L1 Buy after Dump Detector

22. Sept. 2020

Level: 1

Background

The so-called "Buy after Dump" refers to the phenomenon in which the stock price sometimes rebounds temporarily due to the rapid decline in the falling market. The rebound was smaller than the decline, and the downtrend resumed after the rebound.

Function

L1 Buy after Dump Detector is one of my research to see win rate of a "Buy after Dump" chance. The principle is that I use ema() and OHLC to model a whale dump behavior. After the dump wave, I use KDJ to indicate several long entry points.

Key Signal

dump --> whale dump signal
fundready --> it indicate the end of a dump and make fund ready to long entry
longentry --> long entry signal generated from KDJ resonating with dump and fundready signal

Pros and Cons

Pros:

1. it can detect obvious dump and depict the decay of dump wave
2. use resonance to generate long entry


Cons:

1. it may be risky to "buy after dump" which may require take profit method here because the opportunity may be very short
2. KDJ is too sensitive in large time frame and have many long entry signals (the closer to dump wave, the better based on experience)


Remarks

Very interesing stuff, but rare of people trade with such crazy method. I suggest this is ONLY for backtest study of market behavior.

Readme

In real life, I am a prolific inventor. I have successfully applied for more than 60 international and regional patents in the past 12 years. But in the past two years or so, I have tried to transfer my creativity to the development of trading strategies. Tradingview is the ideal platform for me. I am selecting and contributing some of the hundreds of scripts to publish in Tradingview community. Welcome everyone to interact with me to discuss these interesting pine scripts.

The scripts posted are categorized into 5 levels according to my efforts or manhours put into these works.

Level 1 : interesting script snippets or distinctive improvement from classic indicators or strategy. Level 1 scripts can usually appear in more complex indicators as a function module or element.

Level 2 : composite indicator/strategy. By selecting or combining several independent or dependent functions or sub indicators in proper way, the composite script exhibits a resonance phenomenon which can filter out noise or fake trading signal to enhance trading confidence level.

Level 3 : comprehensive indicator/strategy. They are simple trading systems based on my strategies. They are commonly containing several or all of entry signal, close signal, stop loss, take profit, re-entry, risk management, and position sizing techniques. Even some interesting fundamental and mass psychological aspects are incorporated.

Level 4 : script snippets or functions that do not disclose source code. Interesting element that can reveal market laws and work as raw material for indicators and strategies. If you find Level 1~2 scripts are helpful, Level 4 is a private version that took me far more efforts to develop.

Level 5 : indicator/strategy that do not disclose source code. private version of Level 3 script with my accumulated script processing skills or a large number of custom functions. I had a private function library built in past two years. Level 5 scripts use many of them to achieve private trading strategy.

30. Sept. 2020

Versionshinweise

In order to obey the House Rule, remove the irrelevant MA Cross display.

23. März

Versionshinweise

OVERVIEW

This Pine Script identifies potential L1-level buying opportunities emerging after market dumps using dynamic volatility analysis and oscillator-based validation. It combines custom moving averages, multi-timeframe support/resistance calculations, and a refined KDJ oscillator to detect temporary bottoms.

FEATURES

Advanced Volatility Analysis:
• Weighted Moving Average (WMA) calculates normalized low-price volatility ratio
• Adjusted EMA blending short-term lows with smoothed volatility metrics

Support Level Detection
• Dual SMA-based support tiers (support_level_1/i] @0.96x SMALOW, support_level_2/i] @0.85x long-SMALOW)
• Dynamic dumping condition identification via tier comparisons

Oscillator-Based Signals
• Refined KDJ oscillator with optimized WMA smoothing
• J-value threshold crossing verification system

Visual Indicators
• Color-coded dump strength meter (yellow candles)
• Negative-scaled volatility readiness plot (lime green)
• Background highlighting confirmed buy zones

HOW TO USE

Enable "Don't Paint Beyond Last Bar" option
Observe: • Yellow dump strength bars rising above prior values → increased reversal confidence • Green background activation requires simultaneous:
✓ Positive fund readiness (+ve lime plot)
✓ Validated KDJ/J crosses
✓ Confirmed dump indicator presence
LIMITATIONS
• Results sensitive to windowing parameters (e.g., 34-bar lows vs 55-bar lows discrepancy)
• Requires trending markets; ineffective during sideways consolidation phases
• Backtesting recommended before live use due to overlapping calculation dependencies

NOTES
Abbreviated naming conventions follow TradingView community standards:

sm = Simple Moving Average
ema/wma denote Exponential/Weighted varieties
All timeframes assume default bar lengths unless modified