Accumulation/Distribution MACD

The Accumulation/Distribution MACD indicator applies the Moving Average Convergence Divergence (MACD) formula to the Accumulation/Distribution line to identify shifts in volume-based momentum and trend reversals.

Usage

The Accumulation/Distribution MACD is used to identify buying and selling pressure by analyzing the relationship between price and volume through a smoothed oscillator format.

• Trend Identification: When the MACD line is above the Signal line and the zero line, it indicates strong bullish accumulation. Conversely, when the MACD line is below the Signal line and the zero line, it suggests bearish distribution.
• Crossovers: A crossover of the MACD line above the Signal line can be interpreted as a potential entry signal, while a cross under suggests a potential exit or shorting opportunity.
• Histogram Analysis: The four-color histogram helps visualize the acceleration or deceleration of the trend. Bright colors indicate strengthening momentum (upward or downward), while darker shades indicate a potential weakening of the current move.
• Divergences: Users can look for divergences between the AccDist MACD and price action to spot potential trend exhaustion.

Details

This script substitutes the traditional price input of the MACD calculation with the Accumulation/Distribution (AD) index. The AD index is calculated by multiplying the Money Flow Multiplier by the volume for the period and creating a cumulative total.

By applying an Exponential Moving Average (EMA) to this cumulative volume data, the script creates a "Fast" and "Slow" line. The difference between these two averages forms the MACD line, while a Simple Moving Average (SMA) of the MACD line forms the Signal line. This implementation includes multi-timeframe (MTF) capabilities, allowing users to view volume-based MACD data from higher timeframes on their current chart.

Settings

• Use Current Chart Resolution?: When enabled, the indicator uses the timeframe of the current chart. If disabled, it uses the custom timeframe specified below.
• Use Barcolors?: Toggles the coloring of price bars based on the MACD/Signal line relationship.
• Use Different Timeframe?: Specifies the timeframe for calculations if "Use Current Chart Resolution" is unchecked.
• Show MacD & Signal Line?: Toggles the visibility of the MACD and Signal lines.
• Show Dots When MacD Crosses Signal Line?: Displays a circle at the point where the MACD and Signal lines intersect.
• Show Histogram?: Toggles the visibility of the MACD histogram.
• Change MacD Line Color-Signal Line Cross?: Adjusts the MACD line color based on whether it is above or below the Signal line.
• MacD Histogram 4 Colors?: Enables a more detailed 4-color scheme for the histogram to show momentum strength.
• Fast Length: The period for the fast EMA calculation (default 12).
• Slow Length: The period for the slow EMA calculation (default 26).
• Signal Length: The period for the Signal line SMA calculation (default 9).

FAQ

What is the difference between this and a normal MACD? A normal MACD uses price data (usually close), whereas the Accumulation/Distribution MACD uses volume-weighted data to determine momentum.

How do I interpret the histogram colors? Bright green and bright red represent strong momentum in their respective directions. Darker green and darker red represent periods where the trend is still active but momentum is slowing down.

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