OPEN-SOURCE SCRIPT
% Above/Below MA [BySel]
BYSEL
Using % Above/Below MA: EMA, SMA, WMA, RMA, ALMA
The price is currently trading above or below the moving average (MA) by a certain percentage relative to the MA itself. This helps us identify a more reasonable entry price.
Simple Interpretation
In simple terms, this indicator shows whether the current price is trading above or below its moving average (MA), expressed as a percentage deviation from the MA.
During an "uptrend", if the price retraces toward the MA and the indicator returns to around zero or slightly negative territory, this often represents a "pullback toward the trend axis". Rather than chasing an already extended price move, this area can provide a more favorable point for evaluating a potential long entry.
Conversely, when the price is significantly above its MA and continues to rise, the indicator reflects a "strong trend condition". However, this does not necessarily represent the optimal point for an early entry, as the price may already be substantially extended from its mean.
The underlying philosophy is straightforward: following a strong directional move, price tends to exhibit "mean-reverting behavior toward its moving average". The objective is therefore not to buy after the price has become excessively extended, but to identify opportunities when price retraces toward its statistical mean while the "primary trend structure remains intact".
In concise terms:
“Do not chase the peak; look for the price to return to the mean rhythm of the trend.”
Using % Above/Below MA: EMA, SMA, WMA, RMA, ALMA
The price is currently trading above or below the moving average (MA) by a certain percentage relative to the MA itself. This helps us identify a more reasonable entry price.
Simple Interpretation
In simple terms, this indicator shows whether the current price is trading above or below its moving average (MA), expressed as a percentage deviation from the MA.
During an "uptrend", if the price retraces toward the MA and the indicator returns to around zero or slightly negative territory, this often represents a "pullback toward the trend axis". Rather than chasing an already extended price move, this area can provide a more favorable point for evaluating a potential long entry.
Conversely, when the price is significantly above its MA and continues to rise, the indicator reflects a "strong trend condition". However, this does not necessarily represent the optimal point for an early entry, as the price may already be substantially extended from its mean.
The underlying philosophy is straightforward: following a strong directional move, price tends to exhibit "mean-reverting behavior toward its moving average". The objective is therefore not to buy after the price has become excessively extended, but to identify opportunities when price retraces toward its statistical mean while the "primary trend structure remains intact".
In concise terms:
“Do not chase the peak; look for the price to return to the mean rhythm of the trend.”
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.