MACD 3MA mt5
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.
Important! the impulse histogram should be above the signal line for the upward movement and below for the downward movement. The appearance of the impulse histogram can be interpreted as a signal to open a deal in the direction of its movement or as a signal to place a pending order. A pending order is placed awaiting a slight correction during the impulse movement.
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.
Important! The correction phase lasts as long as the signal signal line is within the signal histogram or until the correction histogram disappears. Once the correction phase is over, we stop searching for the possible entry points in the reverse 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:
M1 --> M15
M5 --> M30
M15 --> H1
M30 --> H4
H1 --> D1
H4 --> W1
D1 --> MN1
W1 --> MN1
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. Determine the current phase on the larger timeframe: a) impulse; b) correction.
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.