seems to be the evolution of the current and much-used . The basic strategy is simple: long if the price crosses up the line, short or exit if vice versa.
The main difference between and is that the first one seems to lag much more than the first one, as we can see from the chart below ( crude oil )
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
//@version=2 study("Fractal Adaptive Moving Average",shorttitle="FRAMA",overlay=true) price = close len = input(defval=252,minval=1) FC = input(defval=40,minval=1) SC = input(defval=252,minval=1) w = log(2/(SC+1)) len1 = len/2 H1 = highest(high,len1) L1 = lowest(low,len1) N1 = (H1 - L1)/len1 H2 = for i = len1+1 to len high>high[i]?high:high[i] L2 = for i = len1+1 to len low>low[i]?low:low[i] N2 = (H2 - L2)/len1 H3 = highest(high,len) L3 = lowest(low,len) N3 = (H1 - L1)/len dimen = (log(H1+H2) - log(H3))/log(2) oldalpha = exp(w*(dimen-1)) oldN = (2-oldalpha)/oldalpha newN = ((SC-FC)*(oldN-1)/(SC-1))+FC alpha = 2/(newN+1) out = nz(out)*(1-alpha) + price*alpha plot(out,title="FRAMA")