This technical script is designed to provide traders with a visual analysis of momentum and price trends by measuring the relationship between two different Moving Averages. Rather than just looking at price alone, this tool calculates the "distance" and "speed" between a fast-moving average and a slow-moving average to help identify market shifts.
Core Logic Overview
The script functions by tracking two specific data points:
1. Divergence (The Gap) The first part of the logic calculates the difference between a short-term moving average and a longer-term moving average. By subtracting the value of the slow average from the fast average, the tool produces a "divergence" figure.
- When this gap widens significantly, it indicates that the immediate price movement is pulling away from its long-term trend.
- When the gap narrows, it suggests the immediate price is returning toward its historical average.
2. Slope (The Velocity) The second part of the logic takes it a step further by measuring the change in that gap over time. It looks at how much the divergence changed from one candle to the next.
- This essentially measures acceleration. It tells the user not just how far apart the averages are, but whether that distance is growing faster or slowing down.
- By monitoring this "slope," traders can see if a trend is gaining strength (accelerating) or beginning to exhaust itself (decelerating).
Practical Application
For a user, this means the indicator provides a two-layered view of market sentiment:
- Trend Strength: Helps visualize how aggressively the current price action is moving relative to its history.
- Momentum Shifts: By watching the change in these values, users can potentially spot moments where the "speed" of a move starts to drop before the actual price direction reverses, offering a more nuanced view of market dynamics than standard price charts alone.
Indicators Used
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iFXAnalyser_H4-Open1_v1
/*-----------------------------+
| |
| Shared by www.Aptrafx.com |
| |
+------------------------------*/
//+------------------------------------------------------------------+
//| iFXAnalyser_H4.mq4 |
//| Copyright © 2006, Renato P. dos Santos |
//| inspired on 4xtraderCY's and SchaunRSA's ideas |
//| http://www.strategybuilderfx.com/forums/showthread.php?t=16086 |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2006, Renato P. dos Santos"
#property link "http://www.strategybuilderfx.com/forums/showthread.php?t=16086"
#property indicator_separate_window
#property indicator_buffers 3
#property indicator_color1 Blue
#property indicator_color2 Red
//---- indicator parameters
extern int MA_Shift=0;
//---- indicator buffers
double ind_buffer0[];
double ind_buffer1[];
int FastMA=4;
int SlowMA=6;
int Fast_MAMode = PRICE_OPEN;//close
int Slow_MAMode = PRICE_OPEN;
//----
int counted_bars=0;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
int draw_begin;
string short_name = "iFXAnalyser_H4-open";
//---- drawing settings
SetIndexStyle(0,DRAW_LINE);
SetLevelStyle(STYLE_DOT,1,Black);
SetLevelValue(1,15*Point);
SetLevelValue(2,-15*Point);
SetIndexShift(0,MA_Shift);
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS)+1);
draw_begin=FastMA-1;
SetIndexDrawBegin(0,draw_begin);
//---- indicator short name
IndicatorShortName(short_name+"("+FastMA+","+SlowMA+")");
SetIndexLabel(0,short_name+"Div");
SetIndexLabel(1,short_name+"Slope");
SetIndexLabel(2,short_name+"Accel");
//---- indicator buffers mapping
if(!SetIndexBuffer(0,ind_buffer0) && !SetIndexBuffer(1,ind_buffer1))
Alert("cannot set indicator buffer!");
//---- initialization done
return(0);
}
//+------------------------------------------------------------------+
//| Shaun's 2MA difference |
//+------------------------------------------------------------------+
int start()
{
if(Bars<=MathMax(FastMA,SlowMA)) return(0);
int counted_bars=IndicatorCounted();
//---- check for possible errors
if (counted_bars<0) return(-1);
//---- last counted bar will be recounted
if (counted_bars>0) counted_bars--;
//---- Shaun's Divergence counted in the 1-st buffer
int limit=Bars-counted_bars;
int i;
for(i=0; i<limit; i++)
ind_buffer0[i]=iMA(NULL,0,FastMA,0,MODE_SMA,Fast_MAMode,i)
-iMA(NULL,0,SlowMA,0,MODE_SMA,Slow_MAMode,i);
//---- Shaun's Slope counted in the 2-nd buffer
for(i=0; i<limit-1; i++)
ind_buffer1[i]=(iMA(NULL,0,FastMA,0,MODE_SMA,Fast_MAMode,i)
-iMA(NULL,0,SlowMA,0,MODE_SMA,Slow_MAMode,i))
-(iMA(NULL,0,FastMA,0,MODE_SMA,Fast_MAMode,i+1)
-iMA(NULL,0,SlowMA,0,MODE_SMA,Slow_MAMode,i+1));
//---- done
return(0);
}
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