Madrid Moving Average Ribbon

The Madrid Moving Average Ribbon indicator provides a comprehensive visualization of market trend direction and momentum through a sequence of color-coded moving averages.

Usage

The Usage section focuses on interpreting the visual ribbon to identify trend strength and potential entry or exit points. Traders use the ribbon to distinguish between trending markets and consolidation phases across any timeframe.

• LIME (Bright Green): Indicates a strong uptrend. This is typically used to identify long trading opportunities where the price and shorter-term averages are trending above the long-term baseline.
• MAROON (Dark Red/Faded Red): Represents a short-term pullback within an uptrend or a potential exhaustion signal. In a bullish context, this may signal a "buy the dip" reentry or a warning that the trend is weakening.
• RUBI (Bright Red): Indicates a strong downtrend. This identifies short trading opportunities where the price and short-term averages are trending below the long-term baseline.
• GREEN (Dark Green/Faded Green): Represents a short-term relief rally within a downtrend or a potential exhaustion signal. In a bearish context, this may signal a "sell the peak" reentry or a warning of a trend reversal.

Details

The script constructs a ribbon using 18 different moving averages, ranging from a 5-period to a 90-period length, alongside a 100-period slow moving average used as a reference point. The color of each ribbon line is determined by its relationship to the 100-period MA and its own directional slope.

The logic follows these criteria:

• If the MA is above the 100-MA and rising, it is colored LIME.
• If the MA is above the 100-MA but falling, it is colored MAROON.
• If the MA is below the 100-MA and falling, it is colored RUBI.
• If the MA is below the 100-MA but rising, it is colored GREEN.

The thickness of the 5-period and 90-period averages is increased to highlight the "boundaries" of the ribbon, making it easier to see expansion and contraction. Expansion usually indicates increasing momentum, while contraction (tightening of the lines) indicates consolidation or an impending reversal.

Settings

• Exponential MA: A toggle switch that allows the user to choose between Exponential Moving Averages (EMA) or Simple Moving Averages (SMA). When enabled, the ribbon reacts faster to price changes; when disabled, the ribbon provides a smoother, lagged output.

FAQ

How do I interpret the ribbon colors for a trend reversal? A reversal is often signaled when the fastest moving averages (the thin lines) change color and begin crossing through the slow 100-period moving average. When the entire ribbon shifts from red/green to lime/maroon, a bullish reversal is confirmed.

Can this indicator be used for scalping? Yes, because the ribbon provides a multi-layered view of momentum, it can be applied to lower timeframes (1m, 5m) to identify quick trend shifts, though users should be mindful of market noise.

How do I access the Madrid Moving Average Ribbon? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.