fmacd
calculates the difference between a "slow" EMA and a "fast" EMA and plots the difference and
an EMA of that difference as a signal line. If the MACD is above the zero line and the
MACD line is above its EMA signal line an equity is said to be "trending" upwards. Some
traders use MACD crossovers as entry and exit trigger points for positions. The difference
between the MACD line and its EMA signal Line is plotted as a histogram on the same chart
with the MACD lines. When the histogram is above zero and green the MACD line is above the EMA
signal line. If it is below zero and red then the MACD is below the signal line. The MACD line is
plotted as a thin red line and the signal line as a thin blue line. MACD is a momentum indicator.
The histogram is plotted at an enhanced scale for better viewing
so no reliance should be placed on the histogram
value. The relative scale between histogram values is correct, however. Since the relative scale
is correct, the histogram can be safely used as a divergence indicator. The MACD line scales
are on a 1:1 scale.
The View title displays the name of the indicator and the smoothing periods, the
MACD lookback period and an EMA signal line lookback period.
The Titlebar Chart Code for this indicator is macd. (see EAS Titlebar Chart Codes)
Inputs
p1p2 are the lookback periods for the "fast" and "slow" EMA's used
to calculate the MACD line. p0 defines the EMA signal line lookback period.
Output Data & Plotting
returnflag is set to "data" a (b-a+1)-row by 3-column matrix of data
will be returned. The output is only valid for data points beyond the
lookback period, p0macd+p2macd, in time. The first column of the output is
the value of the MACD line at any given point in time, the second column is the value of the
EMA signal line and the third column is the value of the difference between the MACD line and
the signal line. The third value is what defines the MACD histogram. The MACD histogram raw
data is returned, rather than the enhanced scale data.
| Stockcharts.com MACD |
| Clearstation.com Reading Graphs |
| Equis.com MACD |
| "Technical Analysis Explained, 3rd Ed", by Pring, McGraw/Hill, 1991 |
| "The Visual Investor", by Murphy, Wiley, 1996 |