xMACD

The xMACD indicator provides an extended perspective on market trends and momentum by integrating a third moving average as a trend filter to the classic MACD structure.

Usage

The Usage of the xMACD revolves around identifying trend direction and momentum shifts through three primary components:

• Trend Identification (MACD Line): The main thick line (Red/Green) represents the distance between the Slow Moving Average and the Filter Moving Average. When this line is above zero (Green), the market is considered to be in an uptrend territory. When it is below zero (Red), it indicates a downtrend.
• Momentum Analysis (Histogram): The histogram represents the delta between the Fast and Slow Moving Averages. This reflects short-term momentum. Traders look for the histogram to grow or shrink to identify strengthening or weakening price action, similar to the traditional MACD.
• Signal Line Crossovers: The smoothed blue signal line serves as a trigger for potential reversals. A crossover between the MACD line and the Signal line can indicate an imminent shift in the broader trend.
• Convergence/Divergence: Users can look for divergences between price action and the histogram to identify potential exhaustion in the current momentum.

Details

The xMACD (eXtended MACD) modifies the standard calculation by introducing a "Filter" length (usually the longest of the three averages). While the classic MACD measures the distance between a fast and slow EMA, the xMACD focuses its primary "MACD" line on the relationship between the slow EMA and a longer-term filter EMA.

This construction allows the indicator to reflect the state of three different moving averages simultaneously within a single oscillator window. The histogram remains focused on the short-term spread (Fast vs. Slow), ensuring that the tool captures both the long-term trend direction and the short-term leading momentum.

Settings

• Fast Length: The period for the fastest moving average, used for short-term momentum calculation.
• Slow Length: The period for the intermediate moving average, used in both the histogram and the trend line calculation.
• Filter Length: The period for the longest moving average, acting as the baseline for the trend territory.
• Source: The price data used for calculations (default is Close).
• Signal Smoothing: The period used to calculate the EMA of the MACD line for crossover signals.

FAQ

How do I interpret the zero-axis cross?

A cross of the MACD line over the zero axis indicates that the slow moving average has crossed the filter moving average, signaling a primary trend reversal.

What is the difference between this and the standard MACD?

The standard MACD calculates the difference between Fast and Slow averages for its main line. The xMACD uses that difference for the histogram instead and uses a third, longer "Filter" average to determine the main trend line's position.

How can I access xMACD?

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