Description

The main difference of the custom version of the indicator is that by default 2 moving averages are displayed: "fast" and "slow", and the space between them is colored green or red depending on the current trend. The user can select different smoothing options (SMA, EMA, VWMA, etc.) as well as the data source to plot the moving average.

Application cases

Moving Average is the simplest indicator for determining trend direction. This technical analysis indicator, simplistically speaking, adds up all prices for previous periods and divides them by the number of periods.

There are different methods for calculating the moving average:

Simple (arithmetic average, SMA)
Exponential (EMA)
Weighted Average (WMA)
Volume Weighted Average (VWMA)
Open Interest Weighted Moving Average (OIWMA)
Linear regression (LSMA)

This averaging results in an average price line that is either rising (uptrend) or falling (downtrend) or fluctuating in place (balance phase). Moving average smooths prices, removes sharp fluctuations.

For different instruments and timeframes it is necessary to choose the length of the moving average and methods of calculation by experience.

The main cases of moving averages application:

Determination of trend direction
Determination of support and resistance points
Intersection of moving averages with the price