Guppy Multiple Moving Average

#trendfollowing #movingaverage #system 

Inventor: Daryl Guppy 

Twelve EMAs in two groups. Short group (3, 5, 8, 10, 12, 15) shows what traders are doing. Long group (30, 35, 40, 45, 50, 60) shows what investors are doing. Reading the two ribbons together tells you whether traders and investors agree, and how strong their belief is by how wide each ribbon spreads. 

Default period: 3-15 (short group), 30-60 (long group) 

Both groups rising and separated indicates strong uptrend. Both falling and separated indicates strong downtrend. Groups tangled indicates sideways market. 

Useful readings: 

Short group above long group, both spread wide: Powerful uptrend, traders and investors agree 

Short group dips into long group and bounces: Investors buying the dip, trend continues 

Short group cuts through long group: Possible trend change starting 

Long group compressing: Investors unsure, big move brewing 

Long group wide and steady: Deep trend support, hold positions 

Both groups tangled together: No trend, stand aside 

Objective rules: 

Bullish: Entire short group crosses above the entire long group. 

Bearish: Entire short group crosses below the entire long group. 

Dip buy: In an uptrend, buy when the short group compresses into the long group and re-expands upward 

Strength filter: Hold trades only while the long group stays fanned out in trade direction 

Exit: Short group crosses fully back through the long group 

What makes it unique: 

It visualizes two crowds – traders and investors – as two ribbons and reads their agreement or conflict. Ribbon width shows conviction, something single averages cannot express.

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.

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.