It´s just the histogram of the MACD. (Actually it´s not a histogram, I like the Area visualisation more. But you can switch.)
When I´m using the MACD, I´m just searching for a divergence between Price and the MACD-histogram. I´m not interested in the MACD-signalline or the MACD-line in any way. As you can see, The omission of them leads to better visualisation. It´s much easier to spot a divergence. On the one hand because that way the histogram scales bigger, on the other hand becauce the lines can´t overdraw the histogram. Rules bullish Divergence: Price makes a lower low, oscillator makes higher low. Rules bearish Divergence: Price makes a higher high, oscillator makes lower high.
Do you know how to make "AUTO divergence" indicator ? Which can show divergence.
I try make it.. but it's hard.....
jgvansickle
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Thanks, nice divergence indicator, It seems fixated on 12,26,9 MACD settings for some reason. The code looks independent of the settings. I use 3,10,16 and many times presents a much clearer divergence, this does not always pick up the divergence, but some very clear divergence not picked up.