MACD 2 Colour HISTOGRAM
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This custom technical indicator is designed to provide a more nuanced visual representation of market momentum compared to the standard MACD (Moving Average Convergence Divergence) tool. By utilizing a multi-layered calculation approach, it helps traders distinguish between different types of price movement strength through a distinct color-coded histogram.
Core Logic and Calculations
The script functions by processing three primary mathematical layers:
- Trend Identification: The logic begins by calculating two different Exponential Moving Averages (EMAs). One is "Fast" and the other is "Slow." By subtracting the Slow average from the Fast average, the script identifies the raw momentum of the market.
- Signal Smoothing: To prevent erratic movements from creating "noise," the script then takes that raw momentum and applies a second smoothing calculation (a Simple Moving Average). This creates a "Signal Line" which represents the smoothed trend.
- Momentum Gap: The final primary value is determined by finding the difference between the Raw Momentum and the Signal Line. This gap tells the trader how far the current price move is deviating from its recent average.
Visual Representation (The 2-Colour Histogram)
The most notable feature of this script is how it interprets the results of these calculations to provide visual clarity:
- Positive vs. Negative Sentiment: The indicator automatically separates positive momentum from negative momentum. When the gap between the momentum and the signal line is above zero, it populates one side of the histogram; when it falls below zero, it populates the other.
- Visual Differentiation: Rather than showing a single uniform bar, the script uses specific colors to differentiate these movements. This allows for an immediate visual distinction between bullish (upward) pressure and bearish (downward) pressure.
- Dynamic Scaling: The indicator is programmed to adjust its precision automatically based on the specific market symbol being viewed, ensuring that the histogram remains readable and accurate regardless of whether you are trading highly volatile assets or more stable ones.
By combining these layers, the script provides a refined view of market velocity, allowing users to see not just the direction of the price, but the strength and stability of that movement relative to recent history.
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MACD 2 Colour HISTOGRAM
//+------------------------------------------------------------------+
//| MACD 2 Colour HISTOGRAM.mq4 |
//| Copyright © 2006, MetaQuotes Software Corp. |
//| http://www.metaquotes.net |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2006, MetaQuotes Software Corp."
#property link "http://www.metaquotes.net"
#property link "2 colour Histogram added by cja"
#property indicator_separate_window
#property indicator_buffers 4
#property indicator_color1 Green
#property indicator_color2 Coral
#property indicator_color3 Aqua
#property indicator_color4 Red
#property indicator_width1 3
#property indicator_width2 3
#property indicator_width3 1
#property indicator_width4 1
//---- indicator parameters
extern int FastEMA=8;
extern int SlowEMA=17;
extern int SignalSMA=9;
//---- indicator buffers
double ind_Buffer1[];
double ind_Buffer2[];
double ind_buffer3a[];
double ind_buffer3b[];
double ind_buffer4[];
double ind_buffer5[];
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- 2 additional buffers are used for counting.
IndicatorBuffers(6);
//---- drawing settings
SetIndexStyle(0,DRAW_HISTOGRAM);
SetIndexDrawBegin(0,SignalSMA);
SetIndexStyle(1,DRAW_HISTOGRAM);
SetIndexDrawBegin(1,SignalSMA);
SetIndexStyle(4,DRAW_LINE);
SetIndexBuffer(4,ind_Buffer1);
SetIndexStyle(5,DRAW_LINE);
SetIndexBuffer(5,ind_Buffer2);
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS)+2);
//---- 5 indicator buffers mapping
if(!SetIndexBuffer(0,ind_buffer3a) &&
!SetIndexBuffer(1,ind_buffer3b) &&
!SetIndexBuffer(2,ind_buffer4) &&
!SetIndexBuffer(3,ind_buffer5) &&
!SetIndexBuffer(4,ind_Buffer1) &&
!SetIndexBuffer(5,ind_Buffer2))
Print("cannot set indicator buffers!");
//---- name for DataWindow and indicator subwindow label
IndicatorShortName("MACD ("+FastEMA+","+SlowEMA+","+SignalSMA+")");
//---- initialization done
return(0);
}
//+------------------------------------------------------------------+
//| Moving Average of Oscillator |
//+------------------------------------------------------------------+
int start()
{
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 additional buffer
for(int i=0; i<limit; i++)
ind_buffer4[i]=iMA(NULL,0,FastEMA,0,MODE_EMA,PRICE_CLOSE,i)
-iMA(NULL,0,SlowEMA,0,MODE_EMA,PRICE_CLOSE,i);
//---- signal line counted in the 2-nd additional buffer
for(i=0; i<limit; i++)
ind_buffer5[i]=iMAOnArray(ind_buffer4,Bars,SignalSMA,0,MODE_EMA,i);
//---- main loop
double value=0;
for(i=0; i<limit; i++)
{
ind_buffer3a[i]=0.0;
ind_buffer3b[i]=0.0;
value=ind_buffer4[i]-ind_buffer5[i];
if (value>0) ind_buffer3a[i]=value;
if (value<0) ind_buffer3b[i]=value;
}
//---- done
return(0);
}
//+------------------------------------------------------------------+
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