MACD + vwap RSI

The MACD + vwap RSI indicator combines trend-following momentum and volume-weighted relative strength into a single oscillator pane to provide a comprehensive view of market conditions. By integrating these two classic technical analysis tools, traders can identify potential trend reversals, overbought or oversold conditions, and momentum shifts simultaneously.

Usage

The Usage section focuses on how to interpret the combined signals from the MACD and the VWAP-based RSI.

• Trend Identification: Use the MACD histogram and lines to determine the prevailing trend direction. A bullish crossover (MACD line crossing above the signal line) suggests upward momentum, while a bearish crossover suggests downward momentum.
• Overbought/Oversold Conditions: The RSI line, calculated using VWAP data, helps identify exhaustion points. When the RSI line crosses above the overbought level (default 75) or below the oversold level (default 25), the background and lines change color to highlight potential reversal zones.
• Confluence Trading: Traders can look for high-probability setups where a MACD crossover aligns with an RSI exit from extreme zones. For example, a bullish MACD crossover occurring while the RSI is rising from the oversold territory can indicate a strong entry point.

Details

This tool utilizes a unique approach to the Relative Strength Index by applying it to Volume Weighted Average Price (VWAP) data instead of standard closing prices. This adds a volume component to the RSI calculation, potentially reducing noise. Additionally, the script includes an optional Laguerre filter, which can be toggled in the settings to further smooth the RSI line using a gamma-based smoothing algorithm, aiming to reduce whipsaws in volatile markets.

The MACD component follows the standard construction of calculating the difference between two moving averages (Fast and Slow) and then applying a signal smoothing line to that result.

Settings

RSI Settings

• Resolution: Sets the timeframe for the RSI calculation, allowing for multi-timeframe analysis.
• RSI Length: The lookback period used for the RSI calculation.
• RSI Oversold (%): The threshold level used to define the oversold zone.
• RSI Overbought (%): The threshold level used to define the overbought zone.

Laguerre Settings

• Use Laguerre?: Toggle to apply Laguerre smoothing to the RSI line.
• Laguerre gamma value: Controls the smoothing intensity of the Laguerre filter.

MACD Settings

• MACD Fast Length: The period for the shorter moving average.
• MACD Slow Length: The period for the longer moving average.
• MACD Source: The price source used for MACD calculations (e.g., Close, HL2).
• MACD Signal Smoothing: The lookback period for the signal line.
• MACD Simple MA(Oscillator): Toggle to use SMA instead of EMA for the fast/slow averages.
• MACD Simple MA(Signal Line): Toggle to use SMA instead of EMA for the signal line smoothing.

FAQ

How do I interpret the colors on the RSI?

The RSI line and fills change to green when in the oversold zone and red when in the overbought zone. The MACD histogram uses brighter colors to indicate increasing momentum and darker shades for fading momentum.

Can I use this for multi-timeframe analysis?

Yes, the "Resolution" input allows you to calculate the RSI based on a higher timeframe while viewing it on your current chart.

How can I access MACD + vwap RSI?

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