LT Gamma Confirmation 2.0

17. Juli 2020

This is a momentum and trend based indicator which can show the likely “path of least resistance”. With this indicator we can visually see both the probable short term and long term force of the trend. We can also use this as a “filter” in combination with the LT Pulse. When the gamma confirmation dots are dark blue, this can indicate that the likely path of least resistance - or the stronger trend – is more likely to be to the upside. Cyan coloured dots indicate when the pressure or momentum may increase to the upside (i.e. increasing positive momentum). The red colour gamma confirmation dots indicate when the likely path of least resistance - or the stronger trend - is likely to be to the downside. Magenta dots indicate when the pressure or momentum could increase to the downside (i.e. increasing negative momentum).
Gamma confirmation (blue and red dots) do not change very rapidly so they are more of a “longer term” indicator of the potential trend. In this respect, they can help in smoothing out a lot of the noise and volatility. When the dots disappear (i.e. no dark blue or red dots) this can indicate a potential “neutral” or uncertain territory – as no clear strong trend direction has likely yet been established.
The indicator works by combining a set of two momentum oscillator indicators, and when these indicators are in sync (in synchronicity), they produce a signal. So for example, when both momentum oscillators are above zero, we can get a dark blue signal (bullish or positive). And when both are below zero we can get a red signal (bearish or negative).

We prefer to combine Gamma confirmation with other trend based indicators such as the LT Pulse – mainly as a “directional filter”. On balance of probabilities, when the gamma confirmation is dark blue, and provided price is above the key averages such as the 21 EMA (or LT Velocity), it is more probable for a pulse to fire to the upside than the downside – since the likely path of least resistance and potential trend being to the upside. Vice versa applies for red gamma confirmation dots – so when gamma confirmation is red and price is below the 21 EMA (or LT Velocity) on the chart, it is more probable for the pulse to fire to the downside (due to the likely path of least resistance and trend being to the downside). The risk is always there that a pulse may fire in the opposite direction to the major trend (or the gamma confirmation) due to the probability nature of analysis and price action. However, it can be argued that having some kind of directional “filter” or directional bias is perhaps better than having none. This could potentially increase the probabilities and minimise some of the risks of whipsaws.

The indicator can be used on the charts of the majority of markets (e.g. stocks, indices, ETFs, currencies, cryptocurrencies, precious metals, commodities etc.) and any timeframe. It should be noted that the degree of noise and randomness increases significantly on lower timeframes. So the lower the timeframe that is chosen (e.g. 15-min or lower) the greater the degree of noise and randomness and therefore the higher the frequency of false signals or whipsaws.
Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.

19. Juli 2020

Versionshinweise

This is a momentum and trend based indicator which can show the likely “path of least resistance”. With this indicator we can visually see both the probable short term and long term force of the trend. We can also use this as a “filter” in combination with the LT Pulse. When the gamma confirmation dots are dark blue, this can indicate that the likely path of least resistance - or the stronger trend – is more likely to be to the upside. Cyan coloured dots indicate when the pressure or momentum may increase to the upside (i.e. increasing positive momentum). The red colour gamma confirmation dots indicate when the likely path of least resistance - or the stronger trend - is likely to be to the downside. Magenta dots indicate when the pressure or momentum could increase to the downside (i.e. increasing negative momentum).
Gamma confirmation (blue and red dots) do not change very rapidly so they are more of a “longer term” indicator of the potential trend. In this respect, they can help in smoothing out a lot of the noise and volatility. When the dots disappear (i.e. no dark blue or red dots) this can indicate a potential “neutral” or uncertain territory – as no clear strong trend direction has likely yet been established.
The indicator works by combining a set of two momentum oscillator indicators, and when these indicators are in sync (in synchronicity), they produce a signal. So for example, when both momentum oscillators are above zero, we can get a dark blue signal (bullish or positive). And when both are below zero we can get a red signal (bearish or negative).

We prefer to combine Gamma confirmation with other trend based indicators such as the LT Pulse – mainly as a “directional filter”. On balance of probabilities, when the gamma confirmation is dark blue, and provided price is above the key averages such as the 21 EMA (or LT Velocity), it is more probable for a pulse to fire to the upside than the downside – since the likely path of least resistance and potential trend being to the upside. Vice versa applies for red gamma confirmation dots – so when gamma confirmation is red and price is below the 21 EMA (or LT Velocity) on the chart, it is more probable for the pulse to fire to the downside (due to the likely path of least resistance and trend being to the downside). The risk is always there that a pulse may fire in the opposite direction to the major trend (or the gamma confirmation) due to the probability nature of analysis and price action. However, it can be argued that having some kind of directional “filter” or directional bias is perhaps better than having none. This could potentially increase the probabilities and minimise some of the risks of whipsaws.

The indicator can be used on the charts of the majority of markets (e.g. stocks, indices, ETFs, currencies, cryptocurrencies, precious metals, commodities etc.) and any timeframe. It should be noted that the degree of noise and randomness increases significantly on lower timeframes. So the lower the timeframe that is chosen (e.g. 15-min or lower) the greater the degree of noise and randomness and therefore the higher the frequency of false signals or whipsaws.
Chartists should be aware of the probabilistic and uncertain nature of price action and the markets, and therefore prepare to limit and control any potential risks.

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