This chart provides a zoomed out view of the FSVZO oscillator, stripped of it’s more complex components and left with basic state.
FSVZO Signal Band
Intuitively color coded bi-colored signal band (or line), a core of FSVZO.
When the line goes up, price goes up. When the line goes down, price goes down. Curve peak points are relatively rare outside of extreme levels (marked as green/red horizontal bands) which makes it fast, predictive and predictable to use.
It produces decent divergences and entry points, it contextualizes future price direction for trend, while also detecting changes very quickly. It was originally built as a scalper system volume component.
FSVZO creates resistance and support levels, levels that likely to act as reversal points. They behave like price levels/pivots, or supply and demand zones traders usually use on price charts.
Levels can be used for predicting FSVZO reversals, for determining trend strength, used as take profit areas or re-entry areas. In short it paints active levels that FSVZO respects. Reaching them are relatively rare events.
The Midline separates bullish and bearish FSVZO bias, it’s marked by a dotted line in the middle of the oscillator at value of 0. It acts as a major S/R (support and resistance) line.
Chop (erratic directional changes, color flips, trend flips) is likely to occur in the oscillator and is reflected in price when the band moves between the midline (0 line) and the first colored extreme level. However it’s important to note when the band reverses and changes direction from an extreme level, chop is almost completely absent and trend is clean.
Trend Shift "Bubbles"
More than just directional change/band crossover.
The algorithm attempts to derive actionable, early & predictive trend change signals. It can also be used as a stand alone indicator - the green bubble means trend shift upwards, red means downwards.
Effectivity varies from location on indicator where the bubble was located and how healthy the signal band is.
The MA can be used as a discretional filter to filter out the trend direction. Following it produces some lag, but increases accuracy especially conditions prone to small chops.
Note: Events such as the FSVZO band crossing the MA, usually produces a directional impulse and is relatively rare.
The confirmation time is 1 bar.
Overbought & Oversold Alerts
Simply derived from band value and its interactions with extreme levels.
It prints symbols marked as red ྾ for bearish and green x for bullish placed below/above extreme levelsdepending on side of extreme.
It alerts the user about abnormal FSVZO and Market behavior, suggest reversals, and acts as a reminder to avoid high risk trades by entering into heavily abnormal conditions expecting the continuation.
It technically confirms theoretically correct entry signals the moment the alert stops printing, i.e. on first candle without an alert.
Note it's not advisable to enter a trade the moment you notice an alert, even if in most cases the first alert marks places of price reversal, or is very close to one. If you decide to use it as a reversal point without confirmation, it’s advisable to use confluences such as trend shifts, band flips or other oscillators/indicators.
Example of Confirmed Entry Using Ob & Os
In the chart exampled on this slide two oversold conditions were printed, the candle following it, was absent of any alert, which translates into indicator suggesting an entry point.
Automatic Divergence Alerts Beta
Proprietary Divergence recognition engine.
H for hidden; R for regular; Green for bullish; Red for bearish
Traditionally hidden divergences are used for continuation and regular for reversals. It’s advisable to draw divergences manually to avoid confirmation time and possible bugs.
It uses -1 lag.
White Noise Component
This is a complimentary component of the FSVZO system. Growing bars show increasing trend related activity, shrinking bars show weakening in the overall trend. The moment it crosses to the other side, for example it flips from upside bars to downside bars - it signals a reversal.
It’s advisable to use in confluence with the main oscillator. It was added to reduce the false positive rate and increase effectivity of the indicator.
Similar to White noise, Hue (background highlighting) is independent to FSVZO component, it was added to provide confluences and increase indicator effectivity.
Green Hue - Alerts you about abnormal selling, appears in downtrend, suggesting to taking profits on short positions, look for long entries or avoid taking short positions in current conditions.
Red Hue - Alerts you about abnormal buying, appears in uptrend, suggests taking profits on long positions, look for short entries or abstain from entering long positions.
Hue provides high success rate trades when used in confluences alongside other FSVZO components.