TEWMA Supertrend

The TEWMA Supertrend indicator combines Triple Exponential Weighted Moving Average (TEWMA) with ATR-based volatility filtering to provide highly responsive and smooth trend detection for any market.

Usage

The TEWMA Supertrend is primarily used for trend identification and trailing stop-loss placement. Traders can use the color-coded lines and shaded regions to quickly assess market sentiment:

• Bullish Trend: When the price closes above the Supertrend line, the indicator turns green (bullish), signaling a potential buy entry or long bias.
• Bearish Trend: When the price closes below the Supertrend line, the indicator turns red (bearish), signaling a potential sell entry or short bias.

The tool adapts to market volatility, meaning the bands expand during high volatility to avoid premature exits and contract during low volatility to capture trend shifts early.

Details

This script utilizes a hybrid smoothing technique referred to as TEWMA. It first calculates a Weighted Moving Average (WMA) to emphasize recent price action and then applies a Triple Exponential Moving Average (TEMA) smoothing to significantly reduce lag.

The Supertrend component uses the Average True Range (ATR) to create dynamic envelopes around the TEWMA. A unique memory mechanism is implemented in the band logic: if the price has not breached the prior band, the value "sticks" to its previous level. This prevents the indicator from flipping trend direction during minor pullbacks or sideways noise, resulting in a more stable trend line.

Settings

• TEWMA Source: Determines the price data used for the initial calculations (default is Close).
• TEWMA Length: Sets the lookback period for the WMA and TEMA smoothing processes.
• Supertrend Length: Adjusts the lookback period for the ATR volatility calculation.
• Multiplier: Controls the distance between the TEWMA and the Supertrend bands. A higher multiplier results in a wider channel and fewer trend changes, while a lower multiplier makes the indicator more sensitive.

FAQ

How do I use the TEWMA Supertrend for signals?

A bullish signal occurs when the price crosses above the red line, changing it to green. A bearish signal occurs when the price crosses below the green line, changing it to red.

Can I change the sensitivity of the indicator?

Yes, you can adjust the "Multiplier" setting. Lowering the multiplier will make the indicator react faster to price changes, whereas increasing it will filter out more noise at the cost of slight lag.

How can I access TEWMA Supertrend?

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