Buying the dips

Buying the Dips – High-Precision Trend Analysis

This oscillator uses the Quotient Transform (based on John Ehlers' signal processing theory) to isolate market cycles with minimal lag. It combines a High-Pass filter with a SuperSmoother algorithm to eliminate price noise and accurately represent trend reversals.

Application for Swing Trades

The indicator is optimized for swing trading. Its mathematical smoothing reaches its full potential in higher timeframes such as H4, Daily, or Weekly, identifying significant entry points after market corrections.

Signal Logic: Focus on Buy Signals

The system is primarily designed to generate buy signals, following the strategic "Buying the Dips" approach.

• Buy Signal: The fast line crosses above the slow line within the extreme zone (below -0.8).

• Sell Signals: By default, the indicator does not display active sell signals for short trades. Signal output for the overbought area only occurs after manual parameter adjustments, which is explicitly not recommended, as the algorithm is specialized in identifying market bottoms.

Technical Core Functions

• Quotient Engine: An adaptive algorithm that normalizes price data into an oscillation between -1 and +1.

• Dual Momentum: Uses a fast (Q1) and a slow (Q2) component for trend confirmation.

• Volatility Adjustment: An internal peak detector adjusts the amplitude based on current market movement.

Input Parameters

• Period (20): Calculation period for cycle analysis.

• Q1 / Q2 (0.8 / 0.4): Weighting factors for reaction speed.

• ExtremeLevel (0.8): Threshold for signals in extreme zones.

• ShowArrows / EnableAlerts: Control for visual arrows and terminal notifications.