Adaptive Momentum Engine

Overview: The Adaptive Momentum Engine is a volume-adaptive oscillator that blends two perspectives of market movement: price strength and capital flow. By using a weighting factor that adjusts according to relative volume (RV), the indicator aims to emphasize the most relevant data for the current market environment.

Adaptive Logic: This indicator utilizes a weighting model that monitors participation levels against a 20-period baseline. The engine is designed to adjust its internal calculations as market conditions change:
Higher Participation: When volume is above the recent average, the engine increases the influence of flow-based data to reflect where market conviction is concentrated.
Lower Participation: During quieter periods, the focus shifts toward price-based momentum to maintain sensitivity to trend changes.

In simple terms, the engine continuously rebalances the influence of price and flow data to produce a single adaptive momentum line.

Key Features

Consensus Colouring: The indicator remains a neutral gray until both price and flow signals are in directional agreement, which helps in identifying clearer trends.

Volatility Envelopes: Standard Bollinger Bands are applied to the engine’s output to help visualize momentum expansion and contraction.

Activity Dashboard: A simple on-chart table provides a quick reference for current relative volume levels.

Usage Guidance

Momentum Strength: Signals typically gain strength when the oscillator breaks outside the volatility envelopes during active market phases.

Directional Alignment: A change to Cyan or Red indicates that price momentum and money flow are aligned in the same direction, suggesting higher conviction.

Market Filters: Periods where the line remains Gray usually reflect low-agreement conditions. These are best treated as neutral filters rather than active signals to help avoid low-probability entries.

Note on Visibility: This script is published as Protected to safeguard its adaptive weighting logic. The calculation combines several inputs in real-time based on market activity. Closing the source helps preserve the integrity of this method while ensuring it remains 100% free for the community to use.