Advanced

The Advanced oscillator type aims to return various actionable information to the trader, including adaptive trend estimation, automatic and real-time divergences detection, as well as institutional activity estimation.

Each element of this oscillator is on a scale going from 0 to 100, and is described in the sections below.

Main Oscillator

The Main Oscillator is displayed as an area with colors that switch between green and red depending on the direction of the current price variation. This oscillator has a cyclical and leading nature, and as such might anticipate certain price movements before they occur.

Signals and automatic divergence detection are based on this oscillator.

Trend Area

The Trend Area is an adaptive oscillator displayed as an area with colors that switch between blue and purple. This oscillator aims to adapt to the trend strength in order to be less affected by ranging markets.

It can be interesting to use this oscillator in confluence with the Main Oscillator by only interpreting matching indications such as both oscillators being above 50 or having a divergence at the same time.

The trend area oscillator can also be used to detect classical divergences with the price.

Institutional Movement

The Advanced oscillator type also displays an estimate of the institutional activity in the market, this estimate is based on Shalen’s hypothesis. Using a higher value for the Length setting aims to detect more significant institutional activity.

Institutional activity is detected when the orange histogram is visible.

Note that higher time frames can return fewer occurrences of detected institutional activity.

It is known that Tesla, Inc entered positions mid-January 2021 on Bitcoin. This was detected by the institutional movement in Lux Oscillator.

Make sure the symbol you are applying the Lux oscillator while using the Lux type contains volume data, or else the institutional movement will not be visible.

Support/Resistances

The Lux oscillator type displays real-time linear support and resistances that are used to determine the signals described in the next sections. These are displayed in gray.

The slope of these support and resistance lines decreases for higher values of Length. When a support or resistance is broken by the Main Oscillator, one might expect a pullback or reversal.

Signals

The Lux oscillator type contains various signals, highlighted by several visual elements such as labels, lines and dots. Note that these are not trend following but contrarian signals and as such they aim to detect potential tops and bottoms.

Each signal is described in the following sub-sections.

Minor Buy/Sell

Minor buy/sell signals occur when the Main Oscillator bounces off a new support and resistance line and they aim to indicate potential pullbacks (Reversals can also be detected from minor buy/sell signals but this is a relatively rare occurrence).

Minor buy/sell signals are displayed as relatively big dots with no labels, with minor buys being represented by green dots and minor sells being represented by red dots.

Major Buy/Sell

Major buy/sell signals occur when the main oscillator bounces off of a new support or resistance line while being overbought or oversold. These signals aim to indicate potential reversals or that the current trend is starting to weaken.

Major buy/sell signals are also displayed as big dots but contain an additional label, in green with "+" for major buys and in red with "-" for major sells.

Bullish/Bearish Divergences

Divergences are detected in real-time, and aim to show potential reversals with the price. These are displayed as lines with small dots at the extremity, with green lines representing bullish divergences and red lines representing bearish divergences.

It can be a good idea to have extra confirmation when a divergence has been detected, having a divergence plus a prior major/minor buy/sell can give some additional confidence.

Because of its real-time nature, the detection of divergences can be sensitive to noise, make sure to see if a detected divergence is due to a noisy variation.

All Elements Together

See how every element of the Lux type looks together:

length=50

Alerts

The Advanced Oscillator contains various alerts conditions related to the Advanced oscillator type. You will be alerted each time the alert triggers.

Institutional Activity Detected

The user is alerted each time institutional activity is detected in the market (that is the first time the lux institutional movement histogram becomes visible).