The Sentiment Zone Oscillator (SZO) was authored by Walid Khalil in the Stocks and Commodities Magazine, May 2012. The SZO uses a triple exponential moving average (TEMA) of a plus-minus value, triggered by the current and previous closing prices. Over-bought and over-sold paths and adjustable guides are also given.

This oscillator attempt to measure overall market sentiment and give overbought and oversold levels to play with. Bullish signal may occur when the oscillator is rising from the lower level and bearish one when the white line is quitting the higher level.

Overbought and oversold are dynamic, they take the higher and lower value that the oscillator had in the last  “SZOLongPeriod”.

// parameters
// SZOPeriod = 14
// SZOLongPeriod = 30
// PriceFiltering = 14
// SZOPercent = 95
// AveragePeriod = 14


if(barindex>SZOLongPeriod) then
  prices = average[PriceFiltering](close)

  if prices>prices[1] then
   useValues = 1
  else
   useValues = -1
  endif

  alpha = 2/(1+SZOPeriod)

  worktema1 = worktema1[1]+alpha*(UseValues-worktema1[1])
  worktema2 = worktema2[1]+alpha*(worktema1-worktema2[1])
  worktema3 = worktema3[1]+alpha*(worktema2-worktema3[1])
  mytema = worktema3+3.0*(worktema1-worktema2)

  result = 100*mytema

  szo = result/SZOPeriod

  hi=0
  lo=0

  for i = 0 to SZOLongPeriod do
   if szo[i]>hi then
     hi = szo[i]
   endif
   if szo[i]<lo then
     lo = szo[i]
  endif
  next

  rn = hi-lo

  upz = lo+rn*SZOPercent/100
  dnz = hi-rn*SZOPercent/100

  avg = exponentialaverage[AveragePeriod](szo)
endif

RETURN szo coloured(255,255,255) as "sentiment zone oscillator", avg coloured(50,205,50) as "average", upz coloured(50,205,50) as "up channel", dnz coloured(219,112,247) as "down channel"