Attachments: 1. ELD of the 4 line Stochastic indicator;
2. Workspace based on the color scheme I use (please use Format/Window/General/BarSpacing=3);
3. Various charts showing good and bad examples of what I am seeking to highlight;
GOAL: To create an alert (within 1-2 bars) of when the Blue, Red & Yellow lines form a ‘valid’ V reversal. This can be either by a ShowMe study, or even better using the existing Indicator code, but only if you are able to plot the dots above and below price (NOT on the indicator itself).
DEFINITION: 1. It is important to compress the bars so the V reversal is visually obvious.
2. Price MUST move fast into and out of the turn (defined by any number of different methods – key variable).
3. All 3 lines must have ZERO or only tiny ‘wiggles’ once they cross 50 and head into the reversal point (another variable).
4. The reversal point can be anything beyond the 50 line; (this can be a variable).
5. ALL 3 lines must turn, even if only the Blue line has cross 50 (although the turns will never all be the same speed on each colored line as the yellow is a 40 period, while the Blue is only 10).
6. Related to 2 above. An average of the lines won’t be sufficient. All 3 MUST turn, and notionally move at a rate that is beyond a 45deg angle, even though I understand this isn’t technically valid on a computer screen. So if the Blue and Red turn with speed, but the yellow only makes a half assed turn, then the reversal ISN’T valid. This means we need 3 variables here to quantify the speed of the reversal.
7. Rounded reversals are NOT valid (not fast in-fast out).
8. THIS IS IMPORTANT: A turn is only valid IF 1-3 of the lines (another key variable) has come from the other side of the 50 level. (see chart below – basically a V reversal occurring after continually oscillating near overbought or oversold is NOT valid)
9. All 3 lines must be < 90 or > 10 after the turn to be valid (another variable).
10. The lines do NOT have to be converged to create a valid reversal.
11. Sometimes the 1-2 of the lines will turn 1-2 periods later. This needs to be another variable to allow some latitude.
VARIABLES: 1. The speed of each of the Blue, Red & Yellow lines when reversing;
2. The size of any allowable wiggle when moving from beyond 50 to eventual turning level;
3. The level that must be exceeded by ANY line to create a reversal (default @ > 50 for tops & < 50 for bottoms);
4. The minimum reversal levels that must be exceeded by each line (default @ < 90 for tops & > 10 for bottoms);
5. Number of periods allowed between the turn of each line (expected 1-3 bars);