Wavelet Smoothed Moving Average (TechnoBlooms)

Wavelet Smoothed Moving Average (WSMA) is a part of the Quantum Price Theory (QPT) Series of indicators.

Overview:
The Wavelet Smoothed Moving Average (WSMA) is a trend-following indicator inspired by multi-level Haar Wavelet decomposition. Rather than using traditional wavelet basis functions, it emulates the core wavelet concept of multi-resolution analysis using nested simple moving averages (SMA).

How It Works:
WSMA applies three levels of smoothing:
• Level 1: SMA on price (base smoothing)
• Level 2: SMA on Level 1 output (further denoising)
• Level 3: SMA on Level 2 output (final approximation)

Why Use WSMA:
• Multi-Level Smoothing: Captures price structure across multiple time scales, unlike single-length MAs.
• Noise Reduction: Filters out short-term volatility and focuses on the underlying trend.
• Low Lag, High Clarity: Unlike traditional moving averages that react slowly or miss subtle shifts, WSMA’s layered smoothing delivers cleaner and more adaptive trend detection.

Unique Value:
• Wavelet-Inspired Design: Mimics core wavelet decomposition logic without the complexity of downsampling or basis functions.
• Perfect for Trend Confirmation: The final line (a3) can act as a trend filter, while the detail levels can help identify momentum shifts and volatility bursts.
• Fits Into Quantum Price Theory: As part of the QPT framework, WSMA bridges scientific theory with trading application, giving traders a deeper understanding of market structure and signal compression.