BITCOIN WEIGHTED MOVING AVERAGE

What is Bitcoin Weighted Moving Average?

A weighted moving average asks which observations should count most in an average price. This page brings together three answers. A linear weighted average gives newer closes more weight. Hull’s average combines weighted averages to respond more quickly. A volume-weighted moving average gives more weight to candles in which more Bitcoin traded.The linear and volume-weighted methods multiply each price by its weight, add the products, then divide by total weight. Their result is a dollar price between the lowest and highest included closes. Hull’s method also subtracts one average from another, so it can move outside that range. That difference comes from the formula.

Check what supplies the weight

In a 20-candle linear weighted average, the oldest close receives weight 1 and the newest receives weight 20. Total weight is 210, so the latest close supplies about 9.52% of the result. In the volume-weighted view, a quiet recent candle can count less than a busy older candle.

Separate position from slope

Price above an average says it is higher than the weighted reference. A rising line says that reference is moving up. Maketo requires both price above the line and the line above its value five candles earlier for a Rising reading. Opposing observations produce Mixed, which can happen when price changes direction before the reference follows.

Understand Hull’s quicker turns

Hull’s calculation doubles the shorter weighted average, subtracts the longer one, then smooths the result. The subtraction reduces delay but can exaggerate a turn. A quickly bending line contains no future prices. Its visual smoothness is not proof that the next price move will follow it.

How Weighted Moving Average is calculated

WMA assigns ascending weights from 1 to the period. VWMA divides the sum of close × base volume by summed base volume. Hull combines half-length and full-length WMAs and smooths over the square-root length. The page is published on Weighted moving average, period 20. A period counts candles at the interval you choose, so the same setting covers a different stretch of time on a one-hour chart than on a daily one. How smoothing and missing candles are handled.

A calculation you can follow

Consider three illustrative closes of $90,000, $100,000 and $110,000, with volumes of 10, 20 and 70 BTC respectively. The simple average is $100,000: each close has the same weight.The linear weighted average is ($90,000 × 1 + $100,000 × 2 + $110,000 × 3) / 6 = $103,333.33.The volume-weighted average is ($90,000 × 10 + $100,000 × 20 + $110,000 × 70) / 100 = $106,000.If the 70 BTC instead belonged to the first candle and the last had 10 BTC, the volume-weighted result would be $94,000. The linear weighted result would remain $103,333.33.The closing prices did not change in the last comparison. Only which candles had the most trading changed, so only the volume-weighted average moved.

Period

The default is 20 selected candles. On a 5-minute chart that describes 100 minutes; on a daily chart it describes 20 days. Changing the visible range changes the display. Changing candle interval changes the actual observations.

Hull rounding

For period 20, Maketo uses a 10-candle shorter average, a 20-candle longer average, and a final four-candle weighted average. Half-period and square-root lengths are rounded down, with a minimum of one. Other rounding conventions produce different curves.

Volume weighting

This variant uses candle closes multiplied by BTC volume. A candle with zero volume adds no weight. A window with zero total volume has no usable average, and missing volume is not treated as zero activity.

Faster is not necessarily more dependable

A more responsive line follows both lasting moves and brief reversals sooner. Compare methods with matching periods, candle intervals and price sources. Choosing whichever line best matches the last turn says little about the next one.

A weighted close is not an execution price

All of a candle’s trading volume is attached to its close in this variant. It does not reproduce the average price of the trades inside that candle. Wider candles leave more room for the two prices to differ.

Weighted Moving Average compared with VWAP

The default candle-based VWAP uses each candle’s high-low-close average rather than its close. Calendar and anchored views choose the history differently, too. Trade-weighted VWAP uses actual traded dollar amounts when those inputs qualify. Open Bitcoin VWAP.

Can Hull’s average exceed every recent close?

Yes. Its subtraction step can create a value outside the range of the closes. A linear or volume-weighted average with nonnegative weights cannot do that within its own window.

Why does Hull need more candles?

It first needs enough closes for the longer average, then enough results for the final smoothing. With period 20 and final length four, the numerical line first becomes available after 23 consecutive closes.

Does every weighted average use volume?

No. Linear weighting uses candle order and Hull combines those averages. Only the volume-weighted variant uses the amount of BTC traded as its weighting input.