Volatility-Adjusted Momentum Oscillator (VAMO)

Concept & Rationale: This indicator combines momentum and volatility into one oscillator. The idea is that a price move accompanied by high volatility has greater significance. We use Rate of Change (ROC) for momentum and Average True Range (ATR) for volatility, multiplying them to gauge “volatility-weighted momentum.” This concept is inspired by the Weighted Momentum & Volatility Indicator, which multiplies normalized ROC and ATR values​. The result is shown as a histogram oscillating around zero – rising green bars indicate bullish momentum, while falling red bars indicate bearish momentum​. When the histogram crosses above or below zero, it provides clear buy/sell signals. Higher magnitude bars suggest a stronger trend move. Crypto markets often see volatility spikes preceding big moves, so VAMO aims to capture those moments when momentum and volatility align for a powerful breakout.

Key Features:

• Momentum-Volatility Fusion: Measures momentum (price ROC) adjusted by volatility (ATR). Strong trends register prominently only when price change is significant and volatility is elevated.​
  
• Intuitive Histogram: Plotted as a color-coded histogram around a zero line – green bars above zero for bullish trends, red bars below zero for bearish​. This makes it easy to visualize trend strength and direction at a glance.
  
• Clear Signals: A cross above 0 signals a buy, and below 0 signals a sell. Traders can also watch for the histogram peaking and then shrinking as an early sign of a trend reversal (e.g. bars switching from growing to shrinking while still positive could mean bullish momentum is waning).
  
• Optimized for Volatility: Because ATR is built-in, the oscillator naturally adapts to crypto volatility. In calm periods, signals will be smaller (reducing noise), whereas during volatile swings the indicator accentuates the move, helping predict big price swings.
  
• Customization: The lookback period is adjustable. Shorter periods (e.g. 5-10) make it more sensitive for scalping, while longer periods (20+) smooth it out for swing trading.
  

How to Use: When VAMO bars turn green and push above zero, it indicates bullish momentum with strong volatility – a cue that price is likely to rally in the near term. Conversely, red bars below zero signal bearish pressure. For example, if a coin’s price has been flat and then VAMO spikes green above zero, it suggests an explosive upward move is brewing. Traders can enter on the zero-line cross (or on the first green bar) and consider exiting when the histogram peaks and starts shrinking (signaling momentum slowdown). In sideways markets, VAMO will hover near zero – staying out during those low-volatility periods helps avoid false signals. This indicator’s strength is catching the moment when a quiet market turns volatile in one direction, which often precedes the next few candlesticks of sustained movement.