Ehlers MESA Adaptive Moving Average Analysis & Ehlers MESA Trading Signals

Mesa Adaptive Moving Averages was created by John Ehlers

Originally used to trade commodities and stocks.

The MESA Adaptive average looks like two moving averages. The difference is that the MESA moves in a staircase manner and not in a curved line like the Moving Average. The example illustrated and explained below portrays this indicator drawn on a price chart.

Ehlers MESA Adaptive MA

The MESA Adaptive Moving Average is a trend following technical indicator that adapts to price action movement based on the rate of change of price as measured by the Hilbert Transform Discriminator. This stock indicator will generate a trade signal when the two MAs cross one another. Trades should be executed in direction of the MESA averages.

This method features a fast Moving Average and a slow Moving Average so that composite average rapidly follows behind the price changes and holds the average value until the next candlestick close occurs. This stock indicator is less prone to whipsaws compared with the original Moving averages. This is because of its formula used to calculate the rate of change in relation to the price movement.