Trend Reversal Indicator HMA-Kahlman (m15)

The Trend Reversal Indicator HMA-Kahlman tool provides a dynamic trend detection system that combines the responsiveness of the Hull Moving Average (HMA) with the smoothing capabilities of the Kahlman filter to identify potential market reversals.

Usage

The indicator can be used to identify trend direction and potential entry or exit points through its visual interface. The script plots two primary lines; when the area between them is green, it indicates an upward trend, while a red area indicates a downward trend.

• Reversal Signals: The script displays "B" (Buy) labels when a bullish crossover occurs and "S" (Sell) labels during bearish crossovers. These signals are particularly effective on lower timeframes like the 15-minute (m15) chart for intraday trading.
• Trendlines: The indicator includes an automated trendline module that identifies pivot points to project support and resistance levels. Dotted green lines indicate rising support, while dotted red lines indicate falling resistance.
• Volatility Adaptation: Due to the HMA-Kahlman blend, the tool is designed to filter out noise in volatile markets, making it suitable for assets like Bitcoin and other high-fluctuation instruments.

Details

The script utilizes two variations of the Hull Moving Average to create a tracking envelope. The first is a standard HMA of the source price, while the second uses a modified HMA calculation (hma3) applied to the close. Both outputs are processed through a Kahlman filter—a mathematical method used to estimate the state of a process in a way that minimizes the mean of the squared error. This combination results in a smoother signal that maintains low latency compared to traditional moving averages.

Settings

HMA-Kahlman Trend Module

• Price Data: Sets the source price used for the primary HMA calculation (default is HL2).
• Lookback Window: Determines the period for the HMA and HMA3 calculations. Higher values result in smoother but slower signals.
• Use Kahlman?: Toggles the Kahlman filter on or off.
• Gain: Controls the Kahlman filter's tracking speed. A higher gain makes the filter more responsive to price changes.
• Show Labels?: Toggles the visibility of the "B" and "S" reversal labels.

Trendlines Module

• Trendlines Module: Toggles the automated pivot-based trendlines.
• Pivots Lookback Window: Sets the number of bars used to identify high and low pivot points for trendline construction.

FAQ

How do I use the signals provided by this tool?

You can look for "B" labels for potential long entries when the trend turns green and "S" labels for potential short entries when the trend turns red, ideally in alignment with the automated trendlines.

Can this be used on higher timeframes?

While optimized for lower timeframes like the 15-minute chart, the HMA and Kahlman parameters can be adjusted in the settings to suit hourly or daily timeframes.

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.