Market Flow COG (Oscillator)
Market Flow COG in the "Oscillator" version gives you an aggregated score (bullishness vs. bearishness) based on market flow analysis. I'm using my own definition of market flow since I'm actively doing scientific research on that topic and developing concepts and tools around it.
This indicator is best used together with Market Flow COG (Overlay), which is also public.
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About Market Flow
The market flow is a concept describing the directional force driving price movement that a market experiences based on term-specific (short-, mid- and long-term) momentum as well as dynamic range support and resistance.
In a strong uptrend for example, market flow is upwards, so dynamic range S&R (i.e. Bollinger Bands) is flowing upwards, too. This is increasing the probability to see continuation after dips. In a shifting trend, it is possible to observe market flow still continuing upwards, because the the flow is only changing slowly. Momentum takes a while to run out and exert pressure into the other direction. This phenomenon can be observed on all timeframes in high-volume markets, even more so on the higher timeframes.
Given the complex nature of market flow, there is still a lack of tools available to properly examine it and to derive appropriate trading decisions.
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About Market Flow COG
This indicator calculates a score that indicates where price is in relation all the different COGs (described below). This information is multiplied by a weight depending on the various trends price is in, i.e. a HTF uptrend makes it more likely to see price deviating from the mean to the upside, so the score is not as bearish when price is doing so.
This score is an assessment of how bullish or bearish the market is depending on mean reversion probabilities. If you use this indicator together with the Overlay version of this script, you can visualize where appropriate mean reversion targets are in case score hits very high or low levels. This way, it is possible to supplement your own research and improve your strike rate with your setups. But keep in mind that this indicator is not supposed to be used to derive trading decisions without doing proper interpretation work on the price action itself. It is supposed to help you find evidence supporting your own ideas.
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About "Center of Gravity"
Included as a module in the "Overlay" version of this script - but also being used in the calculations of this script.
The COG is an entity that is pulling price back to it frequently (this is why it is called Center of Gravity) as the law of mean reversion dictates. Mean reversion can be loosely broken up into mean reversion on multiple timeframes, and the COGs are included for ULT (ultra low, 15-60m), L (low, 1h-4h), M (medium, 6h-12H) and H (higher, 1D+) timeframes. As this entity is a new development in TA there is still a lack of scientific evidence that it is reliable. However, if you look at the charts, you will notice that price action will respect this entity and circle around it on the appropriate timeframes most of the time.
The COG is similar to a Bollinger Band, it is using volatility as its main component. However, COGs are aggregated entities looking at more timeframes at the same time, so besides the Time X Volatility perspective that is provided by Bollinger Bands, this entity adds a third dimension by looking at multiple timeframes. The COG is the mean of all the BBs that are included in the calculation, which can be a large number. This makes a COG a meta-analytic entity that is more sensitive to market price action.
The COG helps you in identifying how far and for how long price has been overextended to one side beyond the means. In theory, the probabilities increase dramatically to see a mean reversion to the COG. Watching price interacting with the COG should make clear that the correlations are significant, however there might be differences based on the markets used. The COGs have primarily been tested with the BTCUSD market and for crypto in general.
A way to trade based on COGs is to look for weakness (if price is above the COG) or strength (if price is below the COG) in price action while it is approaching S&R. If signs of accumulation or distribution arise, and the distance to the COG is meaningful (as well as being maintained for a few candles), it can provide additional backing for your long/short scalping and swing trading ideas. I'd recommend to always use the COG in combination with your knowledge on price action.
By using all COGs at the same time for ULTF, LTF, MTF and HTF you can get a feeling for where price is in the context overall market flow.
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Candle Colorization
This script has an optional feature that lets you colorize the candles depending on certain score tresholds you can change manually in the indicator UI. Don't take these as signals, but rather as a possibility to become aware of when price is deviating far from the means.
----------------------
How to Use
You can find in-depth tutorials on how to use this indicator by browsing the links and resources in my signature.
Market Flow COG in the "Oscillator" version gives you an aggregated score (bullishness vs. bearishness) based on market flow analysis. I'm using my own definition of market flow since I'm actively doing scientific research on that topic and developing concepts and tools around it.
This indicator is best used together with Market Flow COG (Overlay), which is also public.
----------------------
About Market Flow
The market flow is a concept describing the directional force driving price movement that a market experiences based on term-specific (short-, mid- and long-term) momentum as well as dynamic range support and resistance.
In a strong uptrend for example, market flow is upwards, so dynamic range S&R (i.e. Bollinger Bands) is flowing upwards, too. This is increasing the probability to see continuation after dips. In a shifting trend, it is possible to observe market flow still continuing upwards, because the the flow is only changing slowly. Momentum takes a while to run out and exert pressure into the other direction. This phenomenon can be observed on all timeframes in high-volume markets, even more so on the higher timeframes.
Given the complex nature of market flow, there is still a lack of tools available to properly examine it and to derive appropriate trading decisions.
----------------------
About Market Flow COG
This indicator calculates a score that indicates where price is in relation all the different COGs (described below). This information is multiplied by a weight depending on the various trends price is in, i.e. a HTF uptrend makes it more likely to see price deviating from the mean to the upside, so the score is not as bearish when price is doing so.
This score is an assessment of how bullish or bearish the market is depending on mean reversion probabilities. If you use this indicator together with the Overlay version of this script, you can visualize where appropriate mean reversion targets are in case score hits very high or low levels. This way, it is possible to supplement your own research and improve your strike rate with your setups. But keep in mind that this indicator is not supposed to be used to derive trading decisions without doing proper interpretation work on the price action itself. It is supposed to help you find evidence supporting your own ideas.
----------------------
About "Center of Gravity"
Included as a module in the "Overlay" version of this script - but also being used in the calculations of this script.
The COG is an entity that is pulling price back to it frequently (this is why it is called Center of Gravity) as the law of mean reversion dictates. Mean reversion can be loosely broken up into mean reversion on multiple timeframes, and the COGs are included for ULT (ultra low, 15-60m), L (low, 1h-4h), M (medium, 6h-12H) and H (higher, 1D+) timeframes. As this entity is a new development in TA there is still a lack of scientific evidence that it is reliable. However, if you look at the charts, you will notice that price action will respect this entity and circle around it on the appropriate timeframes most of the time.
The COG is similar to a Bollinger Band, it is using volatility as its main component. However, COGs are aggregated entities looking at more timeframes at the same time, so besides the Time X Volatility perspective that is provided by Bollinger Bands, this entity adds a third dimension by looking at multiple timeframes. The COG is the mean of all the BBs that are included in the calculation, which can be a large number. This makes a COG a meta-analytic entity that is more sensitive to market price action.
The COG helps you in identifying how far and for how long price has been overextended to one side beyond the means. In theory, the probabilities increase dramatically to see a mean reversion to the COG. Watching price interacting with the COG should make clear that the correlations are significant, however there might be differences based on the markets used. The COGs have primarily been tested with the BTCUSD market and for crypto in general.
A way to trade based on COGs is to look for weakness (if price is above the COG) or strength (if price is below the COG) in price action while it is approaching S&R. If signs of accumulation or distribution arise, and the distance to the COG is meaningful (as well as being maintained for a few candles), it can provide additional backing for your long/short scalping and swing trading ideas. I'd recommend to always use the COG in combination with your knowledge on price action.
By using all COGs at the same time for ULTF, LTF, MTF and HTF you can get a feeling for where price is in the context overall market flow.
----------------------
Candle Colorization
This script has an optional feature that lets you colorize the candles depending on certain score tresholds you can change manually in the indicator UI. Don't take these as signals, but rather as a possibility to become aware of when price is deviating far from the means.
----------------------
How to Use
You can find in-depth tutorials on how to use this indicator by browsing the links and resources in my signature.
Crypto TA & FireflyTA indicator tutorials:
Twitter: twitter.com/FireflyTA
YouTube: www.youtube.com/channel/UC3Hxf0omt3dMqAxGQBnXJPA
Discord: t.co/Ky7gE7zfja
Twitch: twitch.tv/fireflyta
Twitter: twitter.com/FireflyTA
YouTube: www.youtube.com/channel/UC3Hxf0omt3dMqAxGQBnXJPA
Discord: t.co/Ky7gE7zfja
Twitch: twitch.tv/fireflyta