The KLP Volume Price Change Oscillator (KLPVPCOsc) is a custom technical indicator designed to evaluate price movements using algorithmic analysis.
It attempts to provide insights into market conditions as an oscillator, creating an enhanced RSI-like (Relative Strength Index) metric tailored to momentum analysis.
Key Features:
Percentile Analysis:
Measures the change in price over a specified length (default 14 bars).
Incorporates volume data to analyze momentum.
Dynamic Thresholds:
These levels help identify potential divergence points and confirm trend continuation or reversal.
Application:
This indicator is well-suited for intraday and swing trading, offering traders actionable insights into market momentum and potential reversals by:
Spotting Divergences:
Divergences between price and the oscillator (e.g., rising price with declining oscillator) may signal a weakening trend or impending reversal.
Assessing Volume-Driven Moves:
Highlights whether price changes are supportive, providing a better context for breakout and breakdown scenarios.
Confirming Momentum:
Crosses above 70 or below 30 can indicate overbought or oversold conditions, similar to traditional RSI interpretation.
How to Use:
Setup:
Apply the indicator to a chart with timeframes suitable for your trading strategy (e.g., 5-minute for intraday, daily for swing trades).
Adjust the length parameters (RSI Length and Volume Length) to align with market behavior and asset volatility.
Interpret Signals:
Use overbought and oversold levels as caution zones for potential trend reversals.
Look for divergences or sustained movement near thresholds to evaluate trade entry/exit points.
Combine with Other Indicators:
For best results, pair this oscillator with trend-following tools (e.g., moving averages) or volume-based indicators to validate signals.
This indicator is effective in identifying nuanced price movements and is especially helpful for traders focused on momentum.
