Simple Moving Average Crossover

The Simple Moving Average Crossover indicator identifies trend reversals and momentum shifts by combining dual moving average crossovers with a volatility-normalized slope filter to reduce false signals during sideways market conditions.

Usage

The Usage section describes how the script can be used to identify potential entry points during trending market phases. This tool is primarily designed for intraday trading and is optimized for the 15-minute timeframe.

• Long Signals: Triggered when the fast 8-period Simple Moving Average (SMA) crosses above the slow 21-period SMA, provided the slope of the slow SMA is greater than the user-defined Angle threshold.
• Short Signals: Triggered when the fast 8-period SMA crosses below the slow 21-period SMA, provided the slope of the slow SMA is less than the negative value of the Angle threshold.
• Trend Filtering: The main setting affecting interpretation is the "Angle" input. By increasing this value, users can filter out choppy, horizontal price action, ensuring trades are only taken when the underlying trend exhibits sufficient strength.

Details

The script utilizes a combination of two SMAs (8 and 21) to detect momentum changes. To improve signal quality, it incorporates a slope calculation for the slower 21-period moving average.

The angle is calculated using the f_angle function, which employs the Arctangent (atan) of the price change relative to the Average True Range (ATR). This normalization ensures that the "angle" remains consistent across different assets and price scales. Additionally, the script uses a lookback mechanism (f_somethingHappened) that checks for a crossover within the last 15 bars, allowing the slope condition to validate a recent crossover even if they do not occur on the exact same candle. This logic was originally developed by @sixpathssenin.

Settings

• Angle: The minimum slope value required to validate a crossover signal. Higher values require a steeper trend.
• Angle Period: The number of bars used to calculate the change in the moving average for the slope formula.
• ATR Period: The lookback period for the Average True Range used to normalize the slope calculation.
• Angle Level: A sensitivity parameter used in the slope calculation.
• MA Source: Determines the price input (Close, Open, High, Low, etc.) used to calculate the moving averages.

FAQ

Which timeframe is best for this indicator? The script is specifically optimized for intraday trading, with the 15-minute timeframe being the recommended setting for the default parameters.

How does the Angle filter help in trading? The Angle filter prevents the strategy from taking "whipsaw" trades in range-bound markets by requiring the slow moving average to be trending up or down at a specific steepness before a signal is confirmed.

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