Cloudy Momentum Bands for ThinkorSwim

[BenTen]

Leading Cloud-Based Momentum Indicator:

• Above Orange Line => uptrend
• Below Orange Line => downtrend
• Cloud breakout => strong trend confirmation

This indicator can also be used for mean reversion trading.

thinkScript Code

# Cloudy Momentum
# Assembled by BenTen at useThinkScript.com
# Converted from https://raw.githubusercontent.com/f13end/tradingview-custom-indicators/master/indicators/CloudyMomentum.pine

input length = 26;
input emaLength = 55;

def lower = lowest(close, length) - (highest(close, length) - lowest(close, length)) * 0.618;
def upper = highest(close, length) + (highest(close, length) - lowest(close, length)) * 0.618;

def lowerEMA = expAverage(lower, emaLength);
def upperEMA = expAverage(upper, emaLength);
def basis = (lowerEMA + upperEMA) / 2;

plot lower_band = lowerEMA;
plot upper_band = upperEMA;
plot middle = basis;

AddCloud(upper_band, lower_band, color.gray, color.gray);

upper_band.SetDefaultColor(GetColor(1));
lower_band.SetDefaultColor(GetColor(0));
middle.SetDefaultColor(GetColor(4));

 

[kelvin]

thanks

 

[john3]

@BenTen Very interesting, thank you!

Would you please explain in plain English what this code is doing?

 

[BenTen]

@john3 It's similar to the Bollinger Bands.

 

[horserider]

@john3 Looks like a price channel. Different calculations than BB. From charts shown look for reversals when price leaves the outer bands.