QQE

#momentum #trendfollowing #oscillator

Creator: J. Welles Wilder

QQE (Quantitative Qualitative Estimation) is a smoothed and calmer version of RSI. It heavily smooths RSI, then wraps a trailing stop line around it (built from the average movement of the RSI itself). Two lines: the smoothed RSI (fast) and its trailing line (slow). Because of the smoothing, it gives far fewer false signals than raw RSI, at the cost of some delay. 

Default period: 14, 5 (RSI period, smoothing factor) 

Fast line above the trailing line indicates bullish momentum. Fast line below the trailing line indicates bearish momentum. The 50 level separates bull and bear territory. 

Useful readings: 

Fast line crosses above trailing line: Momentum turned up 

Fast line crosses below trailing line: Momentum turned down 

Both lines above 50: Bull territory, favor longs 

Both lines below 50: Bear territory, favor shorts 

Fast line rides far above trailing line: Strong steady trend 

Lines braiding around each other near 50: Choppy market, stand aside 

Objective rules: 

Bullish: Fast line crosses above the trailing line. 

Bearish: Fast line crosses below the trailing line. 

Strong bullish setup: Bullish cross AND fast line above 50 

Strong bearish setup: Bearish cross AND fast line below 50 

Territory filter: Take only long signals above 50, only short signals below 50 

Exit: Fast line crosses back through the trailing line against your position 

What makes it unique: 

It wraps a volatility-based trailing stop around RSI itself, giving the oscillator its own SuperTrend. The result keeps RSI’s logic but removes most of its noise. 

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.