Line Signal QuantAlgo
- Indicators
- Krystof Zak
- Version: 1.0
This script provides a moving average tailored for use as a signal line in a moving average crossover system. The moving average will maintain a divergence from the price during ranging markets, while aligning closely with a regular moving average during trending markets.
Settings
Length: Period of the moving average
How to Use
Moving average crossover strategies often incorporate a "signal" line, a slower moving average used to gauge the overall trend. This signal line works alongside a faster moving average to filter out potential whipsaw trades that might occur between the regular price and the signal line.
The indicator proposed here aims to prevent frequent crossings between the price and the signal line by diverging during ranging periods, thus reducing the number of false signals.
The color of the area between the price and the signal line signifies the price's position relative to the signal line. A green color indicates the price is above the signal line.
The color of the signal line, however, reflects whether the market is in a trending or ranging phase, changing only when the market trend is established.
The color of the area between the price and the signal line is determined by the position of the price relative to the signal line, with a green color indicator a price superior to the signal line.
The color of the signal line, however, is taking into account whether market is trending or ranging, only changing once the market is trending.
