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The elastic volume weighted moving average is a technical indicator used, like all moving averages, to determine the nature of the market and to generate signals. It can also be used as a trigger line. EVWMA has the specificity that it is both symbol-independent and time-frame independent.
This is made by introducing what is called the volume period, i.e. the simple moving average of the volume multiplied by a coefficient. EVWMA can be viewed as an approximation of the average price paid per share.
EVWMA interpretation is similar to all moving averages types. When prices jump up crossing their EVWMA from below, this is a sign for an up-trend, and a buy signal is generated; when they go down crossing their EVWMA from above, this a sign for a down-trend, and a sell signal is generated.
Divergence between the EVWMA and the prices is a strong signal for either an overbought or an oversold market which forecasts a near end of the trend.
The elastic volume weighted moving average function you can get here is named 'elastic_volume_wma', and it takes 2 parameters as arguments. The first one is the time period of the simple moving average of the volume; the second is the coefficient by which this SMA will be multiplied to get the volume period.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
