Point and Figure (PnF) MACD

The Point and Figure (PnF) MACD indicator provides a specialized version of the classic Moving Average Convergence Divergence oscillator calculated using a custom Point and Figure engine. It aims to filter out market noise and insignificant price movements by applying MACD logic directly to filtered PnF columns rather than standard time-based bars.

Usage

The tool can be used to identify trend momentum and reversals while ignoring minor price fluctuations. Traders typically look for the following signals:

• Signal Line Crossovers: Bullish momentum is indicated when the MACD line crosses above the signal line, while bearish momentum is suggested by a cross below.
• Zero Line Crosses: These help identify broader trend shifts based on the underlying PnF data.
• Histogram Analysis: The color-coded histogram shows the distance between the MACD and Signal lines, indicating strengthening or weakening momentum.

Details

Unlike standard indicators that use built-in TradingView functions, this script features a proprietary PnF engine. Point and Figure charting is a time-independent method that only plots data when price moves a specific distance (Box Size). This implementation calculates Moving Averages based on the average price of each PnF column ((Open + Close) / 2) or the Close price, depending on user selection. This ensures the MACD values are entirely derived from the filtered PnF structure, providing a unique perspective on momentum.

Settings

• Method: Selects the box sizing algorithm (User Defined, ATR, Traditional, or Percentage).
• ATR Period: Sets the lookback period for the box size calculation when the ATR method is selected.
• Box Size: The fixed price value for each box when using the User Defined method.
• Percentage %: Sets the box size as a percentage of the current price.
• Reversal: The number of boxes required to create a new column (standard is 3).
• Source (PnF): Determines if the engine uses Close or High-Low prices for column formation.
• Fast Length: The period for the shorter EMA in the MACD calculation.
• Slow Length: The period for the longer EMA in the MACD calculation.
• Signal Smoothing: The period used to calculate the signal line EMA.

FAQ

How do I interpret the PnF MACD histogram colors?

Bright green and red indicate strengthening momentum (increasing distance from the signal line), while faded colors represent weakening momentum.

Why does the indicator not update on every tick?

Because it is based on Point and Figure logic, the values only update when the price movement is sufficient to change a PnF box or column.

How can I access this tool?

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