Stocks & Commodities V. 23:4 (32-35): Sidebar: WEVOMO by Stephan Bisse
Simple moving averages (SMA) are great for showing the past price action of a market by filtering out noise and showing the underlying trend. However, the only way a moving average can indicate the future market direction is if additional, leading information is included in its calculation.
The idea behind WEVOMO is that the magnitude of
moves between datapoints, and the volume of each datapoint are both leading indicators in the future direction of a market, and that the more recent datapoints are more important than the older ones.