Retracement Painpoints - Robinhodl21

Description:

Retracement Painpoints is crafted to delve into the psychology of markets, particularly assets that are heavily driven by profit expectations and hype cycles. This tool excels when applied to assets experiencing strong hype phases. By visualizing downturns, you can assess which pullbacks are mere pauses in the hype cycle and which ones might signal the end of a trend or precede more significant declines. This insight allows you to identify critical points where market sentiment shifts, helping you make more informed trading decisions.

Main Features:

• Focuses on assets influenced by hype and strong profit expectations.
• Helps distinguish between normal retracements and potential trend reversals.

Trend Detection Methods:

• Moving Average (MA): Utilizes a customizable MA period to determine market trends.
• Delta to All-Time High (ATH): Analyzes the percentage distance from the ATH to define trend direction.
• No Trend Detection: Allows for neutral analysis without trend bias.

Statistical Drawdown Analysis:

• Identifies local minima in drawdowns to calculate statistically significant levels.
• Option to calculate statistics based on trend direction (bullish/bearish).
• Adjustable variables for fine-tuning statistical levels.

Visualization:

• Plots drawdown curves with color-coding based on trend direction.
• Displays calculated statistical levels on the chart to highlight potential pain points.

Usage:

Set Parameters:

• Trend Detection Method: Choose your preferred method (MA, Delta to ATH, or None).
• MA Period: Define the period for the moving average (default: 420).
• Delta to ATH (%): Set the threshold for distance to ATH (default: 30%).
• Neutral Zone Delta to ATH (%): Define the neutral market zone (default: 60%).
• Stat Variables 1 & 2: Adjust these to select the desired statistical drawdown levels.
• Minimum Drawdown Threshold (%): Set the minimum drawdown to consider in analysis (default: 10%).

Interpretation:

• Drawdown Curve: Monitor percentage declines from local maxima. The color indicates the current trend direction: Green: Uptrend. Red: Downtrend. Gray: Neutral or no trend detection.
• Statistical Levels: Use the displayed levels as potential support or resistance zones, reflecting key psychological levels in the market.

Strategic Application:

• Identify crucial areas where the price has historically reversed.
• Assess whether a downturn is a typical retracement within a hype cycle or a sign of a more significant decline.
• Combine this tool with other technical analysis methods to enhance your trading strategy.
• Adjust settings based on market conditions and personal trading preferences.

Notes:

• The indicator is based on historical data and should not be used as the sole basis for trading decisions.
• It's recommended to test the indicator across various markets and timeframes.
• Past performance is not indicative of future results.

Created by Robinhodl