Moving Averages work well in trending markets, and badly when there is no tendency in the marketplace. To identify the trend with moving averages, I created the Stoplight Trend evaluation index , that shows the trend in different colours on the bar graph. In a bull market, the pubs on the graph choose a green colour, in a bear market, the pubs on the chart take on a red colour. When the market is neutral, the bars on the chart stay in the default colour, but you can change this color in the chart properties.

The Stoplight Trend analysis indicator is based on three moving averages that differ from each other in a given period, but have a common method of construction. By default, the following conditions are set in the indicator:

• 1 Moving Average-Simple Moving Average, with a period of 5, based on the closing price
• 2 Moving Average-Simple Moving Average, with a period of 15, based on the closing price
• 3 Moving Average-Simple Moving Average, with a period of 30, based on the closing price

A bull market is considered when 1 moving average > 2 moving average and 1 moving average >> 3 moving average. A bear market is considered when 1 moving average < 2 moving average and 1 moving average < 3 moving average. The indicator simplifies these conditions by displaying color on the chart, and allowing you not to pile up the chart with three moving averages. This indicator is convenient to use as an additional tool in analysis, for example, I combine it with graphical analysis and Elliott wave analysis.

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• Bull Bars-color of bars for the bull market
• Bear Bars-color of bars for the bear market
• MA_Method – method for constructing moving averages
• Price_Method is a method of calculating moving averages
• Moving Average #1-period of the 1st moving average
• Moving Average #2-period of the 2nd moving average
• Moving Average #3-period of the 3rd moving average

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