MACD – Moving Average Convergence Divergence. The MACD is calculated

by subtracting a 26-day moving average of a security's price from a

12-day moving average of its price. The result is an indicator that

oscillates above and below zero. When the MACD is above zero, it means

the 12-day moving average is higher than the 26-day moving average .

This is bullish as it shows that current expectations (i.e., the 12-day

moving average ) are more bullish than previous expectations (i.e., the

26-day average ). This implies a bullish , or upward, shift in the supply/demand

lines. When the MACD falls below zero, it means that the 12-day moving average

is less than the 26-day moving average , implying a bearish shift in the

supply/demand lines.

A 9-day moving average of the MACD (not of the security's price) is usually

plotted on top of the MACD indicator. This line is referred to as the "signal"

line. The signal line anticipates the convergence of the two moving averages

(i.e., the movement of the MACD toward the zero line).

Let's consider the rational behind this technique. The MACD is the difference

between two moving averages of price. When the shorter-term moving average rises

above the longer-term moving average (i.e., the MACD rises above zero), it means

that investor expectations are becoming more bullish (i.e., there has been an

upward shift in the supply/demand lines). By plotting a 9-day moving average of

the MACD , we can see the changing of expectations (i.e., the shifting of the

supply/demand lines) as they occur.

by subtracting a 26-day moving average of a security's price from a

12-day moving average of its price. The result is an indicator that

oscillates above and below zero. When the MACD is above zero, it means

the 12-day moving average is higher than the 26-day moving average .

This is bullish as it shows that current expectations (i.e., the 12-day

moving average ) are more bullish than previous expectations (i.e., the

26-day average ). This implies a bullish , or upward, shift in the supply/demand

lines. When the MACD falls below zero, it means that the 12-day moving average

is less than the 26-day moving average , implying a bearish shift in the

supply/demand lines.

A 9-day moving average of the MACD (not of the security's price) is usually

plotted on top of the MACD indicator. This line is referred to as the "signal"

line. The signal line anticipates the convergence of the two moving averages

(i.e., the movement of the MACD toward the zero line).

Let's consider the rational behind this technique. The MACD is the difference

between two moving averages of price. When the shorter-term moving average rises

above the longer-term moving average (i.e., the MACD rises above zero), it means

that investor expectations are becoming more bullish (i.e., there has been an

upward shift in the supply/demand lines). By plotting a 9-day moving average of

the MACD , we can see the changing of expectations (i.e., the shifting of the

supply/demand lines) as they occur.

//////////////////////////////////////////////////////////// // Copyright by HPotter v1.0 18/06/2014 // MACD – Moving Average Convergence Divergence. The MACD is calculated // by subtracting a 26-day moving average of a security's price from a // 12-day moving average of its price. The result is an indicator that // oscillates above and below zero. When the MACD is above zero, it means // the 12-day moving average is higher than the 26-day moving average. // This is bullish as it shows that current expectations (i.e., the 12-day // moving average) are more bullish than previous expectations (i.e., the // 26-day average). This implies a bullish, or upward, shift in the supply/demand // lines. When the MACD falls below zero, it means that the 12-day moving average // is less than the 26-day moving average, implying a bearish shift in the // supply/demand lines. // A 9-day moving average of the MACD (not of the security's price) is usually // plotted on top of the MACD indicator. This line is referred to as the "signal" // line. The signal line anticipates the convergence of the two moving averages // (i.e., the movement of the MACD toward the zero line). // Let's consider the rational behind this technique. The MACD is the difference // between two moving averages of price. When the shorter-term moving average rises // above the longer-term moving average (i.e., the MACD rises above zero), it means // that investor expectations are becoming more bullish (i.e., there has been an // upward shift in the supply/demand lines). By plotting a 9-day moving average of // the MACD, we can see the changing of expectations (i.e., the shifting of the // supply/demand lines) as they occur. //////////////////////////////////////////////////////////// study(title="MACD Crossover", shorttitle="MACD Crossover") fastLength = input(8, minval=1) slowLength = input(16,minval=1) signalLength=input(11,minval=1) hline(0, color=purple, linestyle=dashed) fastMA = ema(close, fastLength) slowMA = ema(close, slowLength) macd = fastMA - slowMA signal = sma(macd, signalLength) pos = iff(signal < macd , 1, iff(signal > macd, -1, nz(pos[1], 0))) barcolor(pos == -1 ? red: pos == 1 ? green : blue) plot(signal, color=red, title="SIGNAL") plot(macd, color=blue, title="MACD")

dawarravi

2 years ago

You are awesome!

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