DLMACD - Divergence Local (wave) MACD. The indicator displays local divergence on the waves of the MACD histogram by changing color of the MACD histogram. It was created as an addition to the previously created DWMACD.
The indicator is very simple to use and configure.
Divergence buffer №1 can also be used in Expert Advisors.
The indicator displays the following types of divergence (definitions from the code):
- #define MoveUp 1 - (Green) movement up, no divergence;
- #define MoveDn 2 - (Yellow) movement down, no divergence;
- #define MoveUpDiv 3 - (MediumTurquoise) movement up, simple divergence (on the basis of one previous wave);
- #define MoveDnDiv 4 - (DarkOrange) movement down, simple divergence (on the basis of one previous wave);
- #define MoveUpDivR 5 - (DodgerBlue) movement up, divergence (on the basis of realwavecount of previous waves);
- #define MoveDnDivR 6 - (OrangeRed) movement down, divergence (on the basis of realwavecount of previous waves);
- #define MoveUpDivBreak 7 - (Blue) movement up, divergence with the breakthrough (down wave on the histogram broke through the previous wave level);
- #define MoveDnDivBreak 8 - (Red) movement down, divergence with the breakthrough (up wave on the histogram broke through the previous wave level).
Divergence with the breakthrough demonstrated good results in the tester using this indicator, so it was included as a signal to the indicator.
The realwavecount parameter defines the number of previous waves on which the current wave divergence will be calculated. The parameter is used to increase the accuracy of calculations at strong and weak waves alternation (a situation that does not correspond to an accurate wave labeling). Further use of a group of waves for divergence calculation proved its feasibility.
Signal line or values of the standard MACD histogram can be used for calculation. You can change the calculation using the linemode parameter.
The last parameter is the price used.
2000 bars are used for the calculation.
Local divergence displayed by this indicator shows the end of a wave on the histogram and the change of the direction to a reversed one. Significant local divergence appears on the simultaneous divergence on DWMACD. If DWMACD shows no divergence, the movement along the local divergence may not last long, although it will be strong. In this case the market becomes more volatile. When analyzing the indicator you should also consider possible triple divergence.
Note: the next divergence cancels the previous one!
To smooth the histogram you should use use the linemode=SIGNALLINE signal line. In this case the indications are clearer. The delay is defined by the period of the signal line.
Have a successful trading!