Moving averages come in all shapes and types. The most basic type is the simple moving average which is simply the sum divided by the quantity. Therefore, the simple moving average is the sum of the values divided by their number.
In technical analysis, you generally use moving averages to understand the underlying trend and to find trading signals. In the case of the Violet indicator, we are using a Hull moving average which is a special variation based on different weights to minimize lag.
The Violet indicator is therefore used as follows: * A bullish signal is generated whenever the close price surpasses the 20-period Hull moving average while the previous close prices from [1, 2, 3, 5, 8, 13, 21] periods were all below their respective Hull moving average of the period. *A bearish signal is generated whenever the close price breaks the 20-period Hull moving average while the previous close prices from [1, 2, 3, 5, 8, 13, 21] periods were all above their respective Hull moving average of the period.
The aim of the Violet indicator is to capture reversals as early as possible through a combination of lagged conditions based on the Fibonacci sequence.