MACD Scaled

The MACD Scaled indicator provides a normalized and re-centered version of the traditional MACD, mapping its values to a user-defined range (typically 0-100) to improve visual clarity and trend analysis. By centering the oscillator around 50 instead of 0, it allows for easier integration with other range-bound indicators like the Stochastic RSI.

Usage

The Usage section highlights how to interpret the rescaled components for trend identification and reversal signals.

• Trend Identification: The indicator features a rescaled MACD line, Signal line, and Histogram. When the histogram is above the 50 midline, the momentum is considered bullish; when below, it is bearish.
• MACD Leader: This additional line acts as a leading indicator for the MACD itself. Users can look for crosses between the Leader and the midline or crosses between the Leader and the MACD line to anticipate shifts in momentum.
• Breach Signals: The indicator includes background highlighting to signal when the MACD values exceed the defined range (0 or 100). These "breaches" often precede potential trend reversals.
• Stochastic RSI Integration: Users can toggle a rescaled Stochastic RSI to look for confluence. For example, an "Ideal Upside" signal occurs when a bottom range breach coincides with a bullish Stochastic RSI cross and a Leader/MACD cross.

Details

The MACD Scaled tool utilizes a %B Standard Deviation method to normalize the standard MACD calculation. Because the standard MACD is an unbounded oscillator, mapping it to a fixed range requires calculating a rolling basis and standard deviation (controlled by the %b Length setting) to define upper and lower boundaries.

The "Leader" component is based on logic by LazyBear, designed to react faster than the standard MACD line. The indicator also offers a "Normalized MACD%" option, which calculates the MACD as a percentage of the slower Moving Average, helping to maintain consistency across assets with different price scales.

Settings

MACD (Trend)

• Fast/Slow Length: Determines the periods for the two Moving Averages used to calculate the MACD.
• Oscillator/Signal MA Type: Allows users to choose between various MA types (SMA, EMA, WMA, etc.) for the calculation and smoothing.
• Use Normalized MACD%: If enabled, calculates the MACD as a percentage of the slow MA rather than a raw price difference.

MACD Leader

• Leader MA Type: Selects the smoothing method for the leading line.
• Show MACD Leader: Toggles the visibility of the leader line.

Scaling

• Scale Range: Sets the maximum value for the scale (default is 100, with 50 as the midline).
• %b Length: The lookback period for the Standard Deviation used in the rescaling process. Higher values reduce distortion.
• Breach Signal: Enables background colors when values move outside the 0-100 range.

Stochastic RSI & RSI

• K/D/Length: Standard parameters for the Stochastic RSI calculation.
• ReScaled sRSI/RSI: If enabled, the RSI components will be rescaled to match the MACD's custom range.

FAQ

How do I interpret the midline? In this version, the midline is set to half of your "Scale Range" (usually 50). It functions exactly like the zero-line in a standard MACD, where moves above signify bullish momentum and moves below signify bearish momentum.

Why do the lines sometimes go outside the 0-100 range? Because the MACD is naturally unbounded, the rescaling uses a rolling standard deviation. Rapid, extreme price movements can temporarily exceed these calculated bounds, which the indicator flags as a "Breach" to signal potential exhaustion.

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