Vortex Indicator w/ MACD Histo

The Vortex Indicator w/ MACD Histo tool combines the trend-following capabilities of the Vortex Indicator with the momentum tracking of the MACD Histogram to identify shifts in buying and selling pressure. By centering the MACD Histogram around the 1.0 baseline rather than 0.0, it allows for a direct visual correlation with the Vortex lines, providing a comprehensive view of trend direction and strength in a single sub-pane.

Usage

The Usage section describes how traders can interpret the relationship between trend direction and momentum.

• Trend Identification: When the VI+ line (blue) is above the VI- line (orange), it indicates positive price movement or a bullish trend. Conversely, when VI- is above VI+, a bearish trend is suggested.
• Momentum Confirmation: The MACD Histogram bars oscillate around the 1.0 baseline. Green bars above 1.0 signify bullish momentum, while red bars below 1.0 indicate bearish momentum.
• Crossover Signals: Bullish signals occur when VI+ crosses above VI- and the MACD Histogram moves above 1.0. Bearish signals occur when VI- crosses above VI+ and the MACD Histogram moves below 1.0.
• Breakpoints: The indicator includes reference lines at 0.8 and 1.2 to help identify when the Vortex components are reaching significant levels of trend intensity.

Details

The Vortex Indicator (VI) is based on the distance between the current high and the previous low, and the current low and the previous high. This implementation calculates the VI+ and VI- over a user-defined period and normalizes them by the True Range.

The integrated MACD Histogram is derived from the difference between a Fast and Slow EMA, smoothed by a Signal period. To ensure visual compatibility with the Vortex Indicator (which typically fluctuates around 1.0), the MACD Histogram is offset by +1. This adjustment allows the histogram to use 1.0 as its zero-point, making it easier to spot trend-momentum alignment without switching between different scales.

Settings

• Period: Sets the lookback length for the Vortex Indicator calculation (Default: 14).
• MACD Slow Period: The period for the longer-term Moving Average Convergence Divergence EMA.
• MACD Fast Period: The period for the shorter-term Moving Average Convergence Divergence EMA.
• MACD Signal Period: The smoothing length for the MACD Signal line used to generate the histogram.

FAQ

How do I interpret the colors in the Vortex Indicator w/ MACD Histo?

The filling between the VI+ and VI- lines changes color based on which trend line is dominant, while the MACD Histogram changes to green when momentum is positive (above 1.0) and red when momentum is negative (below 1.0).

Can I change the sensitivity of the trend signals?

Yes, you can adjust the "Period" setting to make the Vortex Indicator more or less responsive to price action. A shorter period increases sensitivity, while a longer period provides a smoother trend reading.

How can I access this indicator?

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