NAMI Indicator User Manual

Intro

NAMI Indicator User Manual

NAMI is the first composite momentum indicator that plots price action momentum with absolute zero lag - zero drag - with the ability to see price action in this manner, the reader's ability to identify tops, bottoms and divergences becomes effortless. Throughout this guide, you will learn all of NAMI’s components.

The user manual will be sectioned by each component that makes NAMI followed by examples. (See below)

1. (Key) NAMI Momentum Wave

2. Stochastic and RSI Crossovers

3. Dynamic StochRSI Ribbon

4. Money Flow Index Oscillator

5. NAMI’s Divergence Identification

6. True VWAP Oscillator

7. True VWAP and Money Flow Indicator Bar

Section 1.0 - NAMI Momentum Wave

NAMI MOMENTUM WAVE

NAMI’s algorithmic momentum wave is a proprietary momentum oscillator that plots price action in the form of oscillating waves - in real time. (Do not confuse NAMI as an RSI, VWAP or stochastic equivalent; we encourage anyone to make comparisons as they will come to find that NAMI is a beast of its own.)

Key Features:

1. Plots price action momentum with virtual zero lag

2. Momentum wave size and depth factors based on price volatility and volume

3. Displays momentum divergences with absolute clarity

EXHIBIT 1.1 - Ethereum 5HR

On this Ethereum 5-hour chart (exhibit 1.1), you can see price made lows on the 7th and 9th and a top on the 8th of January. (The tops and bottoms are signified with sharp pointed ends with red and green dots.) When the second bottom forms with the green dot, a visibly clear hidden bullish divergence is formed resulting in a 20% move up. (During uptrends, hidden bullish divergences are constantly formed and in a way validates a continued uptrend; the same applies when price is in a downtrend.)

On the counter-end, when price nears the top (third wave, red dot on the 100 line, on the large momentum wave), we see price retrace forming a bottom on the 11th, and a final top on 12th of January. That confirmed red dot on the 12th also confirmed a powerful bearish divergence which pushed price down, breaking higher timeframe market structure.

We use NAMI everyday looking for these printed signals and divergences. It is critically important that you have all your support, resistances, imbalances and liquidity objectives marked out to use as confluence with NAMI.

EXHIBIT 1.2 - Ethereum 5HR Market Cipher B Comparison Chart

Here in exhibit 1.2, we will compare NAMI to Market Cipher B in the same chart as exhibit 1.1

In short, the key differences are:

1. Market Cipher’s initial wave is 10 hours behind NAMI’s initial wave

2. Where NAMI was able to visualize a price floor that created the hidden bullish divergence – Market Cipher fails to plot the second momentum wave.

3. Nami visualizes 3 waves during the uptrend and prints the final top 5 hours before Market Cipher.

4. Market Cipher fails to plot the retracement bottom completely on the 11th of January.

5. Market Cipher fails to plot the final momentum top that NAMI did, creating the bearish divergence.

Note:

We are not cherry picking charts here to make these comparisons– view any asset on any timeframe and you will see this repeat over and over – and over.

Simply put, other composite indicators out in the market are slow and inaccurate. These products confuse market observers with smooth, undulating blobs but unfortunatel the market is not that smooth nor bubbly - it is sharp, impulsive and reactive and this is what NAMI captures then visualizes instantaneously.

Section 2.0 - Stochastic and RSI Crossover

STOCHASTIC AND RSI CROSSOVER

This feature of NAMI displays the stochastic (green and red) and RSI (yellow) oscillating within the dashed red line at 150(top) and 50(bottom). The 150 line and 50 line is the window in which this feature operates and the 100 line is to be used as the center point.

EXHIBIT 2.1 - Ethereum 1HR

Key Features:

1. Stochastic will turn green when it crosses up the yellow RSI; price direction is up

2. Stochastic will turn red when it crosses down the yellow RSI; price direction is down

3. When the green stochastic reaches the top line (150), this means the asset is overbought

4. When the red reaches the bottom line (50), this means the asset is oversold

5. The stochastic can ride the top and bottom when there are extreme buying or selling pressure

How to Use:

In exhibit 2.1, the green stochastic tagged the 150 line and crossed under the RSI, turning the line red. At this point, price topped and sold off and rode the 50 line for many hours. When the red stochastic finally flips the RSI, the selling pressure is released and price finds a local bottom.

This feature is to provide the market observer with additional information and should be used in conjunction with all the other components of NAMI.

Section 3.0 - Dynamic StochRSI Ribbon

NAMI’s Dynamic StochRSI Ribbon overlay is a way to view price trends on any time frame. The ribbon can show market watchers - oversold and overbought conditions, uptrends and downtrends, and divergences.

Key Features:

1. Identifying key price trends (macro and micro)

2. Providing macro and micro bullish or bearish bias

3. Identifying overbought conditions (150 line)

4. Identifying oversold conditions (0 line)

5. Spotting divergences

How to use: (see below)

EXHIBIT 3.1 - Ethereum Monthly Time Frame (other components of NAMI was removed to isolate this feature for visibility)

On exhibit 3.1, you can see the ribbon form a top - at the same time, price is consolidating sideways rather than moving in the downward direction of the ribbon. However, when price impulses at the end of 2017, the ribbon forms a lower high, creating a bearish divergence; from which this point price reverses into a downtrend for an entire year. The bubble finally flips bullish when the ribbon flips upwards near the end of the 2018.

Using the ribbon on a weekly or monthly time frame can often provide a good macro bias. This is great for positioning yourself in the correct trend. The ribbon also showing potential tops and bottoms is helpful when price is exhausting on both sides.

Now let’s see how we can utilize this same concept on an hourly chart.

EXHIBIT 3.2 - Ethereum 1HR

In exhibit 3.2, price is in a macro uptrend - using the bubble on the hourly time frame we can visualize the short term trends, divergences and overbought/oversold levels.

On January 7, the ribbon is showing oversold and a bullish divergence - giving us a move from $2168 to $2360. The price did stay overbought for many hours but eventually did top and gave way to a short term retracement. The ribbon’s ability to display color gradients can determine the depth of buying and selling. As soon as the ribbon turned orange, price began to retrace. The same applies in an oversold situation; on January 8, when the ribbon transitioned to orange, price started to climb. When trying to find the bottom of the retracement you can see from 5:00 to 15:00, price kept descending while the ribbon flipped and ascended – this is creating a bullish divergence and when using it with NAMI’s momentum wave (see EXHIBIT 3.3 below), readers can clearly see a bullish divergence - potentially offering a sign to enter the market.

EXHIBIT 3.3 - Ethereum 1HR with NAMI Momentum Waves

With the momentum waves visible on EXHIBIT 3.3 - market participants can see divergences on NAMI’s momentum wave giving confluence to the StochRSI Ribbon.

Section 4.0 - Money Flow Index

NAMI Money Flow Index

NAMI’s Money Flow Index (MFI) is the final component that makes NAMI. The MFI oscillates between green and red from the zero line and can give insight to the viewer the buying/selling pressure and volume for that particular asset.

Key Features:

1. Buying and selling pressure

2. Overbought and oversold conditions

3. Divergences

How to Use:

1. When the money flow crosses up and rises - this indicates buying pressure

2. When the money flow crosses down and descends - this indicates selling pressure

3. MFI can also create divergences with price action

4. Use as confluence with other key NAMI features.

EXHIBIT 4.1

In exhibit 4.1, we highlighted the price action areas with the corresponding money flow on NAMI. Users can see there is very little delay with displaying the buying and selling pressure. Now let’s have fun and make comparisons with other indicators.

EXHIBIT 4.2 - Comparison with Market Cipher B (MCB)

Key Mentions:

1. In this comparison, MCB money flow is significantly delayed - by the time the money flow crossed over positive, Ethereum took out it’s significant 2022 high

2. NAMI money flow transition is immediate and after taking out the significant high, NAMI’s money flow starts to taper, meaning increased selling pressure

3. MCB, even after the price started selling off, it’s money flow remained flat

EXHIBIT 4.3 - Additional Comparison (Ethereum 3 Day)

Key Mentions:

1. NAMI’s money flow transitions without delay when buying pressure increased

2. Market Cipher’s money flow takes 51 days to transition green within this same time frame

Section 5.0 - NAMI’s Divergence Identification

NAMI’s Divergence Identification

In this section, we will showcase how to use NAMI's divergences for trade entries and exits. While NAMI offers 'Divergence Detection,' understanding and identifying these divergences personally is crucial. The optimal lookback settings for divergence detection (see exhibit 5.1) are not one-size-fits-all and can vary significantly based on market and asset characteristics, alongside individual trading strategies. Our exploration into various timeframes, such as 1min, 5min, 10min, 15min, 30min, 1hr, 2hr, 4hr, 6hr, 12hr, and 1day charts, highlights the importance of empirical testing and adaptation. Rather than adhering to a predefined 'conventional' lookback setting, successful divergence detection requires adjusting parameters based on backtesting results and aligning with specific trading goals.

For the specific range settings (see exhibit 5.1) across different timeframes, it's recommended to experiment with various settings through backtesting to identify what aligns best with your trading strategy and goals. The effectiveness of lookback settings like 3 and 3 on a 12hr chart, as opposed to a generic approach, underlines the value of customization in technical analysis tools.

EXHIBIT 5.1

First, let’s look at a simple diagram of what divergences are and then use NAMI to identify them.

EXHIBIT 5.1

Definitions:

• Bearish Divergence: Price is making higher highs and NAMI is making lower lows; can be a sign of a price reversal

• Hidden Bearish Divergence: Price is making lower lows while NAMI is making higher highs; can be a sign of a bear trend continuation

• Bullish Divergence: Price is making lower lows while NAMI is making higher highs; can be a sign of a price reversal

• Hidden Bullish Divergence: Price is making higher highs while NAMI is making lower lows; can be a sign of bull trend continuation

Examples:

EXHIBIT 5.2 - Ethereum 40 Min Time Frame

The context of this chart is: Ethereum has broken higher time frame bullish market structure and price, unless it reclaims above where the shift occurred, is retracing. Using NAMI’s momentum waves, we can identify divergences that can give insight to the trader, potential scalps, reversals and confluence for bias.

Let’s dive in:

1. A hidden divergence is printed on NAMI, signaling a continuation of this short-term bullish trend

2. NAMI prints a bearish divergence and a larger bearish divergence, signaling a reversal

3. NAMI prints a bullish divergence signaling a short-term reversal

4. A small hidden bull divergence appears on NAMI signaling a continuation of this small trend

5. Price unable to break the previous high, made a lower high and printed a bearish divergence, signaling a bearish reversal

6. At the same time, NAMI is showing us that there is a larger hidden bearish divergence suggesting this could be a local top to the larger down trend

Identifying these divergences will take time for each individual - but with this knowledge going forward, you will be capable of spotting divergence when they occur.

EXHIBIT 5.3 - BTC DAILY

Here we have BTC’s daily chart notated with divergences with the percentage move after the divergence printed. (see notes below.)

1. A bearish divergence printed on NAMI (prior to the divergence, NAMI’s Stoch RSI indicated price was overbought and was due for a pullback) – a 10% move to the downside was recorded after the divergence.

2. Price retraced and found a bottom, consolidating for 6-7 days. On the 17th, NAMI printed a second lower bottom while the price made a higher high. This confirmed a hidden bullish divergence which resulted in a 9.6% move to the upside.

3. NAMI printed a top signal while the Stoch RSI indicated price was overbought which resulted in a short pullback.

4. After the pullback, NAMI printed another bullish divergence which resulted in a 10.8% move to the upside (higher if you held onto your position).

5. Finally, on the 10th of January, NAMI printed a lower momentum wave while the price made higher highs. This is a confirmed bearish divergence and can be a larger bearish divergence when you connect line 1 to line 5. This bearish divergence resulted in a 12%+ move to the downside.

EXHIBIT 5.4 - SAME CHART AS EXHIBIT 5.3, BUT COMPARED TO MARKET CIPHER B (LOWER)

Key Differences:

• General lack of detail on Market Cipher B

• Buy/sell signals are days late

• No visualization of divergences of any sorts

Section 6.0 - True VWAP Oscillator

NAMI’s True VWAP Oscillator

The True VWAP Oscillator is a cutting-edge feature within the NAMI Indicator suite that enhances traditional VWAP analysis by transforming it into an oscillator format. This innovative approach allows traders to instantly ascertain whether the market price is trading above or below the volume-weighted average, thus providing a true and clear depiction of market positioning relative to volume.

Key Features:

1. Oscillator Format: Converts the traditional VWAP from an overlay to an oscillator that fluctuates around a zero line, simplifying the visualization of price relative to VWAP.

2. Real-Time Market Sentiment: Offers immediate insights into bullish or bearish conditions based on the oscillator's position relative to the zero line.

3. Enhanced Clarity: Eliminates ambiguity in interpreting VWAP levels, enabling traders to make more informed decisions quickly.

4. Customizable Settings: Allows traders to adjust the sensitivity and thresholds to align with their specific trading strategies and market conditions.

How to Use:

1. Interpreting the Oscillator: Monitor the True VWAP Oscillator's position in relation to the zero line. When the oscillator is above zero, the market price is above the VWAP, indicating potential bullish momentum. Conversely, when the oscillator is below zero, it suggests the price is below the VWAP, potentially signaling bearish conditions.

2. Entry and Exit Points: Use the oscillator's movement to identify potential entry and exit points. Entering trades when the oscillator crosses above zero can capitalize on emerging bullish trends, while exits or short entries might be favored when it crosses below zero.

3. Divergence Detection: Look for divergences where the price trend and the oscillator do not align. For example, if the price makes a new high but the oscillator fails to surpass its previous high, it could indicate weakening momentum.

4. Integration with Other Indicators: Combine the True VWAP Oscillator with other technical indicators in the NAMI suite for a multi-layered analysis approach. This can help confirm signals and reduce the likelihood of false positives.

Section 7.0 - True VWAP and Money Flow Indicator Bar

NAMI’s True VWAP and Money Flow Indicator Bar

In the NAMI Indicator suite, the Indicator Bars consist of two dynamic, color-changing horizontal bars located at the bottom of the trading pane: the MFI (Money Flow Index) Bar and the True VWAP (Volume Weighted Average Price) Bar. These bars are designed to give traders a quick and clear visual representation of market conditions, reflecting the current states of the MFI and True VWAP indicators through color changes. The MFI Bar changes color based on the position of the money flow relative to its zero line, while the True VWAP Bar changes color based on the price's position relative to the VWAP.

Key Features:

1. Two-Tone Color Schemes: The MFI Bar displays green when the money flow is above the zero line (indicating buying pressure) and red when it is below (indicating selling pressure). The True VWAP Bar shows orange when the price is below the VWAP (potential bearish sentiment) and blue when it is above (indicative of bullish conditions).

2. Real-Time Visualization: These bars update in real-time, providing continuous feedback on the flow of money and the relative price to VWAP.

3. Ease of Use: Positioned at the bottom of the screen for easy visibility without cluttering the main trading chart.

4. Integration with NAMI Features: Complements other NAMI indicators by summarizing their complex data into simple, actionable insights.

How to Use:

1. Monitoring Market Conditions: Keep an eye on the Indicator Bars while trading to quickly assess market momentum. The colors serve as immediate indicators of current market dynamics, enabling rapid decision-making.

2. Entry and Exit Signals: Use changes in the colors of the Indicator Bars as supplementary signals for entering or exiting trades. For example, a shift from orange to blue in the True VWAP Bar might suggest a potential entry point as the price moves above the VWAP, indicating increasing bullish momentum.

3. Correlation with Other Indicators: Align the signals from the Indicator Bars with other NAMI indicators for a comprehensive analysis. For instance, confirmatory signals from the Momentum Wave or divergence indications can be cross-verified with the color changes in the MFI and True VWAP Bars.

4. Risk Management: Utilize the Indicator Bars to manage risk by setting stop-loss orders or taking profits when the bars indicate a reversal in market conditions, such as a change from blue to orange in the True VWAP Bar.