Momentum cascade
Scores runs where the close is up over all four lookbacks at once; reads 0 otherwise, including in downtrends.
MomentumCascade takes the percent change of the close over four lookbacks: fast, med, slow and xslow (defaults 5, 15, 30 and 60 bars). When all four changes are positive, it outputs the sum of their sizes, multiplied by 1.2, 1.5 or 2 as the changes shrink step by step from fast to xslow. In every other case, including when all four are negative, it outputs 0.
How to read it
- The line sits in its own pane below the price and reads 0 on most bars.
- Above 0 means the close is higher than its level from all four lookbacks at once.
- Bigger values mean bigger rises. At defaults the top 5% of bars read 0.43 or more, and the one-month peak was 2.74.
- 0 means no all-up alignment, not a downtrend, because the pane never goes below 0.
What it outputs
- Cascade strength
- Sum of the four absolute percent changes, times 1.2, 1.5 or 2 when they shrink from fast to xslow. 0 unless all four changes are positive.
Settings
- fast
- Lookback for the quickest change, in bars (default 5). Raising it makes the fastest leg look over a longer span, so the all-up test needs a sustained move. Lowering it lets a short burst count toward alignment sooner.
- med
- Lookback for the second leg, in bars (default 15). Raising it needs a longer rise before this leg counts as up, so fewer bars pass the all-up test. Lowering it makes that test easier to pass.
- slow
- Lookback for the third leg, in bars (default 30). Raising it asks for a rise over a longer span before the leg counts as up; lowering it passes the all-up test more often.
- xslow
- Lookback for the longest leg, in bars (default 60, up to 1200). The longest span has to rise too, so raising it makes readings rarer. Longer spans usually carry larger percent moves, so raising it also scales the readings up.
Pitfalls
- Blind to downtrends: a fall over all four lookbacks reads 0, the same as chop, so a flat line is not a bearish signal.
- The scale depends on the lookbacks: the value sums percent moves and steps up 20 to 100 percent as they shrink in order, so changing a param shifts the size of readings, not just when they appear.
- Mostly zero: at defaults at least half the bars read exactly 0, the first 60 bars read 0 while the longest lookback fills, and the sample was one month of SPY one-minute bars.