DiNapoli Displaced Moving Averages

The DiNapoli Displaced Moving Averages indicator provides a specialized trend-following framework by plotting simple moving averages shifted forward in time to reduce market noise and better identify price momentum. Based on the techniques of Joe DiNapoli, this tool offers three distinct averages designed to act as dynamic support/resistance and trend confirmation signals.

Usage

The Usage section describes how the script can be used to identify market direction and potential trade entries. By shifting the moving averages forward, the indicator helps traders avoid "whipsaw" signals often found in standard moving averages.

• Trend Identification: In a bullish market, price action typically remains above the displaced averages. Conversely, in a bearish market, price action stays below them.
• 3x3 DMA (Fast): Used for immediate trend sentiment and short-term momentum. When price crosses the 3x3, it often signals an early trend change or a "wash and rinse" setup.
• 7x5 DMA (Medium): Serves as an intermediate trend filter. Crossovers between the 3x3 and 7x5 are frequently used to signal shifts in momentum.
• 25x5 DMA (Slow): Acts as the primary trend indicator. The relationship between the price and the 25x5 determines the long-term market bias.
• Crossover Alerts: The tool includes built-in alerts for visual crossovers between the Fast/Medium and Medium/Slow moving averages, allowing traders to monitor trend transitions in real-time.

Details

The concepts behind this indicator are derived from Joe DiNapoli's book, Trading with DiNapoli Levels. Unlike standard moving averages that lag significantly, displaced moving averages (DMA) are calculated and then shifted (displaced) forward by a specific number of periods.

This displacement creates a visual "envelope" or buffer that price must penetrate before a trend change is confirmed. The standard DiNapoli settings implemented in this script are:

• 3x3: A 3-period SMA shifted 3 periods forward.
• 7x5: A 7-period SMA shifted 5 periods forward.
• 25x5: A 25-period SMA shifted 5 periods forward.

By displacing the averages, the indicator accounts for the time-sensitive nature of price movements, making it a preferred tool for traders utilizing Fibonacci levels and specific trend-following methodologies.

Settings

• Length 1: Sets the lookback period for the first (Fast) SMA.
• Offset 1: Sets the number of bars to displace the first SMA forward.
• Length 2: Sets the lookback period for the second (Medium) SMA.
• Offset 2: Sets the number of bars to displace the second SMA forward.
• Length 3: Sets the lookback period for the third (Slow) SMA.
• Offset 3: Sets the number of bars to displace the third SMA forward.

FAQ

What makes DiNapoli DMAs different from standard SMAs? Standard SMAs are plotted on the current bar based on historical data. DiNapoli DMAs take that same calculation but shift the plot forward on the X-axis, which helps filter out minor price fluctuations and clarifies trend direction.

Can I use these DMAs on any timeframe? Yes, while Joe DiNapoli originally popularized these for daily and weekly charts, they are frequently applied to intraday timeframes for scalping and swing trading trend confirmation.

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