ADX/MACD Confluence V1.0

The TUE ADX/MACD Confluence V1.0 indicator identifies potential trend reversals and continuations by combining directional movement and momentum oscillators into a unified visual system.

Usage

The tool is designed to simplify the identification of trend confluences between the Average Directional Index (ADX/DMI) and the Moving Average Convergence Divergence (MACD).

• Buy Signals: A 'BUY' label appears when the DI+ is greater than the DI- and the MACD line crosses above the signal line.
• Sell Signals: A 'SELL' label appears when the DI- is greater than the DI+ and the MACD line crosses below the signal line.
• Candle Coloring: When enabled, the candles turn green during bullish confluence and red during bearish confluence. If the confluence is no longer active (e.g., one indicator falls out of alignment), the candles return to the default chart color (white/neutral). This transition can be used as a signal to tighten trailing stop losses or exit a position.

Details

The script functions by calculating two primary technical components:

1. DMI (Directional Movement Index): It evaluates the relationship between DI+ and DI- to determine the current directional bias.
2. MACD: It measures momentum by calculating the difference between fast and slow exponential moving averages.

The "confluence" occurs only when both indicators agree on the market direction. The logic tracks the state of these conditions to ensure signals are only generated on the first occurrence of a valid crossover, preventing signal clutter during ranging markets.

Settings

Display

• Show BUY/SELL Signals: Toggles the visibility of the Buy and Sell labels on the chart.
• Show Candle Colors: Toggles the custom candle coloring based on active confluence.

ADX/DMI Parameters

• ADX Length: The lookback period used for DMI calculations (Default: 14).
• ADX Smoothing: The smoothing period applied to the ADX calculation (Default: 10).

MACD Parameters

• MACD Source: The price source used for MACD calculation (Default: Close).
• MACD Fast Length: The short-term EMA period (Default: 12).
• MACD Slow Length: The long-term EMA period (Default: 26).
• MACD Signal Length: The period for the MACD signal line (Default: 9).

FAQ

How do I interpret white candles? White (or neutral) candles indicate that the ADX and MACD are no longer in agreement. This often suggests a weakening trend or a potential period of consolidation.

Are these signals lagging? Yes, both ADX and MACD are lagging indicators as they are based on historical price data. It is recommended to use these signals in conjunction with proper risk management and stop-loss levels.

How can I access the TUE ADX/MACD Confluence V1.0? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.