MACD 3D with Signals

The MACD 3D with Signals indicator aims to identify market trends and potential turning points by leveraging specialized MACD calculations combined with volatility-based boundaries. This tool provides a multifaceted view of momentum and trend exhaustion, helping traders spot buy and sell opportunities through color-coded visual cues and automated signals.

Usage

The indicator can be used to identify trend direction, momentum crossovers, and potential reversals.

• Trend Identification: The main MACD 3D plot changes color based on momentum. Aqua indicates an upward trend (increased buying pressure), while red suggests a downward trend (increased selling pressure).
• Standard Signals: When enabled, these signals plot when the MACD 3D changes direction (e.g., from red to aqua), indicating a shift in immediate momentum.
• Momentum Crossover Signals: These appear as yellow markers when the MACD value crosses above the upper volatility boundary or below the lower boundary, highlighting potential overextended conditions or trend reversals.
• Differential Histogram: The histogram measures the distance between the MACD value and the median trendline. This can be used to spot divergences or weakening momentum (indicated by darker shades of green or red).

Details

Unlike the traditional MACD which uses standard closing prices, the MACD 3D utilizes the Average Price (HLC3). This value is processed through exponential moving averages to derive the specialized MACD line.

To account for market volatility, the script calculates a standard deviation based on the MACD values to create dynamic upper and lower boundaries. A median line is also calculated to serve as a baseline for the differential histogram, which highlights how far the current momentum deviates from the average.

Settings

• Length: Adjusts the period used for the EMAs and volatility calculations. Increasing this creates a smoother, slower-reacting indicator.
• Standard Signal: Enables or disables plot shapes for basic momentum changes.
• Momentum Crossover Signal: Enables or disables yellow highlights and shapes when the MACD crosses the volatility boundaries.
• Up Color: Sets the color for bullish momentum.
• Down Color: Sets the color for bearish momentum.
• Trend Line: Customizes the color of the median baseline.

FAQ

How do I use the Differential Histogram?

The histogram shows the gap between price momentum and the median. If the histogram bars are getting shorter (darker colors), it may suggest that the current trend is losing steam, even if the price is still moving in the same direction.

What do the yellow circles represent?

Yellow circles appear when the MACD 3D value exceeds the volatility-based upper or lower bands, signifying high-momentum zones that often precede a reversal or a period of consolidation.

How can I access MACD 3D with Signals?

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