Visualizing Trend Strength with a Ribbon of Moving Average Differences

Summary

This indicator represents trend direction and strength as a ribbon built from differences between adjacent moving averages, spanning short through longer lookback periods. Users can choose EMA, SMA, RMA, WMA, or VWMA calculations and optionally smooth each average with linear regression. The resulting sequence of plotted values is filled with bands whose width and color vary according to the short-period difference, its recent change, and the recent range of band spacing.

The author describes a narrowing ribbon as a lack of trend and uses green and red shading to convey upward and downward conditions, with intensity reflecting the computed strength measure. The script is a visualization rather than a fully specified entry and exit strategy. Its accompanying comments report successful-looking trend direction and strength readings based on the author’s tests, but provide no sample, benchmark, or quantified results. The indicator’s behavior depends on its selected average type and smoothing settings, and the supplied material does not establish predictive performance across markets or periods.

Key ideas

• The indicator constructs a ribbon from differences between moving averages with adjacent lookback lengths.
• Five moving average types are available, with optional linear regression smoothing.
• Band width and color encode the calculated trend direction and relative strength.
• A compressed ribbon is intended to indicate weak or absent trend conditions.
• The document provides no quantified or independently validated performance evidence.

Tags

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