The idea for this script came when I studied how the Hull moving average should be used in trading, where I saw someone who used two HMA's, a longer and a shorter one, in a system in which he only placed an order if these agree on direction. This way he could pause trading when there is no direction (sideways movement). I look for a way to analyse range extensions in combination with volume expansions in combination with change of momentum. The idea is to depict momentum as a background color in this new indicator, called REVE, which I wil publish too. The purpose of this script is to show how the background colors are calculated and give users of the REVE a posibilty to tweak the length of the short and long HMA and to verify in the main panel of the chart that the colors are actually meaningful. To show how accurate this works I also put a MACD and the REVE in the sub panels of the example chart
Thanks for this! How can I learn more about the background colors? Also, can this be used on any time frame?
jadabug86
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Also, how do you tell the lines "agree on direction" other than by looking at them?
eykpunter
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@jadabug86, in line 9 the variable istrend is calculated as trnd*atr(30) while trnd is set in the inputs at 0.1. Suppose atr(30) is10 eurocent, then istrend is 1 eurocent. The slope of a line is calculated in line 12. suppose the hma() gains 1.1 eurocent in the next period, then the slope is up more then istrend, so uptrend. Would the gain have been 0.9 cent, then it would have been horizontal.
eykpunter
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@jadabug86, The background colors are defined in lines 23 through 27 and chosen in the bgcolor() command of line 30 using the value of hullag by applying the ?: operator.