WT LB Trading Guide

The WaveTrend (LazyBear) is a popular momentum oscillator that identifies potential overbought and oversold conditions by analyzing the variance of the average price relative to its Exponential Moving Average.

What does the indicator show?

• WT1 and WT2 Lines: The primary oscillator line (WT1) and its slightly smoothed signal line (WT2). When WT1 crosses WT2, momentum shifts occur.
• Difference Area (Diff): A filled background histogram representing the spread between WT1 and WT2, easily visualizing the strength of a momentum crossover.
• Dotted Levels: Visual thresholds defining critical overbought and oversold regions.

Key Settings

• Channel Length (n1): The lookback period used for the Initial Exponential Moving Average (EMA).
• Average Length (n2): The smoothing period applied to calculate the final WaveTrend lines.
• OB / OS Levels: Visual levels marking zones where reversions are statistically most likely to occur.

How to use Strategy Parameters (Condition Source)

Within the Strategy Tester module, you can leverage the data from this indicator to create powerful logical conditions for trade entries and exits.

1. Oscillator Crossover Values

• WT1 — The leading WaveTrend oscillator line.
• WT2 — The trailing signal line.
• Diff (WT1 - WT2) — The absolute difference between the lines.
• Diff Delta — The rate of change in the difference from the previous candle.

Strategy Example: A solid mean-reversion strategy might require an entry when momentum flashes bullish from extreme lows: WT1 crosses_above WT2 combined with WT1 < -53.