MACD Trail | Flux Charts

Aug 9

💎GENERAL OVERVIEW
Introducing our new MACD Trail indicator! Moving average convergence/divergence (MACD) is a well-known indicator among traders. It's a trend-following indicator that uses the relationship between two exponential moving averages (EMAs). This indicator aims to use MACD to generate a trail that follows the current price of the ticker, which can act as a support / resistance zone. More info about the process in the "How Does It Work" section.



Features of the new MACD Trail Indicator :

1. A Trail Generated Using MACD Calculation
   
2. Customizable Algorithm
   
3. Customizable Styling
   
   📌HOW DOES IT WORK ?
   First of all, this indicator calculates the current MACD of the ticker using the user's input as settings. Let X = MACD Length setting ;
   
   MACD ~= X Period EMA - (X * 2) Period EMA
   
   Then, two MACD Trails are generated, one being bullish and other being bearish. Let ATR = 30 period ATR (Average True Range)
   
   Bullish MACD Trail = Current Price + MACD - (ATR * 1.75)
   Bearish MACD Trail = Current Price + MACD + (ATR * 1.75)
   
   The indicator starts by rendering only the Bullish MACD Trail. Then if it's invalidated (candlestick closes below the trail) it switches to Bearish MACD Trail. The MACD trail switches between bullish & bearish as they get invalidated.
   
   The trail type may give a hint about the current trend of the price action. The trail itself also can act as a support / resistance zone, here is an example :
   
   
   
   🚩UNIQUENESS
   While MACD is one of the most used indicators among traders, this indicator aims to add another functionality to it by rendering a trail based on it. This trail may act as a support / resistance zone as described above, and gives a glimpse about the current trend. The indicator also has custom MACD Length and smoothing options, as well as various style options.
   
   
   
   ⚙️SETTINGS
   
   1. General Configuration
   
   MACD Length -> This setting adjusts the EMA periods used in MACD calculation. Increasing this setting will make MACD more responseive to longer trends, while decreasing it may help with detection of shorter trends.
   
   Smoothing -> The smoothing of the MACD Trail. Increasing this setting will help smoothen out the MACD Trail line, but it can also make it less responsive to the latest changes.