Dump Detector - Hull Moving Average

The Dump Detector - Hull Moving Average indicator identifies rapid bearish momentum shifts and potential downtrends by analyzing price smoothing through a dual Hull Moving Average (HMA) crossover system. It serves as an automated exit trigger for long positions or an entry signal for short-biased strategies by detecting "dumps" in real-time price action.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This tool is primarily utilized to capture sudden shifts in trend direction. When the primary Hull Moving Average crosses below its secondary trigger line, a "Dump Warning" is plotted above the bar, signaling a potential trend reversal or breakdown.

• Exit Strategy: Traders can use the dump signals to close out long positions before significant price depreciation occurs.
• Short Entry: The indicator can identify high-probability windows for shorting when the HMA confirms downward momentum.
• Trend Filtering: Users can enable "Pump Signals" via the settings to visualize bullish crossovers, allowing the tool to function as a complete trend-following system.

Details

The script is built upon the Hull Moving Average (HMA), which is designed to reduce lag while maintaining significant smoothing. The detection logic calculates a standard HMA based on the user-defined length. To generate signals, a second "trigger" line is calculated by applying a Weighted Moving Average (WMA) to the primary HMA values.

The "Dump" signal is triggered when the primary HMA crosses under the trigger line, indicating that the immediate price velocity is slowing down relative to its recent average. Conversely, a "Pump" signal occurs when the HMA crosses over the trigger line. By using the HMA as the base calculation instead of a standard SMA or EMA, the indicator responds more rapidly to price "cliffs" or sudden sell-offs.

Settings

• Length: Determines the lookback period for the core Hull Moving Average calculation. Higher values provide more smoothing, while lower values increase sensitivity.
• Source: Defines the price data used for the calculation (default is set to Close).
• Trigger: Sets the period for the secondary smoothing line. This value controls the crossover sensitivity; a smaller trigger value results in faster signals.
• Show Pump Signals?: A toggle to display bullish crossover triangles on the chart.
• Show Hull Moving Average Line?: A toggle to visualize the underlying HMA path on the price chart.

FAQ

How do I adjust the sensitivity of the dump signals? You can increase the "Length" setting to filter out market noise or decrease the "Trigger" value to make the signals react more quickly to price changes.

Can this indicator be used for scalping or long-term trading? Yes, because it is based on the HMA, it is effective across various timeframes. Shorter timeframes (1m, 5m) are suitable for scalping, while daily timeframes can help identify major market cycle shifts.

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