FMA - Fibonacci Moving Average

The FMA - Fibonacci Moving Average indicator provides a specialized trend-following tool that calculates a weighted average based on Fibonacci sequence values to identify price direction and potential trend reversals with reduced lag.

Usage

The FMA is primarily used to identify the prevailing market trend and potential pivot points. Traders can utilize the indicator in several ways:

• Trend Identification: The indicator line changes color based on the slope of the average. A green line indicates an upward trend (FMA is rising), while a red line indicates a downward trend (FMA is falling).
• Support and Resistance: The FMA line can act as a dynamic level where price may find support during an uptrend or resistance during a downtrend.
• Multi-Timeframe Filtering: By enabling the "Use Moving Average on another interval" setting, traders can plot a higher-timeframe FMA on a lower-timeframe chart. This helps in identifying the primary trend while looking for entries on a more granular scale.
• Trend Reversal Alerts: The script includes built-in alert conditions that trigger when the FMA changes direction, signaling a potential shift in market momentum.

Details

The Fibonacci Moving Average (FMA) distinguishes itself from standard moving averages by using the Fibonacci sequence (1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377) for both its weighting factors and its lookback offsets.

Specifically, the calculation assigns the highest weight (377) to the most recent price and distributes the remaining weights to historical prices located at Fibonacci-indexed intervals. The total sum is divided by 985 (the sum of the weights used) to normalize the value. This mathematical structure prioritizes recent price action while incorporating specific historical data points believed to hold mathematical significance in market cycles, resulting in a smoothed line that remains reactive to significant price shifts.

Settings

• Price: Selects the price source for the calculation (e.g., Close, Open, High, Low, HL2).
• Use Moving Average on another interval: A toggle to enable Multi-Timeframe (MTF) functionality.
• Timeframe: Defines the specific timeframe to pull data from if the MTF option is active.
• Changing the color, if a new trend starts: Enables or disables the visual color transition (Green/Red) based on the slope of the FMA.

FAQ

What determines the color change of the FMA line? The color change is determined by the momentum of the average itself. If the current FMA value is higher than the previous value, it turns green (bullish). If it is lower, it turns red (bearish).

Can I use this indicator for automated alerts? Yes, the script is optimized with alert conditions that trigger specifically when a new "Trend Up" or "Trend Down" is detected at the close of a bar.

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