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Moving Average 2 Lines Indicator | Technical Indicators | BCI Futures

PRICE Close Price used to calculate average

LENGTH1 4 Length of average # 1

LENGTH2 14 Length of average # 2

Plot1 = Average(PRICE, LENGTH1)

Plot2 = Average(PRICE, LENGTH2)

The Moving Average indicator is a simple average of the prices of the selected range of days. It is probably the most well known, and widely used, technical indicator in existence. This indicator plots 2 moving averages for the prices and lengths chosen.

The indicator evaluates market conditions as very bullish, bullish, very bearish, bearish, or neutral. Plot1 represents the fast moving average and Plot2 is the slow moving average.

To be classified as bullish, Plot1 must be greater than Plot2, however, to be classified as very bullish, all of the following conditions must be met simultaneously:

Plot1 >= Plot2

Plot1 >= Plot1[1]

Plot2 >= Plot2[1]

Price >= Plot1

Price >= Plot2

When the market conditions are classified as bullish, the variable LongTermTrend is given a value of 1 and when they are very bullish ,the variable is given a value of 2.

To be classified as bearish, Plot1 must be less than Plot2, however, to be classified as very bearish, all of the following conditions must be met simultaneously:

Plot1 < Plot2

Plot1 < Plot1[1]

Plot2 < Plot2[1]

Price < Plot1

Price < Plot2

When the market conditions are classified as bearish, the variable LongTermTrend is given a value of -1 and when they are very bearish, the variable is given a value of -2.

Additional Analysis:

A warning occurs when the difference between Plot1 and Plot2 is less on the current bar following two consecutive increases. This warning tells you that market momentum has slowed down on this bar. It is possible that there may be a market pullback.

See also  Chart Formations | Channels | PFG Futures

Additional References:

Kaufman, Perry J. The Commodity Trading Systems & Methods. John Wiley & Sons, Inc. New York. 1978.