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MACD Signal Line - %Ds Hook

 

Since TradeStation's standard MACD indicators only use bar lengths for EMA1, EMA2 and the signal line, we have designed the AlchemyMACD Indicator which contains inputs that can be entered either as bar lengths OR as smoothing factor percentages. This eliminates the need for any conversion from smoothing factors to bar lengths that would result in MACD's that never precisely match.  Additionally, with our AlchemyMACD Indicator, the moving average types for the fast and slow moving averages of the MACD as well as the MACD average can be specified, therefore these averages are not limited to exponential averages as with the standard TradeStation MACD.  We offer 5 different types of moving averages, a simple moving average, an exponential moving average, a weighted moving average, a smoothed moving average and a triangular moving average, to be selected separately for the fast moving average of the MACD, the slow moving average of the MACD as well as the MACD average.

The Alchemy %Ds Hook Indicator uses a formula that is different from TradeStation's standard DSlow calculation to optimally work with divergence. It also points out hooks by changing plot colors and it contains a user-defined input that sets a minimum slope for a hook requirement.

The Signal Line-%Ds Hook Divergence Indicators are made up of the AlchemyPriceDivergence Indicator, the AlchemySignalLineDivergence Indicator and the AlchemyDsHookDivergence Indicator. These multiple divergence indicators pick the most significant reversal points by combining the %Ds and the MACD Signal Line. These unique indicators find all of the price pivots that only correlate to %Ds hooks and MACD Signal Line peaks/valleys, therefore filtering out any unnecessary noise. The indicators only mark the price pivots that diverge with both oscillators. By confirming the divergence with %Ds AND the MACD Signal Line, the reliability for a price reversal is greatly increased. The indicators mark the divergence points on %Ds, price and the MACD signal line in magenta and they color the previous pivot points that are associated with the divergence pivot on %Ds, price and the MACD Signal Line in yellow. This makes it very easy to quickly identify all of the corresponding pivots. The AlchemyDsHookDivergence Indicator colors all of the hooks that are associated with any divergence pivots.

What is divergence?


Divergence occurs when %Ds and the MACD Signal Line is giving you an indication as to direction that is different from the direction that price is moving. For example, price is heading higher and the indicators are heading lower. Divergence occurs when the higher price is not confirmed by a higher indicator reading.

Types of divergence:

Bullish Divergence - occurs when price is making a lower low and the indicator is making a higher low, failing to move to a new low with price. This is a great sign of a potential bottom and many traders look deeper for confirmation of a buy signal when bullish divergence occurs. Often times, you will see bullish divergence correspond with the low of the day.

Bearish Divergence - occurs when price is making a higher high and the indicator is making a lower high, failing to move to a new high with price. This is a great sign of a potential top and many traders look deeper for confirmation of a sell signal when bearish divergence occurs. Often times, you will see bearish divergence correspond with the high of the day.

Bullish and bearish divergence is a great tool for the intra-day trader. However, spotting actual divergence with price and the indicator can be a very tedious and inconsistent task for most traders. With the Alchemy Divergence Indicators all the difficult and tedious measuring are done for you in a very visual and consistent manner. This allows the trader to concentrate on possible trade set-ups and trade confirmation signals.

 

View Other Charts 

Bar Pattern Analysis

Breakout

Divergence

Engulfment & Reversal

Fibonacci Retracements

Floor Traders Mid Points

Floor Traders Pivot Points

Gap

High Low Mid Points

Intraday Time Zones

MACD Signal Line-%Ds Hook

Multiple Moving Averages Crossover

Open/High/Low/Close

Overbought/Oversold

Rolling Floor Traders Pivot Points

Strong Trend

Support & Resistance Pivot Points

Trailing Stop

Trend Catcher

Read More About

Bar Pattern Analysis

Breakout

Divergence

Engulfment & Reversal

Fibonacci Retracements

Floor Traders Mid Points

Floor Traders Pivot Points

Gap

High Low Mid Points

Intraday Time Zones

MACD Signal Line-%Ds Hook

Multiple Moving Averages Crossover

Open/High/Low/Close

Overbought/Oversold

Rolling Floor Traders Pivot Points

Strong Trend

Support & Resistance Pivot Points

Trailing Stop

Trend Catcher

 

     
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or recommended, and neither does or will review, certify, endorse, approve, disapprove or recommend, any trading
software tool that is designed to be compatible with the TradeStation Open Platform.

 

IMPORTANT INFORMATION:
Government regulations require disclosure of the fact that past performance, whether actual or indicated by historical tests of strategies or indicator methods, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options futures or forex); therefore, you should not invest or risk money that you cannot afford to lose. Any advisory or signal generated by Trading Alchemy indicators or strategies is provided for educational purposes only and any trades placed upon reliance on Trading Alchemy indicators or strategies are taken at your own risk for your own account. Consult your broker or advisor prior to making any investment decisions. The information made available on this Website is not an offer to buy or sell securities, securities derivative, futures products or off-exchange foreign currency (forex) transactions of any kind.  All proprietary technology of Trading Alchemy indicators and strategies is owned by Alchemy Trading Technologies, Inc.

 

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