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Analysis and Trading based on Envelopes, Waves, Cycles
- #14,442
- Jan 11, 2025 9:09am Jan 11, 2025 9:09am
- Joined Oct 2017 | Status: Trader | 12,472 Posts
{quote} Hi Alain, these predictions are for the location of the centre of the candle (hl2). Unfortunately I have no way to determine where the cma will be that far out
P. N. (Pete) Haurlan was the first to use exponential smoothing for tracking stock prices. Haurlan was an actual rocket scientist who worked for JPL in the early 1960s, and thus he had access to a computer. He did not call them “exponential moving averages (EMAs)”, or the mathematically fashionable “exponentially weighted moving averages (EWMAs)”. Instead he called them “Trend Values”, and referred to them by their smoothing constants. Thus, what today is commonly called a 19-day EMA, he called a “10% Trend”.
Haurlan had employed EMAs in designing the tracking systems for rockets, which might for example need to intercept a moving object like a satellite, a planet, etc. If the path to the target was off, then some sort of input would need to be applied to the steering mechanism, but they did not want to overdo or underdo that input and either become unstable or fail to turn. Thus, the right sort of smoothing of data inputs was helpful. Haurlan called this “Proportional Control”, meaning that the steering mechanism would not try to adjust out all of the tracking error all at once.
EMAs were easier to code into early analog circuitry than other types of filters because they only need two pieces of variable data: the current input value (e.g. price, position, angle, etc.), and the prior EMA value. The smoothing constant would be hard-wired into the circuitry, so the “memory” would only have to keep track of those two variables. A simple moving average, on the other hand, requires keeping track of all values within the lookback period. So a 50-SMA would mean keeping track of 50 data points, then averaging them. It ties up a lot more processing power
- #14,444
- Jan 12, 2025 2:16am Jan 12, 2025 2:16am
This new indicator is the McClellan Oscillator as described in Alain’s earlier post.
It’s normally coded to represent price fluctuations but I’ve coded it to represent the movements of each of the CMAs instead.( ie MO CMA )
You’ll note it moves into positive (green) territory & negative (red) territory at the same time as the CMA it represents changes direction. If the MO CMA is a large distance from the zero line then it is impossible for the CMA to change direction.
It can be used to predict CMA direction changes well before the CMA changes direction based on divergences between the indicator and the CMA as shown below.
See below that the MO CMA512 has been declining while the CMA512 was still rising. This is a bearish divergence. You can see the MO CMA512 then declined rapidly towards the zero line while the CMA512 was still rising giving a warning of the CMA turning down more than 100 bars before the CMA512 actually changed direction.
Knowing the CMA512 was likely to change direction would allow you to enter a trade earlier with confidence.
I also suspect that you could use the MO CMA512 and other CMA lengths to stay in the trade for longer as it will give early warning of a trend finishing, rather than waiting for the CMAs to turn, which is often too late.
https://www.tradingview.com/script/y...scillator-CMA/
It’s normally coded to represent price fluctuations but I’ve coded it to represent the movements of each of the CMAs instead.( ie MO CMA )
You’ll note it moves into positive (green) territory & negative (red) territory at the same time as the CMA it represents changes direction. If the MO CMA is a large distance from the zero line then it is impossible for the CMA to change direction.
It can be used to predict CMA direction changes well before the CMA changes direction based on divergences between the indicator and the CMA as shown below.
See below that the MO CMA512 has been declining while the CMA512 was still rising. This is a bearish divergence. You can see the MO CMA512 then declined rapidly towards the zero line while the CMA512 was still rising giving a warning of the CMA turning down more than 100 bars before the CMA512 actually changed direction.
Knowing the CMA512 was likely to change direction would allow you to enter a trade earlier with confidence.
I also suspect that you could use the MO CMA512 and other CMA lengths to stay in the trade for longer as it will give early warning of a trend finishing, rather than waiting for the CMAs to turn, which is often too late.
https://www.tradingview.com/script/y...scillator-CMA/
- #14,445
- Edited Jan 13, 2025 1:54am Jan 12, 2025 6:34am | Edited Jan 13, 2025 1:54am
- Joined Oct 2017 | Status: Trader | 12,472 Posts
