Smoother Moving Average w/ DSL

The Smoother Moving Average w/ DSL indicator provides a high-responsiveness smoothing filter equipped with Discontinued Signal Lines to minimize market noise and refine trend signals. It offers a faster alternative to traditional moving averages by utilizing a specialized smoothing algorithm that reduces lag while maintaining clarity in trend direction.

Usage

The Usage section focuses on how the Smoother Filter and the Discontinued Signal Lines (DSL) interact to generate actionable data. Traders can use this tool to identify trend reversals and momentum shifts across various timeframes.

• Trend Identification: The primary line changes color based on the selected signal type. A green line typically indicates bullish momentum, while a red line indicates bearish momentum.
• Signal Types: The indicator supports two primary signal modes:
  • Slope: Signals are generated based on the directional change of the Smoother Filter.
  • Levels Crosses: Signals are generated when the Smoother Filter crosses the upper or lower DSL levels, providing a more conservative entry approach.
• DSL Levels: The "Level Up" (green) and "Level Down" (red) lines act as dynamic thresholds. When the price filter stays between these levels, it suggests a period of consolidation or weakening momentum.

Details

The Smoother Filter is a unique smoothing technique designed to react faster than a standard Smoothed Moving Average (SMMA). While it significantly reduces lag, it may be more sensitive to volatile price action. To counteract potential false signals, the script implements Discontinued Signal Lines (DSL).

Unlike a standard signal line which is a simple moving average of the indicator, DSL levels are calculated as follows:

• When a specific level is crossed in a bullish direction, an EMA of that value is calculated for the signal line.
• When the direction shifts, the previous signal value is "inherited" and held constant, creating a horizontal level. This hybrid approach combines the benefits of lagging signal lines with static horizontal support and resistance levels.

Settings

Source Settings

• Smoothing Type: Choose the underlying calculation method for Heiken-Ashi smoothing (AMA, T3, or Kaufman).
• Source: Select from an expanded list of price sources, including standard OHLC values, Heiken-Ashi variants, and trend-biased calculations.

Basic Settings

• Period: Sets the lookback period for the Smoother Filter calculation.

Signal/DSL Settings

• Signal Period: Determines the length used for the signal line/DSL smoothing.
• Signal/DSL Smoothing: Selects the moving average type (EMA or FEMA) for the signal line.
• Signal Type: Switches between "Slope" or "Levels Crosses" for signal generation logic.

UI Options

• Color bars?: Enables or disables the coloring of price bars based on the current trend state.
• Show signals?: Toggles the visibility of "L" (Long) and "S" (Short) shapes on the chart.

Moving Average Inputs

• Kaufman/AMA Variables: Adjusts specific parameters (Fast/Slow ends) used only if Kaufman or AMA smoothing types are selected in the source settings.

FAQ

How does the Smoother Filter differ from a standard SMA?
The Smoother Filter uses a more reactive algorithm that reduces the inherent lag found in Simple or Smoothed Moving Averages, allowing for earlier trend detection.

What is the benefit of "Discontinued" Signal Lines?
DSL levels prevent the signal line from constantly fluctuating during sideways price action by "freezing" the level until a significant directional move occurs, thereby reducing whipsaws.

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