Williams Shadow Line

Type

Trend indicator

Short introduction

The shadow lines developed by Larry Williams are based on a modified concept of moving averages.

Statement

Williams first calculates an MA. Then he additionally plots this MA in the chart offset to the right. This offset "MA" practically represents a "shadow line" of the original one. Buy and sell signals are generated at the intersections of these two lines.

Formula/calculation

Williams Shadow Line = MA + SD

where

SD = Shadow Delay

Interpretation

The direction of the MA indicates the prevailing trend in the underlying instrument. The intersections should generate trading signals at trend changes in the underlying instrument. If the MA cuts its shadow line from bottom to top, then this generates a buy signal. If the MA cuts its shadow from top to bottom, then this generates a sell signal.

Default setting

• Period: 14 days
• SD = Shadow Delay: 5 days
• Smoothing: MA

Example: Chart with Williams Shadow Line