Manipulation Ribbon [FxScripts]

Manipulation Ribbon

Designed to detect areas of price manipulation by Market Makers vs areas where it is trading in a natural, price-driven state. By identifying zones of control and imbalance, the ribbon provides a clear visualization of where price is being held or artificially displaced, offering key insights into potential future direction.

Indicator Function

Unlike traditional oscillators, the Manipulation Ribbon plots a continuous line or ribbon, with no defined y-axis. The ribbon dynamically adapts to market conditions, allowing the user to spot potential manipulation and price containment vs natural price movement.

Calculation Methodology

The Manipulation Ribbon is derived exclusively from price action. The underlying algorithm evaluates where price is, where it should be and where it’s being held.

The resulting ribbon reflects these dynamics in real time, providing a visual framework for interpreting price behavior at a granular level.

Operational Use: Divergences

The primary use of the Manipulation Ribbon is to locate divergences between price and the ribbon.

There are two distinct types of divergence to look for:

1. Price Containment: Where the ribbon moves but price doesn’t. This can help identify zones where price is being held, often preceding sharp movements once control is released.
   
2. Price Manipulation: Where price moves but the ribbon doesn’t. This can help identify liquidity sweeps, often preceding swift reversals once the liquidity has been taken.
   

Analytical Scenarios

High Liquidity Sweep: Price forms a higher high while the ribbon forms a lower high. Indicates a liquidity sweep may be occurring at the highs and a potential bearish reversal may be imminent.

Low Liquidity Sweep: Price forms a lower low while the ribbon forms a higher low. Indicates a liquidity sweep may be occurring at the lows and a potential bullish reversal may be imminent.

Top Edge Hold: Upwards movement of the ribbon without price followthrough. Indicates price may be being held at the highs, suggesting Market Makers are artificially holding price down in order to create a top edge and potential bearish reversal.

Bottom Edge Hold: Downwards movement of the ribbon without price followthrough. Indicates price may be being held at the lows, suggesting Market Makers are artificially holding price up in order to create a bottom edge and potential bearish reversal.

Settings

Guides: Option to have dynamic guides applied to your chart. Customizable style, color and width.

Guide Lookback: Due to the ribbon having a non-standard y-axis scale, it’s not possible to plot standard interval guides. Due to technical limitations this value is not calculable automatically either. The upper and lower bounds of the guides are therefore calculated using a user-inputted lookback function. In order to ensure the guides use the correct y-axis on the chart, simply input the average number of bars in your current viewport using the ruler, the guides will automatically update to match this.

Line 1 / Band 1: Option to turn on/off Line 1 and Band 1 alongside updating color and linewidth. Line 1 and Band 1 use the current chart symbol as their source.

Line 2 / Band 2: Option to add a second line and/or band to the chart. Use this to compare any correlated instrument e.g. BTCUSDT and ETHUSDT (as visualized in the chart above) or other pairs such as XAUUSD/XAUEUR or ES/NQ. Due to differences in y-axis scaling it's advised to add this as an additional indicator on a new pane (as per chart above).

Inverse Line 2 / Band 2: Option to show/hide the inverse of Line 2 and Band 2. This is useful for comparing inversely correlated symbols e.g. EURUSD and USDCHF.

Performance and Optimization

Backtesting Results: The Manipulation Ribbon has undergone extensive backtesting across various instruments, timeframes and market conditions, demonstrating strong performance in identifying where price is out of sync with its natural state. User backtesting is strongly encouraged as it allows traders to gain familiarity with the ribbon using their preferred instruments and timeframes.

Optimization for Diverse Markets: The Manipulation Ribbon can be used on crypto, forex, indices, commodities and stocks. The Manipulation Ribbon's algorithmic foundation ensures consistent performance across a variety of instruments. The lack of complex settings makes it easy for the trader to set up and go.

Educational Resources and Support

Users of the Manipulation Ribbon benefit from comprehensive educational resources and full access to FxScripts Support. This ensures traders can maximize the potential of the Manipulation Ribbon and other tools in the Sigma Indicator Suite by learning best practices and gaining insights from an experienced team of traders.