Forward Displaced Moving Average

 

#trendfollowing #movingaverage 

Inventor: Popularized by Joe DiNapoli 

A normal moving average shifted a few bars forward (into the future) on the chart. The shift makes it act like a delayed trailing line: price has to travel further to cross it, so it filters out small shakeouts that whipsaw a normal moving average. 

Default period: 5, 2 (MA period, forward shift) 

Price above the displaced average indicates uptrend. Price below indicates downtrend. Crossings happen later but are more reliable than a normal MA cross. 

Useful readings: 

Price riding above the displaced line: Uptrend with room for normal dips 

Price riding below the displaced line: Downtrend with room for normal bounces 

Price crossing the line: Stronger trend-change signal than a normal MA cross 

Line acts as delayed support in uptrends and delayed resistance in downtrends 

Bigger shift = fewer whipsaws but later signals 

In fast reversals the delay becomes a cost, combine with a faster tool 

Objective rules: 

Bullish: Price closes above the forward displaced MA. 

Bearish: Price closes below the forward displaced MA. 

Long exit: Two consecutive closes below the displaced line 

Short exit: Two consecutive closes above the displaced line 

Chop filter: Skip signals if price crossed the line more than twice in last 15 bars 

What makes it unique: 

The forward shift makes price cross a line drawn in the future, filtering shakeouts by construction rather than by extra math. The simplicity is the whole engineering

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder on RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

Default period: 10, 2 (MA period, forward shift)

Default period: 5, 2 (MA period, forward shift) 

The indicator is applicable to all types of charting. It is calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin-Ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.