Vector MACD

The Vector MACD indicator is a momentum tool designed to highlight trend alignment across multiple timeframes by averaging various vector moving averages. It provides traders with a normalized view of momentum, making it easier to identify when short-term and long-term price action are in agreement.

Usage

The Vector MACD can be used as a primary momentum oscillator to identify trend direction and potential reversals. When the indicator value is rising and colored green, it suggests increasing bullish momentum; conversely, a falling value colored red indicates increasing bearish momentum.

• Trend Confirmation: Stronger moves occur when all underlying vectors point in the same direction, resulting in steeper slopes in the oscillator.
• Zero-Line Crosses: Crossing above the zero line can indicate a shift toward bullish sentiment, while crossing below suggests a bearish shift.
• Divergence: Traders can look for discrepancies between price action and the oscillator (divergence) to detect potential trend exhaustion or upcoming changes.

Details

The script functions by calculating an "Origin" moving average using the Arnaud Legoux Moving Average (ALMA) applied to the midpoint of the candles (hl2). It then calculates six different "Vector" moving averages, which are defined as the difference between a Hull Moving Average (HMA) of a specific period and the Origin MA.

By averaging these six vectors and normalizing the result to a scale of 100, the indicator creates a smoothed oscillator that responds quickly to price changes while filtering out minor noise. This multi-period approach ensures that the momentum reading reflects a consensus across various lookback windows.

Settings

• Vector Period 1-6: These inputs define the lookback periods for the six Hull Moving Averages used in the vector calculations. By default, these are set to Fibonacci-based numbers (89, 55, 34, 21, 13, 8).

FAQ

How do I interpret the colors of the Vector MACD?

The indicator turns green when the current value is higher than the previous bar's value, indicating an upward slope. It turns red when the current value is lower than the previous bar's value, indicating a downward slope.

What does it mean when the indicator is near the 50 or -50 levels?

The indicator is normalized to a range. Reaching the upper (50) or lower (-50) horizontal lines suggests that momentum is reaching relative extremes based on the recent lookback range.

How can I access the Vector MACD?

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