Trend Color EMA

By color-coding the EMA based on its trend direction, it allows you to quickly assess whether the market is in an uptrend, downtrend, or neutral state.

Summary

This script segment calculates an EMA based on the closing prices and a user-specified period. It then evaluates the trend direction over the last 2 periods to determine whether the trend is upward, downward, or neutral. Finally, it plots the EMA on the chart with a color that changes according to the trend direction, providing visual feedback on the market's momentum. This can be particularly useful for traders and analysts looking to quickly assess the prevailing trend and potential reversals.

Source Data and Length

src0 = close
len0 = input.int(13, minval=1, title='EMA 1')

• src0 is set to the closing price (close), which serves as the source data for the EMA calculation.

• len0 is an input variable allowing the user to specify the length of the EMA calculation period, with a minimum value of 1 and a default value of 13.

Calculating the EMA

ema0 = ta.ema(src0, len0)

• Calculates the EMA of the closing prices over the specified period (len0). This EMA acts as a smoothed version of the price data, often used to identify trends.

Determining Trend Direction

falling_1 = ta.falling(ema0, 2)
direction = ta.rising(ema0, 2)? +1 : falling_1? -1 : 0

• falling_1 checks if the EMA has been falling over the last 2 periods.

• direction determines the overall trend direction:

  • If the EMA is rising over the last 2 periods, direction is set to +1.

  • If the EMA has been falling over the last 2 periods, direction is set to -1.

  • Otherwise, direction remains neutral (0).

Setting Plot Color Based on Trend Direction

plot_color = direction > 0? color.lime : direction < 0? color.red : na

• Determines the color for plotting the EMA based on the direction:

  • If direction is positive (+1), indicating an uptrend, the plot color is set to lime.

  • If direction is negative (-1), indicating a downtrend, the plot color is set to red.

  • If direction is neutral (0), the plot color is set to na (not a number), meaning no color is assigned.

Plotting the EMA

plot(ema0, title='EMA', style=plot.style_line, linewidth=1, color=plot_color)

• Plots the EMA on the chart with a line style, a line width of 1, and the previously determined plot_color.