MACD Fake Filter [RH]

The MACD Fake Filter [RH] indicator analyzes historical wave dynamics to identify high-probability crossover signals while filtering out noise and false signals during sideways market conditions.

Usage

The script enhances the standard MACD by adding dynamic filtering thresholds based on the average height of previous positive and negative waves. Users can interpret the indicator through the following visual cues:

• Filtered Signals: When the MACD line crosses the signal line, the tool checks if the cross occurs beyond the calculated average height.
• Bullish Labels: A green label appears when a bullish crossover (MACD over Signal) occurs below the average height of negative waves, indicating a potentially exhausted downtrend.
• Bearish Labels: A red label appears when a bearish crossunder (MACD under Signal) occurs above the average height of positive waves, indicating a potentially exhausted uptrend.
• Visual Fills: The areas between the MACD line and the average height lines are filled to highlight when the momentum has exceeded typical historical levels.

Details

Unlike a standard MACD that treats every crossover with equal weight, this script tracks every "wave" (the area formed between the MACD line and the zero line). It calculates the peak or trough of every wave and maintains a running average of these heights.

By plotting a Positive Average Height line and a Negative Average Height line, the tool establishes a "significant momentum" zone. Signals generated within these zones are prioritized as they represent reversals from levels that are historically significant relative to recent price action.

Settings

• Fast Length: The period for the short-term moving average used in the MACD calculation.
• Slow Length: The period for the long-term moving average used in the MACD calculation.
• Source: The price data used for calculations (e.g., Close, Open).
• Signal Smoothing: The period for the signal line.
• Oscillator MA Type: Choose between SMA or EMA for the MACD line calculation.
• Signal Line MA Type: Choose between SMA or EMA for the signal line calculation.

FAQ

How do I use the filtered labels?

The labels are designed to filter out weak signals. A bullish label suggests a reversal from a significant negative peak, while a bearish label suggests a reversal from a significant positive peak.

Can I set alerts for these filtered signals?

Yes, the script includes alert conditions specifically for "Filtered" crossovers and crossunders, as well as standard MACD alerts.

How can I access MACD Fake Filter [RH]?

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