Anticipated Simple Moving Average Crossover Indicator

The Anticipated Simple Moving Average Crossover Indicator tool calculates the specific price level required for a crossover between two simple moving averages (SMA) to occur on the next bar, effectively removing one bar of lag from traditional crossover signals.

Usage

The Usage section describes how the script can be used to identify early trend shifts. By calculating the price point where a "Golden Cross" or "Death Cross" is triggered, traders can anticipate trend changes before the actual moving averages intersect on the chart.

• Identifying Crossovers: When the current price crosses the "Anticipated Cross" line, it signals that the two selected moving averages will cross on the following candle.
• Trend Confirmation: An upward cross suggests a bullish shift (fast SMA crossing above slow SMA), while a downward cross suggests a bearish shift (fast SMA crossing below slow SMA).
• Support and Resistance: The calculated anticipated level can act as a dynamic threshold for price action, highlighting areas where the trend momentum is likely to change.

Details

The script is based on concepts developed by Dimitris Tsokakis. It mathematically derives the price value needed at time $t$ for $SMA(Price, X)$ to equal $SMA(Price, Y)$. Because standard moving averages are lagging indicators that only confirm a cross after price has already moved significantly, this implementation uses a formula to project that intersection point forward by one bar.

The calculation utilizes the relationship between the sum of prices and the moving average length. By solving for the unknown current price that would make the fast and slow averages equal, the indicator provides a "trigger price." When the market price hits this level, the crossover is confirmed for the next period.

Settings

• Price Source: Determines the price data used for the calculations (e.g., Close, Open, High, Low).
• Fast SMA Selection [1 - 5]: Chooses which of the defined SMA lengths (1 through 5) acts as the shorter-term "Fast" period.
• Slow SMA Selection [2 - 6]: Chooses which of the defined SMA lengths (2 through 6) acts as the longer-term "Slow" period.
• SMA 1 - 6 Length: Sets the lookback periods for six individual moving averages, ranging from short-term (e.g., 10) to long-term (e.g., 200).
• SMA 1 - 6 Color: Customizes the visual color for each of the six available moving average lengths.

FAQ

How does this differ from a standard SMA crossover? Traditional crossovers trigger after the candle closes and the averages have already moved. This indicator calculates the exact price needed for that cross to happen, allowing for entries one bar earlier.

What happens during choppy market conditions? Like all moving average strategies, the Anticipated SMA Crossover can produce false signals during consolidation. It is recommended to use this tool alongside volume or volatility indicators to filter out "whipsaws."

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.