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Guppy Multiple Moving Average (GMMA)

Overview

Developed by Darryl Guppy, Guppy Multiple Moving Average (GMMA) are sets of moving averages where each of the set of moving averages represents different time frames. The sets of moving averages are overlayed on one chart. For more in-depth and detailed information, please check out the book by Darryl Guppy - Trend Trading or visit his website.

It comprises of a shorter-term moving averages set of between 3 and 15 periods. Another set is the longer term set made up of longer term averages between 30 and 60 periods. When used in combination, they allow us to analyse short-term price action in the broader context of long term price action.

GMMAs is useful for :

  • identifying points where market (short and long term groups) comes to an agreement
  • monitoring established trends and to use it to time market entry when there is a short-term pullback

NOTE: As with all indicators, you may need to tweak this indicator by adjusting the sets of exponential moving averages to fit your own timeframe.


How it is calculated

Short Term Group : 3, 5, 8, 10, 12 and 15 period

Long Term Group : 30, 35, 40, 45, 50 and 60 period

NOTE: All averages are calculated as exponential moving averages

Quoted from Darryl (via email):

"There is no mid term group of averages as these do not provide any significant advantage in understanding the behaviour of traders or investors in the market. Additionally, the use of such a mid term group obscures the volatility clustering behaviour and makes it more difficult to quickly understand the degree of fractal repetition which is occurring cross multiple time frames."


Example

Rules available in ChartNexus

GMMA Crossover
  • Bullish crossover of the EMA lines
  • Bearish crossover of the EMA lines
Parameters available:
  • Black Window - the time frame where the EMA lines may cross many times without affecting the triggering of the stock
  • t1 - the minimum number of days that the EMA lines must not cross before the Black Window
  • t2 - the minimum number of days that the EMA lines must not cross after the Black Window
GMMA trend outlook
  • GMMA shows trend is bullish with short- over mid- over long-term EMAs
  • GMMA shows trend is bearish with long- over mid- over short-term EMAs

References :

  • Guppy, Daryl, Trend Trading
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