Katz Impact Wave 🚀

Overview of the Katz Impact Wave 🚀

The Katz Impact Wave is a momentum oscillator designed to visualize the battle between buyers and sellers. Instead of combining bullish and bearish pressure into a single line, it separates them into two distinct "Impact Waves."

Its primary goal is to generate clear trade signals by identifying when one side gains control, but only when the market has enough volatility to be considered "moving." This built-in filter helps to avoid signals during flat or choppy market conditions.

Indicator Components: Lines & Plots
Impact Waves & Fill
Green Wave (Total Up Impulses): This line represents the cumulative buying pressure. When this line is rising, it indicates that bulls are getting stronger.

Red Wave (Total Down Impulses): This line represents the cumulative selling pressure. When this line is rising, it indicates that bears are getting stronger.

Colored Fill: The shaded area between the two waves provides an at-a-glance view of who is in control.

Lime Fill: Bulls are dominant (Green Wave is above the Red Wave).

Red Fill: Bears are dominant (Red Wave is above the Green Wave).

Background Color
The background color provides crucial context about the market state according to the indicator's logic.

Green Background: The market is in a bullish state (Green Wave is dominant) AND the Rate of Change (ROC) filter confirms the market is actively moving.

Red Background: The market is in a bearish state (Red Wave is dominant) AND the ROC filter confirms the market is actively moving.

Gray Background: The market is considered "not moving" or is in a low-volatility chop. Signals that occur when the background is gray should be viewed with extreme caution or ignored.

Symbols & Pivot Lines
▲ Blue Triangle (Up): This is your long entry signal. It appears on the bar where the Green Wave crosses above the Red Wave while the market is moving.

▼ Orange Triangle (Down): This is your short entry signal. It appears on the bar where the Red Wave crosses above the Green Wave while the market is moving.

Pivot Lines (Solid Green/Red/White Lines): These lines mark confirmed peaks of exhaustion in momentum, not price.

Green Pivot Line: Marks a peak in the Green Wave, signaling buying momentum exhaustion. This can be a warning that the uptrend is losing steam.

Red Pivot Line: Marks a peak in the Red Wave, signaling selling momentum exhaustion. This can be a warning that the downtrend is losing steam.

▼ Yellow Triangle (Compression): This rare signal appears when buying and selling exhaustion pivots happen at the same level. It signifies a point of extreme indecision or equilibrium that often occurs before a major price expansion.

Trading Rules & Strategy
This indicator provides entry signals but does not provide explicit Take Profit or Stop Loss levels. You must use your own risk management rules.

Long Trade Rules
Entry Signal: Wait for a blue ▲ triangle to appear at the top of the indicator panel.

Confirmation: Ensure the background color is green, confirming the market is in a bullish, moving state.

Action: Enter a long (buy) trade at the open of the next candle after the signal appears.

Short Trade Rules
Entry Signal: Wait for an orange ▼ triangle to appear at the bottom of the indicator panel.

Confirmation: Ensure the background color is red, confirming the market is in a bearish, moving state.

Action: Enter a short (sell) trade at the open of the next candle after the signal appears.

Take Profit (TP) & Stop Loss (SL) Ideas
You must develop and test your own exit strategy. Here are some common approaches:

Stop Loss:

Place a stop loss below the most recent significant swing low on the price chart for a long trade, or above the recent swing high for a short trade.

Use an ATR (Average True Range) based stop, such as 2x the ATR value below your entry for a long, to account for market volatility.

Take Profit:

Opposite Signal: The simplest exit is to close your trade when the opposite signal appears (e.g., close a long trade when a short signal ▼ appears).

Momentum Exhaustion: For a long trade, consider taking partial or full profit when a green Pivot Line appears, signaling that buying momentum is peaking.

Fixed Risk/Reward: Use a predetermined risk/reward ratio (e.g., 1:1.5 or 1:2).

Disclaimer
This indicator is a tool for analysis, not a financial advisor or a guaranteed profit system. All trading and investment activities involve substantial risk. You should not risk more than you are prepared to lose. Past performance is not an indication of future results. You are solely responsible for your own trading decisions, risk management, and for backtesting this or any other tool before using it in a live trading environment. This indicator is for educational purposes only.