3colorMACD_v1

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3colorMACD_v1

The Three Colour MACD is a specialized technical analysis tool designed to help traders visualize market momentum and trend direction more clearly than a standard MACD indicator. While a traditional MACD provides a single histogram, this script breaks down the movement into distinct visual categories based on the "velocity" of price changes.

Core Logic Overview

The indicator operates by calculating the difference between two moving averages: a Fast Exponential Moving Average (EMA) and a Slow EMA. By subtracting the slow average from the fast one, it determines the immediate strength of the trend. However, instead of simply showing this as a single value, the script analyzes the change in that momentum from one candle to the next to determine the color-coded output.

How the Visuals Work

The tool categorizes the market movement into three distinct states, represented by different colors in the histogram:

  • Positive Momentum (Bullish): When the current momentum is higher than it was in the previous period, the script identifies this as increasing strength and highlights it in a specific color. This suggests that the upward trend is accelerating.
  • Negative Momentum (Bearish): Conversely, when the momentum drops lower than the previous period, the indicator reflects a strengthening downward trend using a different color. This signifies that the bearish move is gaining power.
  • Neutral/Transitionary Momentum: If there is no significant increase or decrease in momentum between periods (the change is zero), the script applies a third "neutral" color. This helps traders identify moments where the market is stalling, consolidating, or transitioning between trends.

Additional Analytical Layers

Beyond the colored histogram, the script provides two additional visual aids:

  1. Signal Line: It calculates a secondary average (Simple Moving Average) of the MACD values. This line acts as a smoothed guide to help identify potential turning points in the trend.
  2. Zero Level: A steady reference point that helps traders distinguish between overall positive territory and overall negative territory.

Summary for Traders

By using this logic, you can see not just where the price is going, but how fast it is moving. Rather than just seeing a bar go up or down, the Three Colour MACD allows you to quickly spot when a trend is gaining steam, losing steam, or becoming stagnant, providing a more nuanced view of market dynamics.

Indicators Used
Moving average indicatorMoving average indicator
Miscellaneous
Implements a curve of type %1
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3colorMACD_v1 
/*-----------------------------+
|			       |
| Shared by www.Aptrafx.com    |
|			       |
+------------------------------*/

//+------------------------------------------------------------------+
//|                                            Three Colour MACD.mq4 |
//|                      Copyright © 2004, MetaQuotes Software Corp. |
//|                                       http://www.metaquotes.net/ |
//|                                              Nikolay Kositsin    |
//+------------------------------------------------------------------+
#property  copyright "Copyright © 2004, MetaQuotes Software Corp."
#property  link      "http://www.metaquotes.net/"
//---- indicator settings
#property  indicator_separate_window
#property  indicator_buffers 5
#property  indicator_color1  Blue
#property  indicator_color2  Magenta
#property  indicator_color3  Gray
#property  indicator_color4  LimeGreen
#property  indicator_color5  DarkSlateBlue
//---- indicator parameters
extern int FastEMA=12;
extern int SlowEMA=26;
extern int SignalSMA=9;
extern int CountBars=300;
extern int Line=3;
extern double  Zero_level=0.0;
//---- indicator buffers
double     ind_buffer1[];
double     ind_buffer2[];
double     ind_buffer3[];
double     ind_buffer4[];
double     ind_buffer5[];
double     ind_buffer6[];

double minuse;
double Vol;
double Zml;
double Color1;

//+------------------------------------------------------------------+
//| Custom indicator initialization function                         |
//+------------------------------------------------------------------+
int init()
  {
  
//---- indicator buffers mapping
   IndicatorBuffers(6);
   if(!SetIndexBuffer(0,ind_buffer1) &&
      !SetIndexBuffer(1,ind_buffer2) &&
      !SetIndexBuffer(2,ind_buffer3) &&
      !SetIndexBuffer(3,ind_buffer4) &&
      !SetIndexBuffer(4,ind_buffer5) &&
      !SetIndexBuffer(5,ind_buffer6))
       Print("cannot set indicator buffers!");
//---- drawing settings
    
   Color1= C'128,0,255';                                            
   SetIndexStyle(0,DRAW_HISTOGRAM, STYLE_SOLID, Line, Color1); 
   SetIndexStyle(1,DRAW_HISTOGRAM, STYLE_SOLID, Line);
   SetIndexStyle(2,DRAW_HISTOGRAM, STYLE_SOLID, Line);
   SetIndexStyle(3,DRAW_LINE, STYLE_DASHDOTDOT,1);   
   SetIndexStyle(4,DRAW_LINE, STYLE_DASHDOTDOT,1); 

   SetIndexDrawBegin(0,Bars-CountBars);
   SetIndexDrawBegin(1,Bars-CountBars);
   SetIndexDrawBegin(2,Bars-CountBars);
   SetIndexDrawBegin(3,Bars-CountBars+SignalSMA); 
   SetIndexDrawBegin(4,Bars-CountBars-100); 
   SetIndexShift(4,100);
     
   IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS)+1);

//---- name for DataWindow and indicator subwindow label
   IndicatorShortName("MACD("+FastEMA+","+SlowEMA+","+SignalSMA+")");
   SetIndexLabel(0,"MACD+");
   SetIndexLabel(1,"MACD-");
   SetIndexLabel(2,"MACD0");
   SetIndexLabel(3,"Signal");
   SetIndexLabel(4,"Zero");
//---- initialization done
   return(0);
  }
//+------------------------------------------------------------------+
//| Moving Averages Convergence/Divergence                           |
//+------------------------------------------------------------------+
int start()   
   {
//---- drawing settings
   SetIndexStyle(0,DRAW_HISTOGRAM, STYLE_SOLID,Line); 
   SetIndexStyle(1,DRAW_HISTOGRAM, STYLE_SOLID,Line);
   SetIndexStyle(2,DRAW_HISTOGRAM, STYLE_SOLID,Line);
   SetIndexStyle(3,DRAW_LINE, STYLE_DASHDOTDOT,1);
   SetIndexStyle(4,DRAW_LINE, STYLE_DASHDOTDOT,1);
   
   int limit;  
   int counted_bars=IndicatorCounted(); 
//---- check for possible errors
   if(counted_bars<0) return(-1);
//---- last counted bar will be recounted
   if(counted_bars>0) counted_bars--;
   limit=Bars-counted_bars;
//---- macd counted in the 1-st buffer
   
   for(int i=0; i<limit; i++)      
   
      ind_buffer6[i]=iMA(NULL,0,FastEMA,0,MODE_EMA,PRICE_CLOSE,i)-iMA(NULL,0,SlowEMA,0,MODE_EMA,PRICE_CLOSE,i);      
      
//---- Three Colour MACD mapping 
     for(i=0; i<limit; i++)
   {   
       ind_buffer5[i]=Zero_level;
       
       Vol = ind_buffer6[i];     minuse = Vol - ind_buffer6[i+1];  
     
           if(minuse>0.0){ind_buffer1[i]=Vol; ind_buffer2[i]=0.0; ind_buffer3[i]=0.0;} 
     else {if(minuse<0.0){ind_buffer1[i]=0.0; ind_buffer2[i]=Vol; ind_buffer3[i]=0.0;}
     else                {ind_buffer1[i]=0.0; ind_buffer2[i]=0.0; ind_buffer3[i]=Vol;}} 
 //---- 
   } 
        
//---- signal line counted in the 2-nd buffer
   for(i=0; i<limit; i++)
      ind_buffer4[i]=iMAOnArray(ind_buffer6,Bars,SignalSMA,0,MODE_SMA,i);
//---- done
   return(0);
  }

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