[blackcat] L2 Risk Assessment for Trend Strength

Mar 24

<b>OVERVIEW</b>

This script provides an advanced technical analysis tool combining real-time **Risk Assessment** and **Trend Strength Indicators**, displayed independently from price charts. It calculates multi-layered metrics using weighted algorithms and visualizes risk thresholds via dynamically-colored zones.


<b>FEATURES</b>

- Dual **RISKA** calculations (RSVA1/RSVA2) across 9-period cycles
- Smoothed outputs via proprietary **boldWeighted Moving Averages (WMAs)**
- Dynamic **Current Safety Level Plot** (fuchsia area-style visualization)
- Color-coded **Trend Strength Line** reacting to real-time shifts across four danger/optimism tiers
- Automated threshold validation mechanism using last-valid-value logic
- Visually distinct risk zones (blue/green/yellow/red/fuchsia) filling background areas



<b>HOW TO USE</b>

1. Add to your chart to observe two core elements:
- Area plot showing current risk tolerance buffer
- Thick line indicating momentum strength direction

2. Interpret values relative to vertical thresholds:
• Above 100 = Ultra-safe zone (light blue)
• 80–100 = Safe zone (green)
• 20–80 = Moderate/high-risk zones (yellow)
• Below 20 = Extreme risk (red)

3. Monitor trend confidence shifts using the colored line:
> **Blue**: Strong bullish momentum (>80%)
> **Green/Yellow**: Neutral/moderate trends (50%-80%)
> **Red**: Bearish extremes (<20%)



<b>LIMITATIONS</b>

• Relies heavily on prior 33-period low and 21-period high volatility patterns
• WMA smoothing introduces minor backward-looking bias
• Not optimized for intraday timeframe sub-hourly usage
• Excessive weighting parameters may amplify noise during sideways markets

Mar 24

Release Notes

Corrected color scheme as community suggested:
OVERVIEW This TradingView indicator ([blackcat] L2 Risk Assessment for Trend Strength) provides multi-layered analysis tools to evaluate real-time market risk exposure and assess trend momentum strength. It combines price action ratios, smoothed oscillators, and visual risk zone mapping into a single analytical framework.
FEATURES

Dual Risk Signal Analysis:
• RSVA1: Measures proximity to recent lows relative to range (9-period basis)
• RSVA2: Assesses distance from highs versus volatility (normalized 9-period calculation)

Advanced Smoothing Techniques:
✓ Weighted Moving Average implementation (3x cascading layers for RSVA1)
✓ Dynamic 9-period weighting system for critical values

Visualized Risk Zones:
• Five-tier threshold system displayed via colored background fills:
▸ Fuchsia (Extreme Risk+): >80%
▸ Red (High Risk): 80%-50%
▸ Yellow (Neutral Zone): 50%-20%
▸ Green (Low Risk): <20%

Realtime Metrics Display:
• Current Safety Level (Blue area plot tracking normalized volatility position)
• Trend Strength Indicator (Color-coded dynamic line showing momentum intensity)

HOW TO USE

Observe vertical positioning relative to risk thresholds (horizontal dotted lines):

Above 80: Potential overextended conditions
Below 20: Possible undervalued regions
Analyze signal convergence/divergence between:
• Blue safety baseline vs green/red/yellow zones
• Color-shift patterns in trend strength indicator

Monitor crossovers with central 50 reference point for directional shifts

LIMITATIONS
• Based purely on price history without volume consideration
• Parameter settings (period lengths) are hard-coded rather than adjustable inputs
• Requires interpretation context within broader timeframe analysis

NOTES
• All technical calculations use custom implementations optimized for Pine Script v6 constraints
• HLine styling maintains consistent 50 opacity transparency across color zones