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Blair Momentum Indicator
Updated
This is a very interesting momentum indicator for everyone to take a look at. To understand the concept behind it please see my previous idea "Adaptive Derivative Analysis", and the short Bitcoin prediction that was concurrent.
At its core this indicator takes the derivative of a custom adaptive moving average and adaptively weights the results. This is what the big black line is, the "Blair Line". When it is above 0 there is upward momentum, and downward when it is below 0. However, simply watching the movement of the Blair line doesn't seem especially helpful, so to aid the eye there are clouds around it. 2 fast clouds, 1 medium cloud, and 1 slow cloud. When the Blair line goes under a cloud it is a good time to sell, when it goes above a cloud it is a good time to buy. The red and orange clouds provide the quickest signals about the behavior of the momentum. The yellow cloud provides more certainty. When all three of these clouds align on the same side of the Blair line, it is a very good indication about the current momentum in the market. The Blue cloud is the slowest cloud, and provides the greatest confluence. Since the market can be in varying degrees of volatility there is a button to adjust the sensitivity of the indicator, called the "Roughness". When the roughness is at its maximum of 6 the indicator takes lots of weight for the most recent price movement, when the roughness is at a minimum of 1 it only looks at really long term behavior. The indicator seems to be the best at a roughness between 2 to 4. Since this is a momentum indicator it will not tell you what is the best time to buy at the lowest and sell at the highest, but it will give you a very good idea about the momentum in the markets, and much more importantly when the momentum will reverse.
It is recommended to use this indicator at a timeframe or two higher than where you are trading for a good overview. If you are trading on the 5 minute charts, look at the Blair momentum indicator of the 1 hour to 2 hour charts. If you trade on the daily charts then look at the weekly Blair momentum.
The power of this tool is in its ability to show where the momentum is changing, a long time before the price action changes. Please apply this indicator to the charts you are working with and see its predictive behavior around breakouts and sideways action.
Happy trading! Always feel free to message me with questions.
At its core this indicator takes the derivative of a custom adaptive moving average and adaptively weights the results. This is what the big black line is, the "Blair Line". When it is above 0 there is upward momentum, and downward when it is below 0. However, simply watching the movement of the Blair line doesn't seem especially helpful, so to aid the eye there are clouds around it. 2 fast clouds, 1 medium cloud, and 1 slow cloud. When the Blair line goes under a cloud it is a good time to sell, when it goes above a cloud it is a good time to buy. The red and orange clouds provide the quickest signals about the behavior of the momentum. The yellow cloud provides more certainty. When all three of these clouds align on the same side of the Blair line, it is a very good indication about the current momentum in the market. The Blue cloud is the slowest cloud, and provides the greatest confluence. Since the market can be in varying degrees of volatility there is a button to adjust the sensitivity of the indicator, called the "Roughness". When the roughness is at its maximum of 6 the indicator takes lots of weight for the most recent price movement, when the roughness is at a minimum of 1 it only looks at really long term behavior. The indicator seems to be the best at a roughness between 2 to 4. Since this is a momentum indicator it will not tell you what is the best time to buy at the lowest and sell at the highest, but it will give you a very good idea about the momentum in the markets, and much more importantly when the momentum will reverse.
It is recommended to use this indicator at a timeframe or two higher than where you are trading for a good overview. If you are trading on the 5 minute charts, look at the Blair momentum indicator of the 1 hour to 2 hour charts. If you trade on the daily charts then look at the weekly Blair momentum.
The power of this tool is in its ability to show where the momentum is changing, a long time before the price action changes. Please apply this indicator to the charts you are working with and see its predictive behavior around breakouts and sideways action.
Happy trading! Always feel free to message me with questions.
Release Notes
This very interesting momentum indicator for everyone to take a look at. To understand the concept behind it please see my previous idea "Adaptive Derivative Analysis" (tradingview.com/chart/GBPUSD/moKB9qve-Adaptive-Derivative-Analysis/), and the short Bitcoin prediction that was concurrent (tradingview.com/chart/XBTUSD/XsDqj45k-Bitcoin-losing-momentum-and-potentially-reversing/)
About:
At its core this indicator takes the derivative of a custom adaptive moving average and adaptively weights the results. This is what the big black line is, the "Blair Line". When it is above 0 there is upward momentum, and downward when it is below 0. However, simply watching the movement of the Blair line doesn't seem especially helpful, so to aid the eye there are clouds around it. 2 fast clouds, 1 medium cloud, and 1 slow cloud. Since the market can be in varying degrees of volatility there is a button to adjust the sensitivity of the indicator, called the "Roughness". When the roughness is at its maximum of 6 the indicator takes lots of weight for the most recent price movement, when the roughness is at a minimum of 1 it only looks at really long term behavior. The indicator seems to be the best at a roughness between 2 to 4. Since this is a momentum indicator it will not tell you what is the best time to buy at the lowest and sell at the highest, but it will give you a very good idea about the momentum in the markets, and much more importantly when the momentum will reverse.
How to use:
When the Blair line goes under a cloud it is a good time to sell, when it goes above a cloud it is a good time to buy. The red and orange clouds provide the quickest signals about the behavior of the momentum. The yellow cloud provides more certainty. When all three of these clouds align on the same side of the Blair line, it is a very good indication about the current momentum in the market. The Blue cloud is the slowest cloud, and provides the greatest confluence. Something interesting about this indicator is that the Blair line almost never seems to full go through the blue cloud when the cloud is very wide, so the potential for long term reversals seems more likely when the blue cloud is thin. On a shorter time frame the width of the yellow could also seems to also play a similar role.
It is recommended to use this indicator at a timeframe or two higher than where you are trading for a good overview. If you are trading on the 5 minute charts, look at the Blair momentum indicator of the 1 hour to 2 hour charts. If you trade on the daily charts then look at the weekly Blair momentum.
The power of this tool is in its ability to show where the momentum is changing, a long time before the price action changes. Please apply this indicator to the charts you are working with and see its predictive behavior around breakouts and sideways action.
Happy trading! Always feel free to message me with questions.
Release Notes
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