Don’t you hate it when there has been a spike in the market leaving your moving averages lagging behind? Wouldn’t it be nice if the moving average could somehow take this spike into account and reset itself?
Introducing the Resetting Moving Average – a Simple Moving Average (SMA) with the capability to reset itself once the price reaches the configured standard deviation level. If the price does not spike for a while, no problems, the average will be just like any other SMA.
- Periods – The length of the full moving average. Note the actual length of the moving average will actually be less than this if the last reset was within this range. Default is 21.
- Reset Threshold – The number of standard deviations, which if reached, causes the moving average to reset. Default is 2.0.
- Can be used in many ways like any other moving average, such as MA cross signals etc.
- Can be used in conjunction with a standard moving average to indicate Momentum by the distance between the two averages. For example: if the Resetting Average rejoins the equivalent SMA then the previous momentum is assumed to be gone, like in the image below.
This indicator was developed exclusively by MooMooForex. Additional reading may be found inside the Research blog.