Turning Point Mov Avg System - Thoughts??

I have been working on a moving average system based on an envelope type of idea. From the looks of it, it tells you with decent accuracy if a move is over as well if a move has reversed. I'm only experimenting with this idea so any thoughts would be greatly appreciated on how to improve it. I'm not sure if I would use it to generate buy/sell signals but merely to tell me if a move is over. Of course there are other ways to do the same thing....

The setup is as follows:

A 4 period sma on HIGH
A 4 period sma on LOW
A 2 period ema on CLOSE

It seems to work on most time frames except it gets whipsawed on lower time frames. I have experimented with using it on longer time frames to spot reversals but taking signals on the crossover from smaller time frames, 15min and 5 minute. I'm sure the periods on the averages could be adjusted to ward off whipsaws but the accuracy would go down, or rather it might pick up the more significant signals. It also tells you if the trend is strong or weak by the way the 2 period avg stays outside of the 4 period avg's. Also if the Yellow avg line is between the upper and lower lines its low volatility and a sideways environment. Interesting...

Anyway, thoughts are very appreciated, i'm open to ideas.

Thanks and happy trading!
(See chart below for a sort of "well chosen example")

i'm also using this kind of envelope to see if the trend is strong so i dont have to baby sit my trade but i'm using MA5 and color changing MA which is pretty neat to view ranging market.

It has nothing to do with bollinger band band but i replaced BB with this envelope without any regrets

How are you using the MA5? For the High/Low envelope? Where do you get a color changing Mov Avg? I like this better than Bollinger bands too.

This is not exactly what you are doing but it is more a channel system than an envelope system.

The BlueGrooveFX2 system

The vertical lines, red or blue, indicate possible entry/exit points.

How are those vertical lines determined? From the Stoch's you have set up??
Please explain

Thanks!

In the lower window my BlueGrooveFX2 system has 3 Stochs

1. Light blue Stoch to go with the blue groove (short term daily trades)
2. Magenta Stoch to go with the magenta channel (mid term multiday trades)
3. Dark blue Stoch to go with the dark blue channel (long term weekly trades)

RSI - 28 period, yellow, to confirm long term trend tops and bottoms

Thanks,

this is the one i use. Ho and it's EMA5 on high and EMA5 on low so pretty much the same settings as yours

Sorry for the OOT (out of topic ^^ ) but the lines and arrow are added automaticaly by your system ???

I add them when I see that the stoch and the price are in the zone of opportunity. It would probably be better for me to show that zone of opportunity as a column like below.

Coincidentally, using a High MA and a Low MA creates something similar to a Keltner Channel with a 0.5 ATR setting and a median price ([H+L]/2) as the center line. How this works is the ATR is basically the Average Range adjusted for gaps. Since gaps are a rarity in FOREX intraday charts, AR is the same thing as ATR in most cases. AR is determined as the moving average of High minus Low. If we add/subtract one half (0.5) this value to the moving average of median price (High plus low divided by two), we get:

(H+L)*0.5 + (H-L)*0.5 = 0.5*High + 0.5*Low + 0.5*High - 0.5*Low = High
(H+L)*0.5 - (H-L)*0.5 = 0.5*High + 0.5*Low - 0.5*High + 0.5*Low = Low

You might find it interesting to play around with Keltner Channels for this method. Personally, I like them better than Bollinger Bands as well.

Also, you might want to look at the Camelback technique by Joe Ross. This method uses a 15 period EMA of the Close, and a 40 period SMA of the High and Low... it is almost exactly the same as your method (Close EMA is roughly half the H/L SMA). The advantage to the Camelback is it's easier to determine what the trend is.