The Oracle by Jaehee

The Oracle

Summary

The Oracle is a volatility-adaptive trend indicator built on a smoothed range filter, persistence counters, and regime-flip logic. Signals appear only when price establishes a sustained move and flips from one regime to the other. An EMA(50)-anchored ribbon provides a flowing visual context but does not drive signals.

What it does

① Calculates a smoothed volatility-based range to adapt to market conditions
② Builds a filtered price path that reduces single-bar noise
③ Tracks persistence of upward or downward filter movement with counters
④ Confirms Buy/Sell signals only on regime flips, not on single ticks
⑤ Draws a multi-phase ribbon around EMA(50) to visualize slope and bias

How it works (concept level)

① Smoothed Range: Double EMA of absolute price change, scaled by multiplier
② Filtered Price: Range filter constrains price movement to reduce noise
③ Persistence Counters: Upward/Downward counters accumulate only if the filter continues in one direction
④ Signal Logic:
  • Buy = price above filter AND prior regime was short
  • Sell = price below filter AND prior regime was long
  • Requires a full flip of state to confirm new signals
⑤ Ribbon: EMA(50) baseline with sinusoidal offsets creates a flowing ribbon, colored by EMA slope (visual only)

Why it is useful

① Noise resistance: Avoids whipsaws by requiring persistence + state flips
② Clarity: Ribbon visually encodes background trend for quick recognition
③ Balanced design: Combines volatility adaptation, persistence, and confirmation in one framework
④ Adaptable: Works across assets and timeframes without heavy parameter tuning

How to use it

① Signal reading:
  • ✧ Buy marker = confirmed transition into an upward regime
  • ✧ Sell marker = confirmed transition into a downward regime
  • Use bar close confirmation
② Ribbon context: Align trades with ribbon slope/color to stay with the dominant trend
③ Timeframes:
  • Higher (4H, Daily) = better swing bias
  • Lower (5m, 15m) = faster signals but noisier
④ Combination: Pair with ATR stops, position sizing, or volume/momentum studies for added confirmation

Limitations

① Still possible to see false flips in choppy consolidations
② Smoothing introduces slight delay in regime confirmation
③ Signals can repaint intrabar — confirm on bar close
④ Indicator only — no built-in money management or strategy logic

Best Practices (Recommended Use)

① Confirm on bar close
  • Signals can change intrabar; always make decisions after the bar has closed.
② Validate across multiple timeframes
  • Although the tool adapts to volatility, reliability improves on higher timeframes.
  • In practice, the 1-hour chart has shown the most stable balance between reactivity and noise.
③ Align with ribbon bias
  • Trade in the same direction as the ribbon slope/color to reduce countertrend exposure.
④ Combine with independent risk management
  • Use stop-losses, position sizing, or ATR-based targets outside the script.
  • The indicator highlights transitions, but risk control must be user-defined.
⑤ Use as confirmation, not prediction
  • Treat signals as confirmation of regime change, not as a forecast of future price.