This Pine Script code is designed to create a custom technical indicator called "Worm" that helps identify trends in the market based on momentum. Let's break down the code and its settings:
Indicator Title and Overlay:
The indicator is named "Worm (Clean)" and is set to be overlaid on the price chart. Input Settings:
The code defines various input settings, which can be customized by the user. These settings include: Indicator Settings (e.g., Alpha, Gap) Backtest Settings (e.g., HighlightCrossovers, ApplyNorm) Color Settings (e.g., Buy Color, Sell Color, Wait Color) Location Settings for displaying the indicator above, below, or at the price. Toggleable Inputs:
These settings allow you to choose whether the momentum indicator should be displayed above, below, or at the price chart. You can also specify the colors for buy, sell, and wait signals. Indicator Calculations:
The code calculates momentum using various formulas involving the source price data (e.g., open, high, low, close). Momentum values are stored in variables L0, L1, L2, L3, and lrsi. It also calculates the Color values for the indicator based on certain conditions and user-defined settings. Bcolor and Scolor are used to determine the color of the plotted indicator based on buy and sell conditions. Bollinger Bands (BB) and Keltner Channels (KC) Calculation:
The code calculates Bollinger Bands (UpperBB and LowerBB) and Keltner Channels (UpperKC and LowerKC) using the source price data. It also determines whether the market is in a squeeze (SqzOn) or not (NoSqz) based on the relationship between BB and KC. Signal Generation:
Buy and sell signals are generated based on various conditions, including momentum values and the squeeze state. The color of the indicator line is determined based on the buy and sell signals. LagF Calculation:
The LagF variable is calculated based on certain formulas involving the L0Line, L1Line, L2Line, and L3Line values. Control Color:
The Color variable is used to control the color of the LagF indicator line based on certain conditions. Plotting:
The momentum indicator (Val) is plotted on the chart with the specified colors and style. The LagF indicator (Worm) is also plotted with a dynamic color based on market conditions. Alerts are triggered when buy or sell signals are generated. Experimental Section:
This section appears to be left for experimentation and may contain additional code or features. Overall, this Pine Script code calculates and displays a custom momentum-based indicator called "Worm" on a price chart. It generates buy and sell signals based on momentum and squeeze conditions and allows users to customize various settings, including indicator location and colors. The code is designed for technical analysis and trend identification in financial markets.