Alpha-Sutte Multi-Price Indicator [CHE]

22. Juli

Overview

The AlphaSutte MultiPrice Indicator is a powerful tool for forecasting market movements and generating trading signals. At its core is the AlphaSutte Model, which stands out for its innovative approach to predicting future price movements.

Inspired by the [AlphaSutte Model](tradingview.com/script/oDmKc1RoAlphaSutteModel/) on TradingView, this indicator enhances the original concept by integrating it with the T3 smoothing technique to improve trend identification and signal reliability.



The AlphaSutte Model

The AlphaSutte Model is a mathematical method for forecasting prices based on the analysis of historical price data. It is applied to various price components such as High, Low, Open, and Close. The model predicts future values using differences and weighted averages of previous periods. Here are the key steps and components of the AlphaSutte Model:

1. Data Extraction:
The model extracts historical values at specified intervals. For example, it uses the values from the last four periods for calculations.

2. Difference Calculations:
Differences between successive historical values are calculated:
Delta_x: Difference between the first and fourth values.
Delta_y: Difference between the second and first values.
Delta_z: Difference between the third and second values.

3. Weighted Average Calculation:
These differences are then integrated into a weighted average to forecast the future value:
The weighted average combines the historical values and their differences to calculate the forecasted value, referred to as a_t.

4. Application to Price Components:
The AlphaSutte Model can be applied to various price components:
High: Forecasting the future high price.
Low: Forecasting the future low price.
Open: Forecasting the future opening price.
Close: Forecasting the future closing price.

5. Averaging AlphaSutte Values:
If multiple price components are used for calculation, an average of the AlphaSutte values is computed. This average serves as the basis for generating trading signals.

Trading Signals and Directional Change

The AlphaSutte Model is used to generate long and short trading signals. These signals are confirmed by the directional change of the T3 Indicator to enhance reliability:

Long Signals:
A long signal is generated when the average value of the AlphaSutte Model is positive, and the T3 indicator previously showed a downtrend.
These signals are displayed with green labels and lines on the chart.

Short Signals:
A short signal is generated when the average value of the AlphaSutte Model is negative, and the T3 indicator previously showed an uptrend.
These signals are displayed with red labels and lines on the chart.



StepbyStep Explanation of the Script

The AlphaSutte MultiPrice Indicator script in TradingView is designed to provide comprehensive market trend analysis and trading signal generation. Here is a stepbystep explanation of how the script operates:

1. Input Parameters:
The script begins by defining several input parameters for the T3 indicator and AlphaSutte Model, including:
`t3Length`: The length of the T3 moving average.
`t3VolumeFactor`: The volume factor used in T3 smoothing.
Boolean inputs to determine which price components (High, Low, Open, Close) should use the AlphaSutte Model.
`numLastLabels`: The number of last labels to display for recent signals.

2. T3 Smoothing Function:
The `t3Smoothing` function calculates the T3 smoothed value for the specified source price using a series of exponential moving averages (EMAs):
It calculates six sequential EMAs of the source price.
It then combines these EMAs using specific coefficients to obtain the T3 value.

3. AlphaSutte Calculation Function:
The `get_alpha_sutte` function forecasts future values based on historical price data:
It extracts historical price values at specific intervals.
It calculates the differences (deltas) between these values.
It computes a weighted average of these deltas to obtain the AlphaSutte value.

4. Calculating AlphaSutte Components:
The script calculates the AlphaSutte values for the selected price components (High, Low, Open, Close) based on user input.
It then averages these values if multiple components are selected.

5. Generating Long and Short Conditions:
The script defines conditions for generating long and short signals based on the AlphaSutte average:
`long_condition`: True if the AlphaSutte average is positive.
`short_condition`: True if the AlphaSutte average is negative.

6. Tracking T3 Trend Direction:
The script updates state variables to track whether the T3 line is in an uptrend or downtrend:
`t3_uptrend`: True if the T3 value is higher than the previous T3 value.
`t3_downtrend`: True if the T3 value is lower than the previous T3 value.

7. Generating and Managing Labels and Lines:
The script generates labels and lines on the chart to visualize long and short signals:
For long signals, green labels and lines are created when the long condition is met, and the T3 was previously in a downtrend.
For short signals, red labels and lines are created when the short condition is met, and the T3 was previously in an uptrend.
Old labels and lines are deleted to keep the chart clean and relevant.

8. Updating Lines to Current Candle:
The script dynamically updates the end points of the lines to the current candle to reflect the latest market data.

9. Highlighting Movements:
The script optionally highlights the T3 line based on its direction to visually emphasize the trend:
Green for an uptrend and red for a downtrend.

10. Plotting the T3 Line:
Finally, the T3 line is plotted on the chart with the specified color and line width to provide a clear visualization of the trend.



Conclusion

The primary focus of the AlphaSutte MultiPrice Indicator is on the forecasting capabilities of the AlphaSutte Model. This model's forecasts are the most critical part of the indicator, providing the essential signals for potential market movements. The T3 indicator serves as a confirmation tool, validating these forecasts by indicating the direction of the trend. This combination enhances the reliability of the trading signals, making the AlphaSutte MultiPrice Indicator a valuable asset for traders looking to make informed decisions based on robust market analysis.

Best regards Chervolino