MACD-V with Volatility Normalisation [DCD]

MACD-V with Volatility Normalisation [DCD]

This indicator is a modified version of the traditional MACD, designed to account for market volatility by normalizing the MACD line using the Average True Range (ATR). It provides a more adaptive approach to identifying momentum shifts and potential trend reversals. This indicator was developed by Alex Spiroglou in this paper:

Spiroglou, Alex, MACD-V: Volatility Normalised Momentum (May 3, 2022).

Features:

• Volatility Normalization: The MACD line is adjusted using ATR to standardize its values across different market conditions.
  
• Customizable Parameters: Users can adjust the MACD fast length, slow length, signal line smoothing, and ATR length to suit their trading style.
  
• Histogram Visualization: The histogram highlights the difference between the MACD and signal lines, with customizable colors for positive and negative momentum.
  
• Crossover Signals: Green and red dots indicate bullish and bearish crossovers between the MACD and signal lines.
  
• Background Highlighting: The chart background changes to green when the MACD is above 0 and red when it is below 0, providing a clear visual cue for bullish and bearish conditions.
  
• Horizontal Levels: Dotted horizontal lines are plotted at key levels for better visualization of MACD values.
  

How to Use:

• Look for crossovers between the MACD and signal lines to identify potential buy or sell signals.
  
• Use the histogram to gauge the strength of momentum.
  
• Pay attention to the background color for quick identification of bullish (green) or bearish (red) conditions.
  

This indicator is ideal for traders who want a more dynamic MACD that adapts to market volatility. Customize the settings to align with your trading strategy and timeframe.