Amplitude Momentum Label - Smart Trend Detection That Adapts to Market Volatility
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Version 2.1
Live ( No Lag Sequence Detection )
Regular / Adaptive Momentum
Optimal Sequence Tracking ( Re-entry points during sequence run )
Visual - Color Coded Chart Candles and Signal Markers
Base / Default Parameters provide a starting point for indicator usage on 1minute charts for most trading symbols.
Image Gallery presents a comprehensive visual guide for all indicator components.
Use Comment Section or contact me directly if you need addition help to setup this indicator.
Future Updates
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What Is It?
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The Amplitude Momentum Labeler is a regime-detection indicator that identifies when the market shifts into upward or downward momentum phases—and tells you exactly when those phases end.
Unlike simple moving average crossovers that lag behind price, this indicator detects actual momentum shifts by measuring how far price has moved and whether it's reversing direction with conviction.
The Core Idea
Markets move in phases. Sometimes they trend up, sometimes down, and sometimes they go nowhere. This indicator answers one simple question:
"Is the market currently in a momentum phase, and which direction?"
It does this by tracking two things:
- How far price has moved (amplitude)
- In which order the highs and lows occurred (sequence)
When price makes a significant move in one direction, then reverses with enough strength, it signals a new momentum phase has begun.
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How It Works (Technical Overview)
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Step 1: Measure the Swing
The indicator constantly tracks the highest and lowest points price has reached. The difference between them is called the amplitude—think of it as the "size of the swing."
Step 2: Watch for Reversal
- If price drops significantly, then bounces back up → Upward momentum
- If price rises significantly, then pulls back down → Downward momentum
Step 3: Confirm It's Real
The reversal must be large enough to matter. A tiny bounce doesn't count. The indicator requires the reversal to meet a minimum threshold before confirming the signal.
Step 4: Know When It Ends
Momentum doesn't last forever. If price stalls and doesn't make new progress for too long, the indicator recognizes the momentum has exhausted and returns to neutral.
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The Parkinson Volatility Advantage: Self-Adjusting Thresholds
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Here's what makes this indicator different: it automatically adjusts to market conditions.
Traditional indicators use fixed settings that work well sometimes but fail when volatility changes. This indicator uses Parkinson Volatility which is a superior estimator, primarily because it incorporates more information by accounting for intraday price swings through the high and low prices.
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The VWAP Enhancement: Dynamic Support & Resistance
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Once a momentum regime is identified, the indicator calculates a Volume-Weighted Average Price (VWAP) specific to that regime. This gives you:
- For uptrends: A dynamic support level (where buyers are likely to step in)
- For downtrends: A dynamic resistance level (where sellers are likely to appear)
Why VWAP?
VWAP represents the "fair price" based on where most trading activity occurred. Institutions use it heavily. When price pulls back to VWAP during a trend, it often presents a re-entry opportunity.
The EWMA Option
Standard VWAP becomes less responsive as more data accumulates. Enable EWMA (Exponentially Weighted Moving Average) mode to give more weight to recent prices, making the VWAP and bands curve smoothly with developing price action—ideal for spotting re-entry points in extended trends.
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Important Usage Guidelines
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Key Benefits
1. Objective Trend Identification
No guessing. No drawing trendlines. The math determines whether you're in a momentum phase—removing emotion and subjectivity.
2. Volatility-Adaptive
Works across different market conditions without manual adjustment. The Parkinson Volatility Estimator integration ensures thresholds make sense for current volatility.
3. Clear Entry Zones
The regime-specific VWAP provides logical re-entry levels during pullbacks, giving you defined areas to add to positions.
4. Defined Regime Boundaries
You know exactly when momentum starts, and importantly, when it ends. No more holding positions through extended consolidations hoping the trend resumes.
5. Multi-Timeframe Versatile
Works on any timeframe. The BPS (basis points) calculation normalizes everything, so the same logic applies whether you're scalping or swing trading.
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The Science Behind It
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Logarithmic Returns
Price movement is measured using logarithmic returns rather than simple percentage changes. This provides symmetry—a 10% rise followed by a 10% fall returns to the same value in log terms, unlike simple returns. This makes momentum detection mathematically accurate.
Basis Points Standardization
All calculations are done in basis points (1 bp = 0.01%). This standardizes the indicator across any asset—whether you're trading a $10 stock or a $50,000 futures contract, the same thresholds apply meaningfully.
Retracement Detection
The core algorithm detects "V-shaped" reversals: a significant move in one direction followed by a meaningful counter-move. This pattern indicates genuine momentum shift rather than random fluctuation.
Synthetic Volume
For markets without reliable volume data (like forex), the indicator creates "synthetic volume" using the bar's range and body size. More volatile bars get more weight, ensuring the VWAP accurately reflects significant price levels.
Who Is This For?
- Trend followers who want objective regime identification
- Swing traders looking for pullback entries with defined support/resistance
- Systematic traders who need quantifiable trend states for strategies
- Discretionary traders wanting to remove subjectivity from trend analysis
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What It Doesn't Do
This indicator identifies momentum phases—it does not predict future price direction. It tells you "we are currently in an uptrend" not "price will go up." Use it as one component of your trading decisions, not as a standalone buy/sell system.
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Summary
The Amplitude Momentum Labeler combines three powerful concepts:
- Regime Detection → Objectively identifies when trends start and end
- Volatility Adaptation → Automatically adjusts sensitivity to market volatility
- Dynamic VWAP → Provides logical support/resistance for regime-specific entries
The result is an indicator that tells you the market's current state with clarity, adapts to changing conditions automatically, and provides actionable levels for trade management—all without requiring constant manual adjustment.
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Disclaimer
This indicator is provided for educational and informational purposes only. It is not intended as financial or investment advice. Nothing in this product, its documentation, or any related materials should be construed as a recommendation to buy, sell, or hold any financial instrument. Trading in financial markets involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results. There is no guarantee of profits, and users may incur substantial losses. By using this indicator, you acknowledge that you are solely responsible for your own trading decisions and financial outcomes. The creator of this product shall not be held liable for any losses or damages arising directly or indirectly from its use. Always conduct your own analysis before making any trading decisions.
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