Combined Moving Averages + Squeeze & Volume Spike Signals

The Combined Moving Averages + Squeeze & Volume Spike Signals indicator provides a smoothed trend-following framework by averaging six different moving average types into four distinct lines to identify high-probability entry zones and volatility contractions.

Usage

The Usage section describes how the script can be used to identify trend direction, potential support/resistance zones, and volatility shifts.

• Trend Identification: The four moving averages (default lengths: 10, 50, 100, 500) act as dynamic filters. The 10 and 500 periods change color based on their slope (rising vs. falling), while the 50 and 100 periods form a "cloud" based on their crossover state.
• The Cloud Zone: The area between the 50 and 100 moving averages serves as a primary interest zone. In a trending market, price frequently retraces to this cloud before continuing its primary move.
• Volume Spike Detection: The cloud brightness changes dynamically based on volume. Darker colors indicate volume at or below the 10-period median, while brighter colors highlight volume spikes, signaling stronger trend conviction.
• Squeeze Signals: A yellow background highlights "squeezes," which occur when the gap between the 50 and 100 moving averages becomes significantly narrower than the historical median. This typically precedes a breakout or a period of high volatility.
• Entry Signals: Buy and Sell labels appear when specific conditions align: the price is within the cloud, the cloud direction matches the candle color, moving average slopes are aligned, and a volume spike is present.

Details

The script is constructed using a "composite" calculation method. Each of the four visible moving averages is actually an average of six different types: SMA, EMA, HMA, RMA, WMA, and VWMA. This approach aims to minimize the lag of traditional SMAs while reducing the "noise" of more reactive averages like the HMA, providing a smoother output that represents a consensus of various mathematical models.

The squeeze logic utilizes a 200-period median of the difference between the second and third moving averages. If the current distance falls below a user-defined percentage of this median (the Squeeze Value Multiplier), a squeeze is triggered. This normalization allows the indicator to adapt to different assets and timeframes automatically.

Settings

General Settings

• Signals On/Off: Enables or disables the Buy/Sell labels on the chart.
• Squeeze Signals On/Off: Toggles the yellow background highlight for volatility contractions.
• Squeeze Value Multiplier: Adjusts the sensitivity of the squeeze detection. Lower values require a tighter contraction to trigger a signal.

Moving Average Configurations

The following settings are available for each of the four moving averages (MA #1 through MA #4):

• MA On/Off: Toggles the visibility of the specific moving average.
• Moving Average Length: Sets the lookback period for the composite calculation.
• Indicator Source: Determines the price data used (e.g., Close, Open, HL2).
• Colors: Customizes the rising/falling or bullish/bearish colors for the lines and cloud.

FAQ

How do I interpret the cloud color changes? The cloud transitions from dark to bright colors based on volume intensity. A very bright green or red cloud indicates a major volume spike (greater than 2x the median volume), suggesting strong momentum.

What happens if I change the lengths of MA #2 and MA #3? Since the cloud, squeeze logic, and entry signals are specifically calculated based on the relationship between MA #2 and MA #3, changing these lengths will fundamentally alter how the signals and cloud are displayed.

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