Multi-Horizon Momentum Waves Using Smoothed EMA Differences
Summary
The document presents three momentum indicators, labeled A, B, and C, to view short-, medium-, and long-term market direction together. Each wave uses a pair of calculations built from exponential moving averages: a faster average of closing prices compared with a slower average, with an additional smoothing operation applied to their difference. The selected periods lengthen from the short-horizon wave to the long-horizon wave.
Wave A is suggested as a signal when it crosses the zero line, while Wave C is identified as the main guide to the longer-term trend. Wave B fills the middle horizon, allowing the trader to compare momentum across scales. The document supplies formulas for all three waves but no charts, trading rules for combining them, backtest, or evidence of predictive performance. The periods appear fixed in the example, and no guidance is given for markets or timeframes where they might need adjustment.
Key ideas
- The indicator set separates momentum into short-, medium-, and long-term horizons.
- Each wave is derived from differences between fast and slower exponential moving averages with additional smoothing.
- Wave A zero-line crossings are proposed as short-term signals.
- Wave C is intended to provide the primary view of the longer-term trend.
- No testing or rules for combining the three horizons are provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.