The Deviation-Scaled Moving Average by John F. Ehlers
Moving averages have two characteristics—they lag and they smooth data. But there are different ways to tweak them. Here’s one way to make them more adaptive to current prices and make the smoothing heavier.
Adaptive moving averages are not new to technical analysis. If you’re familiar with adaptive techniques, you’ll know that most start with an exponential moving average (EMA). The EMA is a smoothing filter that takes a fraction of the current price and adds the complement of that fraction times the value of the EMA one bar ago ...