Moving average ribbons on fast charts

[Shadow Trader]

A ribbon of six or eight moving averages looks impressive. Colors fan out in a trend and tangle in a range. It's a nice visual of momentum and compression.

The question is whether it adds information beyond a single fast and slow average. Each line is built from the same price data, so the ribbon mostly repackages one idea in a prettier form.

Where ribbons can help is quick visual regime recognition. Expanded and ordered lines suggest a trend. Flat, tangled lines suggest a range. That doesn't generate entries, but it can filter them.

The cost is lag and clutter. More lines on a small screen can distract from price itself.

Another use some traders find helpful: color or ordering of the ribbon as a simple on/off switch. If the lines are ordered fast above slow, long entries only. If they're tangled, no trades. That's a rule anyone can write down and test, and it turns a decoration into a decision.

Has a ribbon made any difference compared with two simple averages, or is it mostly a good-looking way to confirm what price already showed?

[FXS HongKong Scalper]

Fair point that the ribbon mostly repackages the same data. We tested a ribbon against a single 20 and 50 EMA pair on M5 EURUSD as a trend filter, and the trade lists were almost identical. The ribbon removed a few trades in transitions, but not enough to change the results.

The one place we found it useful is as a quick visual for new traders, because it makes "is the market trending or flat" very easy to see. For anyone automating, one or two averages, or simply the slope of one, is easier to test and does the same job.