MACD crossover while RSI Oversold/Overbought

The MACD crossover while RSI Oversold/Overbought indicator identifies potential market reversals by combining MACD trend momentum with RSI exhaustion levels to generate trade signals directly on the price chart.

Usage

The indicator can be used to identify high-probability entry points by filtering standard MACD crossovers with recent RSI extreme conditions.

• Bullish Signal: A green upward triangle appears below the bar when a bullish MACD crossover occurs and the RSI was at or below the "Oversold" threshold within the last 6 bars. This suggests a recovery from an undervalued state.
• Bearish Signal: A red downward triangle appears above the bar when a bearish MACD crossover occurs and the RSI was at or above the "Overbought" threshold within the last 6 bars. This suggests a potential pullback from an overextended state.

Details

This tool calculates the classic Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI). Rather than requiring the RSI to be in an extreme zone at the exact moment of the crossover, the script looks back over a specific window (6 bars) to see if the asset was recently overextended. This allows for the natural lag that often exists between an RSI peak/trough and the subsequent MACD signal line crossover.

Settings

MACD Settings

• Fast moving average: The period for the shorter-term EMA used in MACD calculation (default 12).
• Slow moving average: The period for the longer-term EMA used in MACD calculation (default 26).
• Signal length: The smoothing period for the MACD signal line (default 9).

RSI Settings

• RSI Oversold Level: The threshold below which the market is considered oversold (default 29).
• RSI Overbought Level: The threshold above which the market is considered overbought (default 71).
• RSI Length: The lookback period used to calculate the Relative Strength Index (default 14).

FAQ

How do I use the signals for trading?

Signals are typically used as confirmation of a trend reversal. Traders often look for the bullish signal near support levels or the bearish signal near resistance levels to increase trade confidence.

Can I change the sensitivity of the signals?

Yes, by adjusting the MACD EMA lengths or the RSI thresholds in the settings menu, you can make the indicator more or less sensitive to market fluctuations.

How can I access MACD crossover while RSI Oversold/Overbought?

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