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WaveTrend Oscillator

Ehlers DSP oscillator momentum overbought oversold ehlers

WaveTrend is an oscillator that helps identify overbought and oversold conditions.

Usage

Use as a momentum oscillator to identify overbought and oversold conditions. WaveTrend crossovers at extreme levels provide high-probability mean-reversion entry signals.

Background

WaveTrend (popularized as LazyBear WaveTrend on TradingView) computes a channel index by normalizing price deviation from an EMA by the smoothed absolute deviation. A second EMA of this index produces the signal line. Extreme values (±60) with WT1-WT2 crossovers are the classic trade trigger.

Parameters

  • n1 (default: 10): Channel Length
  • n2 (default: 21): Average Length

Formula

\[ WT_1 = EMA(ESA, n_2) \]

Source