Today we gonna demonstrate out heuristic of classical Indicator. We decided to simplify your trading staff and add some meta data. So, let’s look at it from the very beginning and initially speak about what is and then I’ll tell you why our indicator is extremely convenient and useful.
So, what is EMA? An ( ) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The is also referred to as the exponentially . An exponentially reacts more significantly to recent price changes than a ( ), which applies an equal weight to all observations in the period.
-The is a moving average that places a greater weight and significance on the most recent data points.
-Like all moving averages, this technical indicator is used to produce buy and sell signals based on crossovers and divergences from the historical average.
As you know, Cross is one of basic and most popular Entry Indicators. It’s kinda easy to understand and even easier to use. This indicator consists of two EMAs - fast (red line) and slow (blue line). Fast is of less length that the fast (default parameter is 9). Thus, it reacts the price change more actively than the slow. We can say that it takes into consideration the most actual price movements. Speaking about slow (default parameter is 30) it’s more inert and it’s more difficult to change its action vastly. We can say that the «looks» at the historical data more accurate, but doesn’t forget about actual price movements.
But how it works? Trivial. When the fast crosses the slow bellow, it provides signal, whereas when it crosses it above, it’s signal. Even more, we added some «confirmation» factor. As you know, when the price is above the slow , the slow plays the role of support line for price and means that the price is in uptrend. Thus, when we see the cross above and it takes place under the price, we called it «strong Signal». When the price is bellow the slow , slow is resistance. Thus, when we see the cross bellow and it’s under the slow , we called it «strong Signal».
To make your trading process easier, we plotted the places of crosses on the chart and added the descriptions of the crosses. The flags mean the place of cross. The default parameters have nice backtest on 1H chart. However, you can also change them depending on your goals and the time period. The places of cross looks like flags (red flag is «bearish» cross, green - «bullish»). As you can see, it’s really convenient.
I hope you’ll enjoy our heuristic of classical Cross. We are sure that the meta data that we are taking into consideration makes the signals more accurate and the deals more profitable. The SkyRock Team with support of Trading View try to make your trading process more successful and profitable. Every day we works in conjunction to boost both your skills and trading balance. We hope, it’s really useful for you, dear traders!
After the realise of our EMA Cross Indicator, we've made many tests to see how it works. We find that the signals are very poor on the choppy market. Thus, we decided to add filter, that disable the script to make signals while sideways. We decided to make filter based on volatility. In my opinion, the best volatility indicator is Bollinger bands. It's very sensitive and catches "blow ups" very well. So, how does it work?
The process of making long/short signals is the same. However, if the value of BB Width ( width of the Chanel between upper and lower line of Bollinger Bands) is less than average of previous values (how many you can tune, default is 10), the signal seems to be false and doesn't appear. It reduced the wrong signals vastly.
Well, guys, I hope you enjoy my script and it'll become the part of your trading staff. Write down to comments what pros and cons you match when you use it. Have a nice trading day!
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.