Multi-Factor Long Bias Tool

The Multi Factor Long Bias Tool is designed to highlight periods when multiple bullish conditions align, helping traders identify higher probability long opportunities. By combining trend, momentum, and participation metrics into a unified visual signal, the indicator goes beyond single factor analysis to support more consistent decision making.

Optimized for a 1-hour chart, it integrates four complementary components—MACD momentum, RSI confirmation, volume participation, and optional short interest filtering—to reveal when market conditions collectively favor a long bias rather than isolated upswings.

Core Logic

1. Momentum confirmation with MACD (1 Hour Frame):
The tool uses a fast MACD configuration to capture short term momentum shifts. A bullish MACD state—where the MACD line is above its signal line, above zero, and supported by a positive histogram—indicates that short term momentum exceeds long term trend strength. This alignment reflects sustained upward pressure rather than temporary mean reversion.

2. Relative strength moderation via RSI:
RSI serves as a context filter to avoid extremes. The tool favors an RSI that falls between the oversold and overbought thresholds, typically between 30 and 70. This “healthy momentum zone” identifies when price maintains strength without being overheated, aligning with controlled, directional moves rather than exhaustion.

3. Volume backed participation:
A volume filter confirms whether moves are supported by meaningful market participation. The script compares current daily volume to its 20-day average; only sessions meeting or exceeding a user defined multiple (default: 1×) qualify as high volume days. This ensures momentum signals align with genuine liquidity rather than thin, unreliable activity.

4. Optional short interest condition:
An additional input allows traders to incorporate short interest data, either manually or from external sources. When enabled, the tool verifies that short interest meets a chosen minimum percentage before validating a long bias. This feature is especially useful for setups targeting potential short squeezes or for avoiding markets lacking a meaningful contrarian base.

Signal Interpretation
When MACD momentum, RSI positioning, volume participation, and optional short interest filters align, the chart background softens to green, indicating a “long bias” environment.
If the “Focus on Longs Only” option is active, a small upward triangle marker labeled LONG appears beneath price bars for clear visual confirmation.

Traders can also choose to view MACD, its signal line, histogram, and RSI in a detachable sub panel. This optional visualization makes it easy to inspect alignment between underlying momentum and the on-chart bias signal without cluttering the main price view.

Why These Factors Are Combined

Each component contributes a distinct layer of confirmation:

• Momentum + liquidity: Ensures directional strength is backed by solid participation, preventing false breakouts on low volume moves.
  
• RSI moderation: Filters out overextended rallies and unsustainable intraday spikes.
  
• Short interest filter: Adds an optional contrarian check for potential squeeze setups or sentiment imbalance.
  

Together, these signals improve reliability by demanding agreement across multiple perspectives—trend, momentum, and market depth—before painting a bullish bias.

Practical Use and Tuning
The indicator serves as a bias and timing aid rather than a standalone trading system. It helps discretionary traders focus attention on periods when multiple conditions favor looking for long entries, while leaving exact entry, exit, and risk parameters to individual strategies.

All inputs—including MACD lengths, RSI range, daily volume multiplier, and short interest requirements—are fully adjustable to match various instruments, timeframes, and trading styles.
For instance:

• Adjusting MACD lengths fine tunes responsiveness to trend shifts.
  
• Modifying RSI thresholds changes the tolerance for extended momentum.
  
• Raising the volume multiplier demands stronger conviction from market participants.
  

Visual Cues

• Background highlight: Shaded green when all long bias conditions align.
  
• Triangle markers: “LONG” indicators below bars when the tool detects favorable conditions.
  
• Optional chart pane: Displays MACD and RSI for manual confirmation.
  

Intended Use
This tool assists traders in recognizing when technical, behavioral, and participation factors converge to support long opportunities. It is best used as part of a comprehensive trading process that includes broader context analysis, defined risk management, and confirmation from higher timeframe trends.

All parameters are user configurable for customization across markets and trading approaches. This indicator is for analytical purposes only and does not constitute financial or investment advice.