Trend Strength Matrix [JOAT]

Trend Strength Matrix — Multi-Timeframe Confluence Analysis System

This indicator addresses a specific analytical challenge: how to efficiently compare multiple technical measurements across different timeframes while accounting for their varying scales and interpretations. Rather than managing separate indicator windows with different scales, this tool normalizes four distinct analytical approaches to a common -1 to +1 scale and presents them in a unified matrix format.

Why This Combination Adds Value

The core problem this indicator solves is analytical fragmentation. Traders often use multiple indicators but struggle with:

1. **Scale Inconsistency**: RSI ranges 0-100, MACD has no fixed range, ADX ranges 0-100 but measures strength not direction
2. **Timeframe Coordination**: Checking multiple timeframes requires switching between charts or cramming multiple indicators
3. **Cognitive Load**: Processing different indicator types simultaneously creates mental overhead
4. **Confluence Assessment**: Determining when multiple approaches agree requires manual comparison

This indicator specifically addresses these issues by creating a standardized analytical framework where different measurement approaches can be directly compared both within and across timeframes.

Originality and Technical Innovation

While the individual components (RSI, MACD, ADX, Moving Average) are standard, the originality lies in:

1. **Unified Normalization System**: Each component is mathematically transformed to a -1 to +1 scale using component-specific normalization that preserves the indicator's core characteristics
2. **Multi-Timeframe Weighting Algorithm**: Higher timeframes receive proportionally more weight (40% current, 25% next, 20% third, 15% fourth) based on the principle that longer timeframes provide more significant context
3. **Real-Time Confluence Scoring**: The composite calculation provides an instant assessment of how much the different analytical approaches agree
4. **Adaptive Visual Encoding**: The heatmap format allows immediate pattern recognition of agreement/disagreement across both indicators and timeframes

How the Components Work Together

Each component measures a different aspect of market behavior, and their combination provides a more complete analytical picture:

**Momentum Component (RSI-based)**: Measures the velocity of price changes by comparing average gains to losses
**Trend Component (MACD-based)**: Measures the relationship between fast and slow moving averages, indicating trend acceleration/deceleration
**Strength Component (ADX-based)**: Measures trend strength regardless of direction, then applies directional bias
**Position Component (MA-based)**: Measures price position relative to a reference average

The mathematical relationship between these components creates a comprehensive view:
- When all four agree (similar colors), it suggests multiple analytical approaches are aligned
- When they disagree (mixed colors), it highlights analytical uncertainty or transition periods
- The composite score quantifies the degree of agreement numerically

Detailed Component Analysis

**1. Momentum Oscillator Component**
This component transforms RSI into a centered oscillator by subtracting 50 and dividing by 50, creating a -1 to +1 range where 0 represents equilibrium between buying and selling pressure.

// Momentum calculation normalized to -1 to +1 scale
float rsi = ta.rsi(close, rsiLength)
float rsiScore = (rsi - 50) / 50
// Result: 0 at equilibrium, +1 at extreme overbought, -1 at extreme oversold

**2. Moving Average Convergence Component**
MACD is normalized by its own volatility (standard deviation) to create a bounded oscillator. This prevents the unbounded nature of MACD from dominating the composite calculation.

// MACD normalized by its historical volatility
[macdLine, signalLine, histLine] = ta.macd(close, macdFast, macdSlow, macdSignal)
float macdStdev = ta.stdev(macdLine, 100)
float macdScore = macdStdev != 0 ? math.max(-1, math.min(1, macdLine / (macdStdev * 2))) : 0

**3. Directional Movement Component**
This combines ADX (strength) with directional movement (+DI vs -DI) to create a directional strength measurement. ADX alone shows strength but not direction; this component adds directional context.

// ADX-based directional strength
[adx, plusDI, minusDI] = calcADX(adxLength)
float adxStrength = math.min(adx / 50, 1)  // Normalize ADX to 0-1
float adxDirection = plusDI > minusDI ? 1 : -1  // Direction bias
float adxScore = adxStrength * adxDirection  // Combine strength and direction

**4. Price Position Component**
This measures price deviation from a moving average, weighted by the magnitude of deviation to distinguish between minor and significant displacements.

// Price position relative to moving average
float ma = ta.sma(close, maLength)
float maDirection = close > ma ? 1 : -1
float maDeviation = math.abs(close - ma) / ma * 10  // Percentage deviation scaled
float maScore = math.max(-1, math.min(1, maDirection * math.min(maDeviation, 1)))

Multi-Timeframe Integration Logic

The multi-timeframe system uses a weighted average that gives more influence to higher timeframes:

// Timeframe weighting system
float currentTF = composite * 0.40    // Current timeframe: 40%
float higherTF1 = composite_tf2 * 0.25  // Next higher: 25%  
float higherTF2 = composite_tf3 * 0.20  // Third higher: 20%
float higherTF3 = composite_tf4 * 0.15  // Fourth higher: 15%

float multiTFComposite = currentTF + higherTF1 + higherTF2 + higherTF3

This weighting reflects the principle that higher timeframes provide more significant context for market direction, while lower timeframes provide timing precision.

What the Dashboard Shows

The heatmap displays a grid where:

• Each row represents a timeframe
  
• Each column shows one component's normalized reading
  
• Colors indicate the value: green shades for positive, red shades for negative, gray for neutral
  
• The rightmost column shows the composite average for that timeframe
  

Visual Elements

• Moving Average Line — A simple moving average plotted on the price chart
  
• Background Tint — Subtle coloring based on the composite score
  
• Shift Labels — Markers when the composite crosses threshold values
  
• Dashboard Table — The main heatmap display
  

Inputs

Calculation Parameters:

• Momentum Length (default: 14)
  
• MACD Fast/Slow/Signal (default: 12/26/9)
  
• Directional Movement Length (default: 14)
  
• Moving Average Length (default: 50)
  

Timeframe Settings:

• Enable/disable multi-timeframe analysis
  
• Select additional timeframes to display
  

How to Read the Display

• Similar colors across a row indicate the components are showing similar readings
  
• Mixed colors indicate the components are showing different readings
  
• The composite percentage shows the average of all four components
  

Alerts

• Composite crossed above/below threshold values
  
• Strong readings (above 50% or below -50%)
  

Important Limitations and Realistic Expectations

• This indicator displays current analytical conditions—it does not predict future price movements
  
• Agreement between components indicates current analytical alignment, not future price direction
  
• All four components are based on historical price data and inherently lag price action
  
• Market conditions can change rapidly, making current readings irrelevant
  
• Different parameter settings will produce different readings and interpretations
  
• No combination of technical indicators can reliably predict future market behavior
  
• Strong readings in one direction do not guarantee continued movement in that direction
  
• The composite score reflects mathematical relationships, not market fundamentals or sentiment
  
• This tool should be used as one input among many in a comprehensive analytical approach
  

Appropriate Use Cases

This indicator is designed for:
- Analytical organization and efficiency
- Multi-timeframe confluence assessment
- Pattern recognition in indicator relationships
- Educational study of how different analytical approaches relate
- Supplementary analysis alongside other methods

This indicator is NOT designed for:
- Standalone trading signals
- Guaranteed profit generation
- Market timing precision
- Replacement of fundamental analysis
- Automated trading systems

— Made with passion by officialjackofalltrades