Middle-High-Low Moving Average

The Middle-High-Low Moving Average indicator calculates the midpoint of a price range over a specified period and applies a smoothing moving average to provide a responsive trend-following tool.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This section also focuses on how main settings affect the indicator interpretation and output.

• Trend Identification: The primary use of the MHLMA is to identify the prevailing market trend. When the indicator line is rising (colored green by default), it indicates bullish momentum. Conversely, a falling line (colored red) indicates bearish momentum.
• Crossover Strategies: Traders can use the MHLMA in conjunction with other moving averages, such as a standard 20-period EMA. For example, a bullish signal may occur when the MHLMA crosses above a standard EMA, suggesting that the midpoint of the price range is shifting upward faster than the average closing price.
• Reversal Signals: The indicator changes color when the slope of the moving average shifts. A transition from red to green can be interpreted as a potential long entry, while a transition from green to red may signal a short entry or the closing of a long position.

Details

The Middle-High-Low Moving Average was originally developed by Vitali Apirine and introduced in the August 2016 issue of Technical Analysis of Stocks & Commodities. The script functions by first finding the median price of a specific lookback period, calculated as (Highest High + Lowest Low) / 2.

By using the extremes of the price range rather than only the closing prices, the MHLMA captures the equilibrium point of market activity. This midpoint is then smoothed using either an Exponential Moving Average (EMA) or a Simple Moving Average (SMA). This two-step process filters out minor price fluctuations while remaining sensitive to shifts in the trading range.

Settings

• Length: The period used for the final smoothing moving average (EMA or SMA).
• High-Low Range: The lookback period used to determine the highest high and the lowest low values.
• MA Type: Specifies whether to use an Exponential Moving Average (EMA) or a Simple Moving Average (SMA) for the smoothing calculation.
• Highlight Movements: A toggle to enable or disable the color-coding of the plot based on its slope direction.

FAQ

What is the advantage of using the MHLMA over a standard EMA? The MHLMA accounts for the total price range (highs and lows) rather than just the closing prices, which can provide a more comprehensive view of market balance and volatility.

Can I use this indicator for intraday trading? Yes, the MHLMA is versatile and can be applied to any timeframe, though users may need to adjust the Length and High-Low Range settings to suit the specific volatility of lower timeframes.

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