MACD-v & Hist

The MACD-v indicator provides a volatility-normalized momentum oscillator designed to overcome the limitations of traditional momentum tools like the classic MACD and RSI. By standardizing readings through volatility adjustment, it allows for consistent momentum analysis across different assets and timeframes.

Usage

The MACD-v framework is used to identify market regimes based on standardized momentum thresholds. It can be interpreted through seven core patterns:

• Risk Range (Overbought): Identified when MACD-V > Signal Line and MACD-V > +150. This indicates extreme bullish momentum and potential exhaustion.
• Retracing: When MACD-V < Signal Line but remains above -50, suggesting a mild pullback in a bullish trend.
• Rundown: When MACD-V < Signal Line and falls between -50 and -150, signaling weakening momentum and building bearish pressure.
• Risk Range (Oversold): Identified when MACD-V < Signal Line and MACD-V < -150. This indicates extreme bearish momentum and potential capitulation.
• Rebounding: When MACD-V > Signal Line and remains above -150, suggesting a recovery from weak conditions.
• Rallying: When MACD-V > Signal Line and breaks above +50, indicating an accelerating bullish trend.
• Ranging (Neutral Zone): When the indicator stays between -50 and +50 for an extended period, signifying a sideways market.

The MACD-v Histogram provides additional short-term insights:

• Risk (Overbought): Histogram > +40 indicates stretched short-term bullish momentum.
• Risk (Oversold): Histogram < -40 indicates stretched short-term bearish momentum.

Details

The MACD-v solves the "subjectivity" problem of traditional oscillators. Classic MACD values are price-dependent; for example, a MACD value of 50 on the S&P 500 in the 1970s is not comparable to a value of 50 today due to the change in absolute price levels. By dividing the difference between two Exponential Moving Averages (EMAs) by the Average True Range (ATR), the MACD-v creates a unit-less, volatility-adjusted score.

The formula used is: [(EMA(12) - EMA(26)) / ATR(26)] × 100.

This normalization enables cross-market comparability (comparing momentum in Forex vs. Equities) and establishes an objective momentum classification system that remains stable over time.

Settings

MACD-v

• Mode: Select between the standard Oscillator, Histogram, Multi-Timeframe Heat Map, or Multi-Market Dashboard.
• Timeframe: Sets the calculation timeframe for the oscillator/histogram modes.
• Fast Length: The period for the fast Exponential Moving Average (default is 12).
• Slow Length: The period for the slow Exponential Moving Average (default is 26).
• Source: The price input used for calculations (default is Close).
• Signal Smoothing: The period for the EMA applied to the MACD-v to create the Signal Line.

Timeframes

• Timeframe 1-5: Configure the specific timeframes used when viewing the Heat Map or Dashboard modes.

Symbols

• Symbol 1-7: Define the specific tickers to be displayed when the Dashboard mode is active.

FAQ

How do I access MACD-v?

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

What is the benefit of volatility normalization?

It ensures that momentum readings are comparable across different years and different asset classes, regardless of the underlying price or volatility levels.

Why does the indicator change colors?

The colors are tied to the 7 core patterns (Risk, Rallying, Ranging, etc.), allowing you to visually identify the current momentum regime at a glance.