Here is a very simple tool that uses the Arnaud Legoux Moving Average(ALMA). The ALMA is based on a normal distribution and is a reliable moving average due to its ability to reduce lag while still keeping a high degree of smoothness.
Input Options: -Offset : Value in range {0,1} that adjusts the curve of the Gaussian Distribution. A higher value will result in higher responsiveness but lower smoothness. A lower value will mean higher smoothness but less responsiveness. -Length : The lookback window for the ALMA calculation. -Sigma : Defines the sharpe of the curve coefficients.
I find that this indicator is best used with a longer length and a 4 Hour timeframe. Overall, its purpose is to help identify the direction of a trend and determine whether a security is in an uptrend or a downtrend. For this purpose, it is best to use a lower offset value since we are looking to identify long-term, significant price movement rather than small fluctuations.
The Chart: The ALMA is plotted as the aqua and pink alternating line. It is aqua when bullish and pink when bearish.
The low price for each candle is then compared to the ALMA. If the low is greater than the ALMA, then there is a bullish trend and the area between the candles and ALMA is filled green. The area between the ALMA and candles is filled red when the low price is less than the ALMA.
The difference between the slow ALMA and candles can reveal a lot about the current market state. If there is a significant green gap between the two, then we know that there is a significant uptrend taking place. On the other hand, a large red gap would indicate a significant downtrend. Similarly, if the gap between the two is narrowing and the ALMA line switches from aqua to pink, then we know that a reversal could be coming shortly.
this is aboslute ace! As far as i remember is used this in my own franketsein indicator which i usually use. Recently i modified the code again and tried to find out where i stole the alma code, as i always want to know who is the author, but i accidentally deleted that line. (only me using this indicator). So i started the search and came here again, the weird thing: the code is identical, the plotting on the chart is not. I still can´t figure out why that is the case. Either way, my alma trend is tighter (offset seems to be off) and gives much faster signals. I use in combination with other MAs, making this a very good swing and scalping tool. I love the simplicity and layout of it. THANKS
ctgaff
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It's funny (or sad depending how you look at it) how ALMA never really caught on like Hull, but its actually an improvement over it. This indicator is fantastic, excellent work!