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Using VWMA and SMA Crossovers to Flag Trend Changes

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Summary

This indicator compares a volume-weighted moving average (VWMA) with a 20-period simple moving average (SMA). It colors the chart background green when the VWMA is above the SMA and red otherwise, giving a quick view of their relative position. It also draws an upward arrow when the VWMA crosses above the SMA and a downward arrow when it crosses below. The author presents these crossings as signs that a current trend may be weakening or changing.

The document provides indicator code but no tests, market examples, or performance results. It does not specify the VWMA lookback length, and the crossover alone does not establish that a trend reversal will follow. Traders would need to define the calculation settings and evaluate the signal across instruments and time periods, including the effects of lag and false crossovers.

Key ideas

  • The indicator compares a volume-weighted moving average with a 20-period simple moving average.
  • Background color shows whether the VWMA is above or below the SMA.
  • Upward and downward arrows mark crossovers between the two averages.
  • The author treats crossings as possible clues to trend weakening, not as tested trading signals.

Tags

Technical indicatorsTrend following

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