The MACD 3MA indicator is a modification of the standard MACD.
MACD ( Moving Average Convergence/Divergence) is a technical indicator developed by Gerald Appel for the evaluation and prediction of price fluctuations in the stock and currency markets.
For the MACD calculation, an exponential moving average with a larger period is subtracted from a moving average price (usually an exponential MA with a smaller period is used. In most cases, the result is smoothed using EMA to eliminate random fluctuations.
Unlike the standard MACD MACD 3MA is built on three MAs and two standard MACDs. The man purpose of MACD 3MA is the following:
- Determining the beginning and the end of an impulse movement.
- Determining the current direction of the price movement
- Defining entry points
Let's start with the impulse. The first screenshot features three histograms: a) dark gray (impulse) b) gray (corrective) c) light green (signal). Also it has a signal line (brown). Impulse histogram is the price movement acceleration. If the histogram is above 0, then an upward movement is developing. If it is below 0, the movement is downward.
If the impulse histogram disappears, then we are in a corrective phase. Now we analyze the correction histogram. During the correction phase, we can consider trading options in the opposite direction.
If we still observe the signal histogram, the market situation should be considered uncertain. We do nothing during this period.
MACD 3MA has an additional filter (red and indigo colored points). Red - downward movement. Indigo - upward movement.
- fast - short period of the MA
- slow - long period of the MA period
- signal - signal line period
- fast_method - fast MA smoothing method
- slow_method - slow MA smoothing period
- SoundAlert - an alert when the impulse histogram crosses the zero level
- PushNotification - sending a Push notification when the impulse histogram crosses the zero level
- EmailAlert - sending an email when the impulse histogram crosses the zero level
The 'slow' value is 3 or more times larger than 'fast'. Better use MACD 3MA on two timeframes (higher and working TF).
|Working TF||Higher TF|
Determine the current phase on the larger timeframe: a) impulse; b) correction.
If the impulse phase is detected on the larger timeframe, then wait for the impulse histogram on the working TF in the direction of the higher TF impulse. That's all. If an impulse histogram appears on the higher TF, and it already exists on the working TF, better wait till a new impulse in the direction of the higher TF impulse appears.
If a correction phase is detected on the higher TF, wait for an impulse histogram on the working TF, which should be in the direction of correction on the higher TF. That's all. If the correction phase appears on the higher TF, and there is an impulse movement on the working TF, better wait till a new impulse in the direction of the higher TF correction appears.
SoundAlert - an alert when the impulse histogram crosses the zero level
PushNotification - sending a Push notification when the impulse histogram crosses the zero level
EmailAlert - sending an email when the impulse histogram crosses the zero level