๐ Signal Moving Average ๐
The Signal Moving Average is an indicator that combines a Simple Moving Average (SMA) with a dynamic correlation calculation to better adapt to market conditions. ๐ฏ This indicator adjusts its sensitivity based on the strength of the trend, making it a powerful tool for identifying trends and filtering out market noise. ๐
Key Features ๐
๐ Adjusted Moving Average:
- The moving average line dynamically adjusts based on the correlation between price and time.
- In strong trending markets, the moving average moves faster to follow the price. ๐
- In sideways markets, the moving average remains more stable, reducing false signals. ๐
๐ข Correlation Calculation:
- The indicator calculates the correlation between price and time using the Pearson formula.
- It adjusts the moving average based on the coefficient of determination (Rยฒ). ๐งฎ
๐ Visualization:
- Clear and intuitive display for easy interpretation. ๐๐
How to Use the Indicator ๐ ๏ธ
๐ Trend Identification:
- Bullish Trend: When the price is above the correlated moving average. ๐
- Bearish Trend: When the price is below the correlated moving average. ๐ป
โ Signal Confirmation:
- Use the adjusted moving average as a dynamic support or resistance level. ๐ก๏ธ
- Combine this indicator with other technical tools to confirm signals. ๐
Moving Average Adjustment โ๏ธ
The algorithm adjusts the moving average based on the value of Rยฒ:
- If Rยฒ > 0.5 (significant correlation):
- The moving average is adjusted using a weighted combination between the current SMA value and the previous value of the adjusted moving average (_ma).
- The weighting depends on the value of Rยฒ. โ๏ธ
- If Rยฒ โค 0.5 (non-significant correlation):
- The moving average is adjusted by subtracting a value proportional to the absolute difference between the current SMA value and the previous value of the adjusted moving average. ๐
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