Dual Moving Average Trend Signals with Candle-Color Confirmation

Summary

This strategy combines a slow moving average for trend direction, a fast moving average as an entry filter, and recent candle-body colors as confirmation. It takes long signals when the broader trend is up and the specified candle pattern aligns, and short signals when the trend is down and the opposite pattern aligns. The published defaults use a 20-period slow average, a 5-period fast average, and check up to two bars; the slow-average type can also be selected from several alternatives.

The document describes the strategy’s logic and adjustable parameters, but gives no performance statistics or comparative tests. Its risks include whipsaws during sideways or volatile markets and sensitivity to parameter choices. It recommends validating across instruments and settings, and suggests position sizing and a stop based on the slow average as possible additions. The description calls the method both trend-following and mean-reverting, though the implemented signals primarily combine trend state with pullback-style entries.

Key ideas

• The slow average sets the trend state, while the fast average filters potential entries.
• Candle-body colors over a configurable number of bars provide an additional signal condition.
• The published defaults are a 20-period slow average, a 5-period fast average, and two bars for color confirmation.
• Sideways and volatile markets can produce whipsaws, so parameter and instrument testing is needed.
• The document provides no backtest performance results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.