Jaw Line (Blue): The balance line for the current time frame displayed on the chart. It is a 13 bar smoothed moving average offset 8 bars into the future.
Teeth Line (Red): The balance line for one significantly shorter time frame. It is an 8 bar smoothed moving average offset 5 bars into the future.
Lip Line (Green): The balance line for still one more significantly shorter time frame. It is a 5 bar smoothed moving average offset 3 bars into the future.
From www.CQG.com:
Definition:
A smoothed moving average, referred to as Smooth, uses the current closing price added to the difference of the previous sum of closing prices in the lookback period minus the previous simple moving average value, and divided by the number of bars in the lookback period.Example: The formula for a five-day smoothed moving average is:
Smooth = (Close(@) + ((Sum(Close(@),5)[-1] – MA(Close(@),5)[-1]))/5
The formula for the five-day smoothed average shows that the elements in the numerator are divided by 5, or each element is weighted by 1/5. On a percentage basis, this means each element contributes just 20% to the calculation. Therefore, the longer the lookback period, the smaller the individual weighting, and the slower the smoothed moving average will respond to the price action.
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