Moving Average Cross Probability

The Moving Average Cross Probability indicator calculates the probability of an upcoming bullish crossover or bearish crossunder between fast and slow moving averages, allowing traders to anticipate trend shifts before they occur on the chart.

Usage

The tool is designed to provide a statistical "heads-up" regarding potential momentum changes. It outputs a probability histogram and an on-chart data table to help users visualize the likelihood of a cross.

• Early Trend Detection: Use the probability percentage to identify if a trend is likely to reverse (crossunder/crossover) or continue its current path.
• Front-Running Movements: High probability readings (e.g., above 80%) suggest a high likelihood of a moving average cross on the very next bar, allowing for earlier entries or exits.
• Customizable Signals: Traders can adjust the moving average types and lengths to match specific timeframes or asset classes.

Details

The indicator estimates probability by analyzing a range of potential price values for the upcoming bar.

1. It uses a Hull Moving Average (HMA) to forecast the most likely next price point.
2. A volatility range is established around this forecast using a standard deviation calculation.
3. This range is divided into multiple price levels based on the user-defined Resolution setting.
4. For every possible price level, the script calculates what the resulting Fast and Slow moving averages would be.
5. Finally, it determines the percentage of these outcomes that result in a cross, presenting this as a probability score.

Settings

Main Settings

• Moving Average Type: Choose between Exponential Moving Average (EMA) or Simple Moving Average (SMA).
• Data Processing Smoothing Window: Controls the length used for the HMA forecasting and standard deviation range.
• Slow MA length: Sets the period for the slower moving average.
• Fast MA length: Sets the period for the faster moving average.
• Resolution: Determines the number of price levels sampled within the projected range; higher values increase calculation precision.

Appearance

• Colors: Customize the colors used for bullish (green) and bearish (red) probability bars and table elements.

FAQ

How do I interpret the probability histogram?

The histogram shows the statistical likelihood of the fast moving average crossing the slow moving average on the next candle. A value of 100% means that within the calculated standard deviation range, every possible price outcome results in a cross.

What is the "Resolution" setting for?

Resolution determines how many data points are tested within the forecasted price range. A higher resolution provides a more granular probability percentage but requires more computational resources.

How can I access Moving Average Cross Probability?

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