Fractal Resonance BarLazyBear's WaveTrend port has been praised for highlighting trend reversals with precision and punctuality (minimal lag). But strong "3rd Wave" trends can "embed" or saturate any oscillator flashing several premature crosses while stuck overbought/oversold. This happens when the trend stretches over a longer timescale than the oscillator's averaging window or filter time constant. Our solution: monitor many timescales. With Fractal Resonance Bar's rich color codings, strong wavefronts form across timescales and jump out like an approaching line of thunderclouds!
Fractal Resonance Bar color-codes the status of eight underlying stochastic oscillators, with each row averaging over twice the time of the row above.
Fractal Resonance Bar shifts its timescales along with your choice of main chart timescale:
1 minute chart: 1 minute through 128 minute (~2 hour) oscillators.
15 minute chart: 15 minute through 1920 minute (~32 hour) oscillators.
1 hour chart: 1 hour through 128 hour (~2 week) oscillators.
Daily chart: 1 day through 128 day (~4 month) oscillators.
The color map is configured as follows:
Hot Pink: Extreme Overbought (> 100%) rolled over to sell, but oscillators probably embedded with more upside (revert to Dark Green) possible after a pause.
Deep Red: Overbought (> 75%) crossover ripe for selling (validated when red spreads to timescales below).
Brown: Minor (< 75%) crossover sell from which could bounce back green or start a plunge toward gray/black.
Gray/Black: Mature (< -75%) sells turning full black in a plunge before the dawn.
Lime Green: Extreme Oversold (< -100%) and bouncing, though may yet bottom even lower.
Green: Oversold (< -75%) crossover ripe for buy. Green spreading to all timescales below will validate bottom is in.
Dark Green/Teal: Mature buy in overbought (> 75%) range, waiting for sell crossover to Hot Pink for a pause or correction.
White Stripes are Impulsive Trend Warning
Fractal Resonance Bar warns of oscillator embedding by showing white stripes when it detects strong, early surges in the timescale rows below.The white stripes usually accompany Hot Pink warning it's too early to go short, or Lime Green warning it's too early to go long.
Heeding these warnings will probably miss the exact top or bottom, but you're less likely to get overrun in a momentum move.
Usually the market gives us a second opportunity to short very close to the top or buy very close to the bottom after the warning white stripes have subsided.
NOTE: Recently rolled over Futures contracts may not have enough history for all oscillator calculations, in which case no bar colors will appear.
Tweakable Attributes
The default Channel Length, Stochastic Ratio Length and Lag Length work reasonably well on all timescales in our experience. Minor tweaks don't hurt but this may just overfit to a particular chart history.
We don't recommend changing the 75% Overbought and 100% Extreme Overbought default levels as these are ideal numbers relative to the underlying oscillator statistic calculations. But these settings can shift the color transition levels.
Embedded attribute controls the sensitivity/conservativeness of the white strip embedding detectors. Closer to 75 increases the warning sensitivity while closer to 100 decreases the aggressiveness of blocking white stripes.
Embed Separation also affects the white stripe sensitivity.
Row width increases each row's thickness to fill the available screen height you've afforded the bar.
Wavetrend
Fractal Resonance ComponentLazyBear's WaveTrend port has been praised for highlighting trend reversals with precision and punctuality (minimal lag). But strong "3rd Wave" trends can "embed" or saturate any oscillator flashing several premature crosses while stuck overbought/oversold. This happens when the trend stretches over a longer timescale than the oscillator's averaging window or filter time constant. Our solution: simultaneously monitor many oscillator timescales. Watch for fresh crossovers in "dominant" timescales alternating most smoothly between the overbought (red shade) and oversold (green shade) range.
Fractal Resonance Component facilitates simultaneous viewing of eight timescales that are power of 2 multiples of the chart timescale. Each timescale shows lead line, lag line, lead-lag difference, and crossover marks. Add 4 to 8 copies to your chart for a good multi-fractal read. Format * the "Timescale Multiplier" attribute of each row to be twice that of the row above for a sequence like 1, 2, 4, 8, 16, 32, 64, 128...
Fractal Resonance Component shifts its timescales along with your choice of main chart timescale:
1 minute chart: 1 minute through 128 minute (~2 hour) oscillators.
1 hour chart: 1 hour through 128 hour (~2 week) oscillators.
Daily chart: 1 day through 128 day (~4 month) oscillators.
Crossovers in different oscillator ranges tend to have different meanings:
Minor (< 75%) crossovers: small green/red dot
usually noise
Overbought/Sold crossovers (shaded 75 to 100%): black outlined dot (o)
reliable reversal indicators (when they appear alone)
Extreme Overbought (> 100%) crossovers: black outlined plus (+).
Can be a major reversal in fast markets, but usually portend the end of Elliot 3rd waves with just a small corrective (4th wave) retrace before the larger impulsive (5-wave) sequence resumes in original direction.
The final 5th-wave terminus should appear later as a lone non-extreme (black outlined circle) crossover on a slower timescale coincident with weaker (non-extreme) dot crosses on this timescale.
Careful examination of historical charts leads to many useful observations such as:
Dominant crossovers punctuating true reversals are usually in the green/red shaded ranges with black outlined dots (o) rather than minor or Extreme (+) ranges.
Due to market's fractal nature, two well-separated timescales like 1 minute and 1 hour can show dominant crosses simultaneously in opposite directions, e.g. the 1 minute showing a very short term high and the 1 hour a medium term low nearby.
Staying Nimble
Watch out for embedding on your supposedly dominant timescale -- a second cross while stuck in the overbought/oversold region suggests a stronger, longer trend than expected. Drop your eyes to a slower timescale below for the real dominant whose crossover will validate main trend reversal.
Embedding can often be predicted even at the first cross mark by checking whether the green lead line of the next slower timescale (one row below) has already hit the Overbought or especially the Extreme Overbought range but isn't close to rolling over. Fractal Resonance Bar (to be published) uses this principle to mark embedded timescales with white stripes, warning of a powerful trend wave on longer timescales you shouldn't fight until the white stripes subside.
Overnight gaps surge all timescales in ways that obscure the dominant timescale, so for shorter than daily charts, these methods work best on Futures contracts that only suffer weekend gaps.
