Bouncer Moving Average V2

The Bouncer Moving Average V2 indicator provides a multi-layered trend analysis system by combining smoothed moving averages with ADX-based momentum filtering to identify high-probability trend reversals and continuations.

Usage

The Bouncer Moving Average V2 is primarily used to identify trend direction and potential entry points through the interaction of multiple moving average components and directional filters.

• Main Trend Identification: The indicator plots a 200-period Simple Moving Average (SMA) complex (high, low, and close) which serves as a long-term trend baseline. The color of this complex shifts based on the relationship between a short-term SMMA (12) and a medium-term SMMA (default 34), combined with price action slope.
• Momentum Filtering: The central Bouncer Moving Average (SMMA 34) changes color based on ADX and Directional Index (DI) values. A green color suggests a strong bullish trend (ADX above threshold and +DI > -DI), while a red color suggests a strong bearish trend (ADX above threshold and -DI > +DI).
• Crossover Signals: Users can monitor the interaction between the silver SMMA (12) and the color-coded SMMA (34). A crossover of the fast SMMA over the medium SMMA often signals a shift in local momentum.

Details

The script utilizes a combination of traditional Simple Moving Averages (SMA) and Smoothed Moving Averages (SMMA) to reduce noise.

The core logic integrates:

1. Directional Movement Index (DMI): It calculates Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) along with the Average Directional Index (ADX) over a 14-period lookback. This determines the "Active" state of the Bouncer MA, ensuring color changes only occur when trend strength is sufficient (controlled by the ADX MA Active setting).
2. SMMA Calculation: The smoothed moving averages are calculated using a recursive formula, providing a smoother output than a standard SMA while maintaining less lag than an EMA of the same length.
3. Triple 200 SMA: By plotting the 200 SMA of the high, low, and close, the indicator creates a "trend channel" that helps visualize long-term support and resistance zones.

Original code by @CapnOscar.

Settings

• ADX MA Active: Sets the threshold for the ADX. The main Bouncer MA will only display trend colors (Green/Red) when the ADX is above this value, otherwise appearing in the default chart color.
• Period: Determines the length of the medium-term Smoothed Moving Average (SMMA). This affects the sensitivity of the main trend line and crossover signals.

FAQ

How do I interpret the color changes on the 200 SMA lines?

The 200 SMA lines turn green when the 12-period SMMA is above the 34-period SMMA and rising. They turn red when the 12-period SMMA is below the 34-period SMMA and falling.

What is the difference between the silver line and the colored line?

The silver line is a fast 12-period SMMA used for timing. The colored line is the medium-term "Bouncer" SMMA (default 34) which incorporates ADX filtering to confirm trend strength.

How can I get access to the Bouncer Moving Average V2?

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