WaveTrend Oscillator v3 [JopAlgo]

WaveTrend Oscillator v3 [JopAlgo] — reversal focus with confirmation, not guesswork
Core idea

WaveTrend (WT) gives you a smoothed oscillator pair (WT1 and WT2) with overbought/oversold rails and a momentum histogram. This v3 adds two filters so reversals are earned, not guessed:

Heikin-Ashi trend check → only take crosses with candle bias

Reversal Confidence Score (RCS) → only fire when momentum vs ATR is strong enough

Add an optional divergence check so you only act when price and oscillator disagree into extremes.

What you’ll see

WT1 (green) and WT2 (red)

Histogram = WT1 − WT2 (gray columns)

Rails: Overbought = +60, Oversold = −60, and the Zero line

Labels when all conditions align → Smart Buy (below) or Smart Sell (above)

Read it fast → Are we near +60/−60? Did WT1 cross WT2? Is the histogram expanding in that direction? Did a Smart label print?

How the signals are built

A signal prints only if all are true:

Cross → Bull: WT1 crosses up WT2; Bear: WT1 crosses down WT2

Extreme → Bull: WT1 below −60; Bear: WT1 above +60

RCS filter → |WT1 − WT2| scaled by ATR must be > threshold (default 80)

Heikin-Ashi agreement → HA close vs open points the same way as the cross

Divergence (lookback N) → Bull: oscillator makes lower low while price doesn’t; Bear: oscillator higher high while price doesn’t

Result → a reversal-grade setup, not a continuation ping.

How to use it (simple playbook)
Direction filter

If you want a pure reversal tool, keep the default rails (+60/−60) → you’ll wait for true extremes.

If you want more frequency, relax the rails (e.g., +50/−50) or lower RCS (e.g., 70 → 65). More signals → more noise.

Entry logic

Long reversal template
→ Price drives down into a value area edge (VAL/LVN)
→ WT1 < −60, WT1 ↗ WT2, RCS > threshold, HA bias up, bullish divergence
→ Enter on reclaim of the level or on the first higher-low after the cross

Short reversal template
→ Price pushes into VAH/HVN
→ WT1 > +60, WT1 ↘ WT2, RCS > threshold, HA bias down, bearish divergence
→ Enter on rejection and lower-high after the cross

Location first (always)

Use Volume Profile v3.2 [JopAlgo] (VAH/VAL/POC/LVNs) for where to act

Use Anchored VWAP [JopAlgo] (session/weekly/event) for who has control

No level → no trade. A WT flip into a level is better than one mid-range.

Risk & targets

Stops → beyond the sweep extreme or beyond the reclaimed level

Targets → ladder to next Fib/VP nodes (POC/HVNs, VA mid), then trail behind swings or the WT zero-line reclaim

Settings that matter (and how to tune)

WT Length (default 10) → core smoothing of the channel
→ Lower = faster turns; higher = calmer oscillator

WT EMA Smoothing (default 21) and Signal Smoothing (default 3)
→ Increase to reduce chop; decrease to react earlier

Overbought / Oversold (default +60/−60)
→ Tighten to +50/−50 for more frequent reversals; widen to +70/−70 for only the strongest

RCS Threshold (default 80)
→ Down to 70 for earlier triggers; up to 90 for only the punchiest turns

Divergence Lookback (default 5)
→ Shorter finds more local divs; longer finds bigger swings

Starter presets

Intraday (15m–1H) → WT 10/21, signal 3, rails ±60, RCS 80, div 5

Swing (2H–4H) → WT 14/28, signal 3–5, rails ±60/±70, RCS 85–90, div 7–9

Pattern cheat sheet

Double-dip divergence → oscillator prints a lower low near −60 while price holds a higher low → high-quality long if RCS/HA agree

Zero-line reclaim after a smart long → momentum shift; use it to trail stops or add on retest

Failure signal → cross fires but RCS < threshold or histogram shrinks back toward 0 into a level → stand down or cut quick

Overbought drift → WT pinned near +60/+70 without cross down → trend grind; don’t fade blindly

Best combos (kept simple)

Volume Profile v3.2 [JopAlgo] → take WT reversals at VAH/VAL/LVNs; target POC/HVNs

Anchored VWAP [JopAlgo] → WT cross with an AVWAP reclaim/reject is higher quality

CVDv1 [JopAlgo] (optional) → prefer flows that align with the reversal; avoid if absorption is fighting you

Common mistakes this helps you avoid

Fading every spike without RCS/HA confirmation

Taking reversals mid-range, far from levels

Treating divergence as timing (it’s context; you still need the cross + filter)

Ignoring the zero-line behavior after entry (weak follow-through)

Disclaimer

This indicator and write-up are for education only, not financial advice. Trading involves risk; results vary by market, venue, and settings. Test first, act at defined levels, and manage risk. No guarantees or warranties are provided.