The JSA Moving Average by George R. Arrington, Ph.D.
Presenting the JSA, a unique moving average that could provide an early warning that other technical indicators may have an impending signal. In addition, comparing the JSA with other moving averages raises interesting questions about the information that moving averages in general provide.
Most traders use moving averages to identify underlying price trends and to help signal the timing of a
trade. In slow- moving markets, the three most common moving averages (simple, linear and
exponential) may do just fine. But in fast-moving markets with sudden and large price changes, the JSA
moving average may be a better indicator to watch.
COMPARISON OF MOVING AVERAGES
Figures 1 and 2 illustrate the simple, linear, exponential and JSA moving averages. (The calculation for
each average is explained in the sidebar, "JSA calculations," but the JSA can be defined as
(P1 + Pn) / 2
in which P = price.)
The price series is the same in both Figures 1 and 2, and price changes are exaggerated to illustrate the
differences in the averages. To summarize, prices rise slowly at first; then a large spike increase is
followed by a large decline; then prices stabilize.