RK's 07 ∴ Moving Average Ribbon with Momentum Adjusted by DGT

The RK's 07 ∴ Moving Average Ribbon with Momentum Adjusted by DGT indicator provides a sophisticated trend visualization tool that combines multi-period moving averages with momentum-based price action adjustments for faster market response. By integrating momentum, acceleration, and psychological probability factors, this tool aims to reduce the inherent lag found in traditional moving average systems.

Usage

The Usage section focuses on identifying trend direction and strength through the expansion and contraction of the ribbon. Traders can use the script to identify trend reversals when the ribbon lines converge and cross over one another.

• Trend Identification: When the ribbon is expanding and colored bullish (green), it indicates strong upward momentum. Conversely, a bearish (red) expanding ribbon indicates a strong downtrend.
• Momentum Mode: Users can toggle between the "Momentum Adjusted" mode and a "Simple Moving Average" mode. The Momentum Adjusted setting uses price velocity to "lead" the moving average, making it more sensitive to sudden price shifts.
• Color Logic: The indicator offers two coloring modes. One determines color based on the position relative to a middle line (HL2), while the "Crossover" mode changes colors when faster moving averages cross slower ones, providing a more traditional ribbon crossover signal.

Details

The script is an adaptation of DGT’s "Momentum Adjusted Moving Average" (MaMA). It calculates price action by factoring in not only price movements but also the rate of change (Momentum) and the rate of that change (Acceleration).

The implementation includes a versatile library of 22 different moving average types, including advanced filters like Ehlers Super Smoother, Fractal Adaptive Moving Average (FRAMA), and Kaufman’s Adaptive Moving Average (KAMA). The "Uptrend Strength" factor uses a ratio of rising bars over a specific period to weight the momentum adjustment, ensuring that the speed of the averages correlates with the underlying trend conviction.

Settings

Main Setup

• Source Setup: Determines the price source used for all calculations (default is Close).
• Moving Average Type: Allows selection from 22 different MA types (SMA, EMA, HMA, ALMA, etc.) to form the ribbon.
• Line 0-5 Function Length: Individual length settings for each of the six lines forming the ribbon, allowing for custom spread and depth.

Momentum & Ribbon Setup

• Ribbon Setup: Switches between "Momentum Adjusted by DGT" and "Simple Moving Average" calculation logic.
• Use Momentum Acceleration?: When enabled, adds the rate of momentum change to the price calculation for even faster responses.
• Acceleration Multiplier: Adjusts the intensity of the acceleration factor.
• Momentum Length: The lookback period used to calculate price momentum.
• Length for Uptrend Strength: The window used to calculate the probability ratio of the trend.
• Colors change when slower MA crossover faster MA?: Toggles the color logic between price-relative or crossover-relative.
• Ribbon Transparency: Controls the visibility and opacity of the filled area between the ribbon lines.

FAQ

How does the Momentum Adjusted mode differ from standard ribbons? Unlike standard ribbons that only use price, the Momentum Adjusted mode offsets the source price based on its current velocity and acceleration, allowing the averages to react to moves before they are fully reflected in standard time-series calculations.

Can I use this for scalping or long-term investing? Yes, by adjusting the "Line Function Lengths" and the "Moving Average Type," you can tune the ribbon to be highly sensitive for lower timeframes or smoothed for long-term trend following.

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