Colorful Moving Averages

The Colorful Moving Averages indicator provides a multi-dimensional view of trend dynamics by visualizing price direction, momentum, and acceleration directly on a customizable moving average line.

Usage

The Usage section describes how the script can be used to interpret trend strength and potential reversals. Users can select from various moving average types (SMA, EMA, T3, etc.) to serve as the baseline for calculations.

• Momentum Visualization: The color of the moving average line shifts dynamically based on momentum. A green hue indicates positive momentum, while red indicates negative momentum. The intensity of the color represents the strength of the trend.
• Trend Reversals: The script identifies local minima and maxima. A green diamond labeled "Min" appears when momentum crosses from negative to positive, signaling a potential upward reversal. A red diamond labeled "Max" appears when momentum crosses from positive to negative, signaling a potential downward reversal.
• Momentum Table: A real-time dashboard appears in the corner of the chart displaying two key metrics:
  • Δ (Delta): Represents the instantaneous momentum of the moving average, normalized between -100 and 100.
  • Γ (Gamma): Represents the acceleration (momentum of the momentum), showing how quickly the trend is gaining or losing strength.

Details

The script calculates momentum by measuring the change in the selected moving average's value over time. Acceleration is derived from the rate of change of that momentum.

To ensure the values remain readable regardless of the asset's price scale, the script employs a normalization formula. This process uses a cumulative average of absolute changes to scale the Delta and Gamma values between a fixed range of -100 and 100. The color gradients are then mapped to these normalized values, allowing for consistent visual interpretation across different timeframes and instruments.

Settings

General Settings

• Moving Average Type: Choose between T3, SMA, EMA, SMMA (RMA), WMA, VWMA, LSMA, or HLM.
• Length: The lookback period used for the moving average calculation.
• Source: The price data used for calculations (e.g., Close, Open, HL2).
• Width: Adjusts the thickness of the plotted moving average line.

Tillson T3 Settings

• T3 Volume Factor: Specifically for the T3 moving average, this setting controls the damping effect. A higher value makes the average more responsive but potentially more volatile.

FAQ

How do I interpret the Δ and Γ values in the table?
The Δ (Delta) represents the current trend strength, while Γ (Gamma) represents the acceleration. If Delta is positive and Gamma is also positive, the trend is not only moving up but doing so at an increasing speed.

What do the "Min" and "Max" labels signify?
These labels mark "Local Minimum" and "Local Maximum" points where the momentum of the moving average crosses the zero line, often serving as leading indicators for trend changes.

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.