Separated Moving Average - evo

The Separated Moving Average - evo indicator separates price action into two distinct moving averages based on candle polarity to help traders visualize trend strength and potential exhaustion levels independently. By calculating averages for positive and negative bars separately, the tool provides a more nuanced view of market momentum compared to traditional singular moving averages.

Usage

The Usage section describes how the script can be used to identify trend deviations and potential entry or exit points. Traders typically use the two lines to gauge the "pull" of the market in either direction; when the price stays consistently above the Average Up line, it indicates strong bullish momentum. Conversely, staying below the Average Down line suggests a firm bearish trend.

Interpretation

• Bullish Scenario: When the price crosses above the Average Up line, it may signal a bullish continuation or breakout.
• Bearish Scenario: When the price crosses below the Average Down line, it may signal a bearish breakdown or reversal.
• Smoothing: The indicator utilizes Heikin Ashi calculations by default to filter out market noise, allowing the separated averages to react more fluidly to the prevailing trend.

Details

The script functions by isolating closing prices based on whether a bar is positive (Close > Open) or negative (Close < Open).

• Memory Logic: If the current bar does not match the required polarity (e.g., a green bar occurs when calculating the negative average), the script uses the last known valid price for that specific average. This ensures the calculation remains continuous and representative of recent directional activity.
• Heikin Ashi Integration: By utilizing request.security for Heikin Ashi data, the script can determine bar polarity based on smoothed trend values rather than standard raw candles, though this can be toggled off for a more reactive output.

Settings

• Type: Selects the calculation method for the averages (SMA, EMA, or HMA).
• Length: Determines the lookback period used for the moving average calculations.
• Heikin Ashi Settings: When enabled, the indicator uses Heikin Ashi open/close values to determine if a bar is positive or negative, providing smoother lines.
• Show Regular Moving Average: Toggles the visibility of a standard moving average based on all closing prices for comparative analysis.

FAQ

How do I interpret the two different lines? The green line (Average Up) tracks the average of positive price movements, while the red line (Average Down) tracks the average of negative movements. The gap between them can represent market volatility or trend strength.

Can I change the sensitivity of the indicator? Yes, you can adjust the "Length" setting to make the averages more or less reactive, or switch the "Type" to EMA or HMA for faster response times compared to the standard SMA.

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