in one bar + Volume spikes > 3.0x the average + RSI is Oversold. This often marks capitulation bottoms.

B. Divergence Detection The script automatically detects and plots Regular Bullish and Bearish divergences between Price and the Sentiment Index.

Bullish Divergence: Price makes a Lower Low, but Sentiment makes a Higher Low (indicating waning selling pressure).

Bearish Divergence: Price makes a Higher High, but Sentiment makes a Lower High (indicating waning buying pressure). Note: The script plots these signals precisely on the indicator line corresponding to the pivot point.

C. Multi-Timeframe (MTF) Engine Users can view the "Daily" sentiment score while trading on a 5-minute or 15-minute chart. This allows scalpers to align their trades with the higher-timeframe market psychology.

3. Usage Guide
Step 1: Trend Alignment Look at the dashboard or the main line color. Green indicates Greed/Uptrend, Red indicates Fear/Downtrend.

Step 2: Extremes

Sell/Take Profit: When the Index crosses 80 (Extreme Greed) or a "FOMO" triangle appears.

Buy/Long: When the Index crosses 20 (Extreme Fear) or a "PANIC" triangle appears.

Step 3: Confirmation Use the Divergence Dots as confirmation. A "Panic" signal followed by a "Bullish Divergence" dot is a high-probability reversal setup.

Settings
Timeframe: Select the MTF resolution (default is Chart).

Weights: You can adjust the influence of RSI, MACD, BB, or Trend to fit your specific asset class.

Visuals: Fully customizable colors, table position, and toggle switches for shapes/backgrounds.

Disclaimer: This script is for informational purposes only and does not constitute financial advice.