This is a moving average that has the close of each bar weighted with the square of the tick range. It comes close to a volume-weighted moving average, and may be used with instruments, for which no volume information is available.
Indicator Description
For instruments volume data is unavailable (or unreliable), the Range Weighted Moving Average (RWMA) can be used as a substitute for the Volume Weighted Moving Average. The indicator have similar properties to the Volume Weighted Moving Average but takes the close of each bar, weighting it with the square of the tick range.
Using the Range Weighted Moving Average
The RWMA may be used in combination with other tools for technical analysis, such as channel indicators, momentum oscillators, support / resistance levels and volume analysis. For channel indicators, you may review the Commodity Channel Index, Donchican Channel or the Squeeze Channel. A Donchian Channel Strategy was reviewed in our Indicator Spotlight, as was the Squeeze Momentum setup. Furthermore, the Indicator Spotlight looked at how the Ichimoku Cloud can be used for trend and momentum entries. A library version of the Ichimoku indicator is also available.
For support / resistance, you may consider using Daily Pivot Levels as discussed in our in our Indicator Spotlight. A number of Pivot indicators are available from the Session Tools category. For example, the Daily Pivots, Weekly Pivots, Monthly Pivots and the N-Monthly Pivots. The library also has an Hourly Pivots indicator.
You may find additional support resistance levels with the Average Range for a daily, weekly or monthly lookback period. This may for example be done using a ADR indicator, alternatively the Weekly Range Projections / Monthly Range Projections. The Indicator Spotlight furthermore reviewed the Average Daily Range Projections.
For volume you may consider Force Index or Relative Volume analysis. Our NinjaTrader Relative Volume indicator was discussed in our Indicator Spotlight. For instruments that lack reliable volume information (FX/Crypto currencies), you may consider analyzing Relative Ranges. Our Relative Range indicator was also reviewed in the Indicator Spotlight.
Other Library Indicators
Other that the RWMA, our moving average category includes the ALMA, DWMA, Exponential Hull Moving Average, Holt EMA, Moving Average Wave, MA Cross, Sine WMA, Tillson T3 and the Trigger Lines. Our Indicator Spotlight also discussed the Trigger Lines Cross vs. Thrust Trend Definition.
Additionally, you may want to review our Trend Analysis and Trend Filters, such as the Adaptive Laguerre Filter, ADX, ADXVMA Plus, Coral Filter, Directional Movement Index (DMI), Distant Coefficient Filter, MAAF, Efficiency Ratio, Butterworth Filter, Gaussian Filter, Laguerre Filter, Rainbow Filter, Supersmoother Filter and the Supertrend indicator.
The RWMA indicator is available for NinjaTrader 8.
