Angle of Moving Average

The Angle of Moving Average indicator measures the slope of various moving average types to quantify trend strength and momentum transitions. By calculating the trigonometric angle of an average’s trajectory relative to volatility, it helps traders identify when a trend is accelerating, decelerating, or entering a neutral state.

Usage

The Usage section describes how the script can be used to identify trend phases based on the slope of a selected moving average. The indicator outputs a histogram and a line centered around a zero level, where positive values indicate an upward slope and negative values indicate a downward slope.

Traders can use the Angle of Moving Average to:

• Identify Trend Strength: A higher absolute angle value suggests a steeper, more aggressive trend. When the angle crosses above or below the user-defined "Angle Level," it signifies a strong directional move.
• Spot Momentum Shifts: Changes in the angle’s direction (sloping up or down) are reflected in the color of the histogram, providing early warnings of potential trend exhaustion or reversals.
• Filter No-Trade Zones: When the "No Trade Zone" setting is enabled, the indicator highlights periods where the angle is within a specific range, helping traders avoid choppy or sideways markets.

Details

The script calculates the angle by determining the change in the moving average value over a specific lookback period and normalizing it using the Average True Range (ATR). This normalization ensures that the angle calculation remains consistent across different assets and timeframes regardless of price volatility.

The calculation uses the formula: Angle = arctan((MA - MA[n]) / (ATR * n))

This result is converted from radians to degrees to provide a scale that is easier to interpret. The script supports 12 different moving average types, including standard options like SMA and EMA, as well as more complex calculations like ALMA, McGinley Dynamic, and LSMA.

Settings

• Angle Period: The lookback period used to calculate the change in the moving average value for the angle calculation.
• ATR Period: The lookback period for the Average True Range used to normalize the price change.
• Angle Level: A threshold value used to define strong trends and trigger alerts.
• MA Length: The window size for the underlying moving average calculation.
• MA Type: Selects the calculation method for the average (e.g., SMA, EMA, HMA, ALMA, McGinley).
• MA Source: The price data used for the moving average calculation (e.g., Close, Open, HL2).
• LSMA Offset: Specifies the offset value specifically for the Least Squares Moving Average.
• ALMA Offset/Sigma: Specific parameters to adjust the smoothness and responsiveness of the Arnaud Legoux Moving Average.
• Bar Color: When enabled, the chart bars are colored based on the indicator's trend detection.
• No Trade Zone: When enabled, visually distinguishes between active trending zones and neutral zones based on the Angle Level.

FAQ

How do I interpret the histogram colors? The colors change based on the slope's direction and its position relative to the Angle Level. Typically, a bright color indicates the trend is strengthening in that direction, while a neutral color suggests the angle is weakening or within the "No Trade Zone."

What is the benefit of using ATR in the angle calculation? Using ATR normalizes the vertical movement of the moving average. Without it, the "angle" would vary wildly between a high-priced asset like Bitcoin and a low-priced penny stock, making it difficult to use a consistent Angle Level threshold.

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