Normalized MACD (v420)

The Normalized MACD (v420) indicator provides a modified version of the classic Moving Average Convergence Divergence oscillator, utilizing Hull Moving Averages (HMA) and normalization techniques to identify trend shifts and momentum cycles.

Usage

The Normalized MACD (v420) can be used to identify trend reversals and momentum exhaustion through the interaction of the normalized MACD line and its trigger line. Users can look for crossovers between the MACD line and the trigger line to signal potential entry or exit points.

• Crossovers: A cross of the MACD line above the trigger line suggests bullish momentum, while a cross below suggests bearish momentum. These are highlighted on the chart with cross icons for easy identification.
• Zero-Line Rejections: Observing how the oscillator behaves around the zero level can help determine the strength of the current trend.
• Visualizations: The tool includes options for histograms and fills to help visualize the distance between the MACD and the trigger line, providing a clearer view of momentum acceleration or deceleration.

Details

This script replaces traditional Exponential Moving Averages (EMA) with Hull Moving Averages (HMA) to reduce lag while maintaining smoothness. The calculation involves finding the ratio between two moving averages and then applying a normalization formula based on the highest and lowest values over a user-defined lookback period. This ensures the output remains within a consistent range, typically between -1 and 1, making it easier to compare momentum across different timeframes or assets.

Settings

Core Settings

• HullMA cross: Sets the length for the underlying Hull Moving Average calculations used to derive the MACD.
• Trigger: Determines the period for the Weighted Moving Average (WMA) applied to the MACD line to create the signal/trigger line.
• Normalize: Defines the lookback period used for the normalization process.

Visuals

• Histogram: Toggles the display of the histogram columns representing the difference between the MACD and the Trigger.
• Color Change: Enables dynamic color changes for the lines and elements based on momentum direction.
• Fill: Toggles a background fill between the MACD line and the Trigger line.

FAQ

How do I use the Normalized MACD (v420)?

You can use it to spot trend changes by watching for crossovers between the primary MACD line and the thicker trigger line.

What makes this different from a standard MACD?

This version uses Hull Moving Averages instead of EMAs for faster response times and applies a normalization algorithm to keep the oscillator values within a fixed scale.

How can I access Normalized MACD (v420)?

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