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Technical Studies Reference


Wave Trend Oscillator

This study calculates and displays a Wave Trend Oscillator and an Average Wave Trend Oscillator of the data specified by the Input Data Input.

Let \(X\) be a random variable denoting the Input Data, and let \(X_t\) be the value of the Input Data at Index \(t\). Let the Inputs Channel Length and Average Length be denoted as \(n_C\) and \(n_A\), respectively. We define a function called the Channel Index, denoted as \(CI_t(X,n_C)\), and we compute it in terms of an Exponential Moving Average as follows.

\(\displaystyle{CI_t(X,n_C) = \left\{ \begin{matrix} \frac{X_t - EMA_t(X,n_C)}{0.015 \cdot EMA_t(|X - EMA(X,n_C)|,n_C} & EMA_t(|X - EMA(X,n_C)|,n_C) \neq 0 \\ 0 & EMA_t(|X - EMA(X,n_C)|,n_C) = 0 \end{matrix}\right .}\)

We then denote the Wave Trend Oscillator as \(WTO_t(X,n_C,n_A)\), and we compute it as follows.

\(\displaystyle{WTO_t(X,n_C,n_A) = EMA_t(CI(X,n_C),n_A)}\)

The Moving Average type in the formulas for both the Channel Index and the Wave Trend Oscillator can be changed using the Moving Average Type 1 Input.

We then compute the Average Wave Trend Oscillator, denoted as \(\overline{WTO}_t(X,n_C,n_A)\), in terms of a Simple Moving Average as follows.

\(\overline{WTO}_t(X,n_C,n_A) = SMA_t(WTO(X,n_C,n_A), 4)\)

The Moving Average type in the above formula can be changed using the Moving Average Type 2 Input.

This study also displays the Wave Trend Oscillator Difference, which is computed as \(WTO(X,n_C,n_A) - \overline{WTO}_t(X,n_C,n_A)\).

This study also displays four horizontal lines at levels determined by the Overbought Level 1, Overbought Level 2, Oversold Level 1, and Oversold Level 2 Inputs.

Inputs


*Last modified Tuesday, 14th February, 2023.