WaveTrend Threshold Signals with a Long-Term Moving Average Filter

Summary

The strategy constructs a WaveTrend oscillator from the high, low, and close average, using successive EMA smoothing steps. It compares the oscillator with overbought and oversold thresholds, while a long-term simple moving average classifies the broader market direction. The stated trade logic opens longs when WaveTrend rises through the oversold level while price is above the trend average; it opens shorts when the oscillator falls through the overbought level while price is below the average. Opposing oscillator crossings close positions.

The document lists indicator parameters and a multi-year BTC/USDT futures backtest configuration, but reports no measured performance. There is a mismatch between its description and implementation: the overview suggests trend-aligned signals throughout, but the source closes positions on oscillator crosses regardless of the trend filter. The prose also describes thresholds as risk controls, although the code does not define explicit stop-loss or take-profit orders. Parameter sensitivity and repeated signals in ranging markets are noted limitations.

Key ideas

• WaveTrend is formed by smoothing deviations from the HLC average with EMAs.
• Oscillator crossings of oversold and overbought thresholds trigger candidate signals.
• A long-term SMA filters new entries by the direction of price relative to the average.
• The source closes positions on opposing oscillator crosses even without trend confirmation.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.