Sine Weighted Moving Average

The Sine Weighted Moving Average indicator calculates a smoothed trend-following line by applying trigonometric weighting to price data, offering a responsive filter with characteristics similar to a Triangular Moving Average.

Usage

The Sine Weighted Moving Average (SWMA) is primarily used to identify market trends and potential reversal points while minimizing the "lag" often associated with Simple Moving Averages. Because the weighting is distributed symmetrically across the lookback period, it excels at filtering out high-frequency market noise.

• Trend Identification: Traders can monitor the slope of the SWMA to determine the current trend direction. When the line is rising, it indicates bullish momentum, while a falling line suggests bearish momentum.
• Visual Cues: The script includes a toggle to highlight price movements. When enabled, the indicator changes color (typically green for up and red for down) based on whether the current value is higher or lower than the previous bar.
• Support and Resistance: Like other moving averages, the SWMA can act as a dynamic level where price may find support or resistance during a trend.

Details

The SWMA operates on the principle that data points in the center of the lookback window are often more representative of the underlying trend than the extreme ends. It achieves this by using a sine wave function to assign weights: math.sin((i + 1) * math.pi / (length + 1)).

Unlike a Linear Weighted Moving Average (WMA) which assigns weights in a straight line, or a Simple Moving Average (SMA) which assigns equal weight to all points, the SWMA uses a bell-like distribution. This specific weighting curve allows for a smoother output that is less sensitive to sudden price outliers at the very beginning or end of the calculation window.

Settings

• Length: The number of bars used in the calculation window. Higher values result in a smoother line with more lag, while lower values are more responsive to price changes.
• Highlight Movements?: A boolean toggle that changes the color of the plot based on the direction of the moving average.
• Source: The price data used for the calculation (e.g., Close, Open, High, Low, HL2).

FAQ

How does the SWMA differ from a Triangular Moving Average? While both indicators apply a "peaked" weighting system where the middle data points carry the most weight, the SWMA uses a sine function to create a smoother curve, whereas the Triangular Moving Average is essentially a double-smoothed SMA.

Can I set alerts for trend changes? Yes, the script is optimized for alerts. It triggers a notification when the SWMA changes direction from down-to-up or up-to-down, signaling a potential shift in momentum.

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