3 Smoothed Moving Average

The 3 Smoothed Moving Average indicator plots three distinct smoothed moving averages to help traders identify long-term trend direction and momentum shifts while filtering out market noise.

Usage

The Usage section focuses on how the script provides visual and alert-based cues for trend analysis.

• Trend Identification: By default, the indicator uses lengths of 60, 100, and 200. When the price remains above these lines and the shorter averages are above the longer ones, a strong uptrend is indicated. Conversely, when the price is below the lines and the averages are stacked in descending order, a downtrend is confirmed.
• Support and Resistance: The smoothed nature of these averages makes them effective dynamic support and resistance levels. Traders often look for price retracements to these lines for potential entry opportunities.
• Crossover Alerts: The script is optimized with alerts that trigger when the fast SMMA (Length 1) crosses the medium SMMA (Length 2), or when the medium SMMA crosses the slow SMMA (Length 3). These crossovers can signal potential trend reversals or trend continuations.

Details

The Smoothed Moving Average (SMMA) is a variation of the Exponential Moving Average (EMA) that provides a much smoother line by incorporating a longer-term lookback into its smoothing formula. It is calculated by first taking a Simple Moving Average (SMA) for the initial value, then applying the formula: SMMA = (Previous SMMA * (Length - 1) + Current Price) / Length.

Because the SMMA reacts more slowly to price changes than a standard SMA or EMA, it is particularly effective at reducing "whipsaws" (false signals) during volatile market conditions. This implementation allows for three independent SMMA calculations to be overlaid on the chart simultaneously. This script is a refactored version of the original work by @hamidsafi.

Settings

• Length 1: Sets the lookback period for the first smoothed moving average (default: 60).
• Source 1: Determines the price input (Close, Open, High, Low, etc.) for the first SMMA.
• Length 2: Sets the lookback period for the second smoothed moving average (default: 100).
• Source 2: Determines the price input for the second SMMA.
• Length 3: Sets the lookback period for the third smoothed moving average (default: 200).
• Source 3: Determines the price input for the third SMMA.

FAQ

How does the SMMA differ from a standard Simple Moving Average (SMA)? The SMMA applies a smoothing factor that gives it a much "flatter" appearance compared to an SMA of the same length. This makes it less susceptible to temporary price spikes, providing a clearer view of the underlying trend.

Can I change the colors of the lines? Yes, while the inputs control the logic, the visual styles including color, thickness, and line type can be modified in the "Style" tab of the indicator settings.

How do I access the 3 Smoothed Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.