Article/Author: Omega Research Inc., 1997

Download: MACD.ELA

Category: Indicator > Trend Identificator

Description:

The MACD indicator calculates 2 exponential moving averages of the lengths specified by the inputs FastMA and SlowMA. The difference between these 2 averages is then plotted as the MACD. This value is also averaged for the number of bars specified by the input MacdMA and then plotted as the MACDAvg. Finally, the difference between the MACD and the MACD average is calculated and plotted as the MADiff.

Usage:

As a trend-following indicator, the MACD may be interpreted similarly to other moving averages. When the MACD crosses above the MACD Average, an uptrend may be beginning, indicating a buy signal. Conversely, when the MACD crosses below the MACD Average, a downtrend may be beginning. As an oscillator, the MACD can signal overbought and oversold conditions.

INPUTS: FASTMA(12), SLOWMA(26), MACDMA(9); 



PLOT1(MACD(CLOSE, FASTMA, SLOWMA), "MACD");

PLOT2(XAVERAGE(MACD(CLOSE, FASTMA, SLOWMA), MACDMA), "MACDAVG");

PLOT3(PLOT1 - PLOT2, "MADIFF");



{ALERT CRITERIA}

IF PLOT3 CROSSES OVER 0 THEN

	ALERT("MACD HAS GENERATED A BULLISH ALERT")

ELSE

	IF PLOT3 CROSSES UNDER 0 THEN

		ALERT("MACD HAS GENERATED A BEARISH ALERT");