Advanced Market Forecast Indicator ThinkorSwim TOS Script

The advanced market forecast indicator can be used to identify complex signals.

Hi Robert…

The Market Forecast indicator is used by trend trade coaches in my online classes. It has 3 lines that correspond to 0 and 100.

The near-term divergence is similar to the macd divergence.

It would be difficult to come up with a thinkscript for this signal as it would involve counting backwards on the blue line for days to find the previous peak.

Is it possible to create a script that could identify this signal?

Was it difficult? Yes. Was it possible? No.

The market forecast indicator is only available on the ThinkorSwim platform. It is similar to RSI and stochastic in that it ranges between zero and 100. It works well with a variety of financial instruments. There are multiple time frames on the chart.

If read correctly, the indicator can provide a number of valuable signals. With so much information being displayed at once, signals may be overlooked and opportunities missed.

ThinkorSwim has a default market forecast indicator.

The built-in indicator can be used to identify several different signals.

MARKET POSTURE

Market posture is the first signal. It shows the direction of the intermediate-term trend and strength.

Market posture strength meter.

Think of it as an advanced market forecast.

CLUSTERS

The lines are all in the oversold area at the same time. This is a sign that the price is poised for a pull back or reversal.

The bearish and bullish clusters are marked on the chart.

The market forecast is called the Bearish Cluster.

The market forecast is Bullish Cluster.

Each element used to indicate a cluster formation is individually enabled or disabled on the upper and lower portions of the chart.

There is an advanced market forecast.

This article from TDAmeritrade has more information on cluster signals.

NEAR-TERM DIVERGENCE

A divergence between the blue, near-term line and price action is called a near-term divergence. A bearish divergence occurs when the price makes higher highs and the oscillator makes lower highs and the price is due for a correction. The opposite is true for bullish divergences.

Bullish and bearish divergences are marked on the chart. If the chartist were to manually identify these patterns, the short-term trend lines would be drawn the same way.

When price closes above or below the respective confirmation line, the divergence is confirmed.

Show all divergences in the advanced market forecast.

The user can choose to show the most recent divergence rather than all divergences. The most recent divergence will always be highlighted in order to bring it to the user’s attention. This can be accomplished byggling in the script’s settings panel.

Show only the most recent divergence.

Refer to this Shadow Trader article for more information on near-term divergence signals.

INTERMEDIATE CONFIRMATION

When the momentum and intermediate lines are at opposite extremes, the intermediate confirmation signal occurs. The weakest of the four signals from the Market Forecast indicator is a trend continuation signal.

Intermediate confirmation signals are not shown. They can be enabled from the script settings panel.

Thinkscript is an advanced market forecast.

There is a video clip about the advanced market forecast.

Refer to the Shadow Trader article for more information on intermediate confirmation signals.