The Moving Average Convergence Divergence consists of three elements: two moving averages (the line and the signal line) and a histogram. The blue line is the difference between a longer and a shorter (here 13 and 21 periods preset), the red signal line is an (here 8 preset) on the line. The histogram (green: ascending, red: descending) shows the difference between both lines.
As soon as the blue line crosses the red signal line, circles are generated that indicate an up/down trend. If the red signal line is greater than or equal to the blue line, this indicates a downward trend (red circle). If the blue line is greater than or equal to the red signal line, this indicates an upward trend (green circle).
The special thing about this indicator is the many setting options, especially the definition of the MA variants for (Fast, Slow) and signal. You can define the following MA types: "COVWMA", "DEMA", "EMA", "EHMA", "FRAMA", "HMA", "KAMA", "RMA", "SMA", "SMMA", "VIDYA", "VWMA", "WMA".
You also have the following display options:
- "Up/Down Movements: On/Off" - Shows ascending and descending , signal lines
- "Up/Down Movements: Rising Length" - Defines the length from which ascending or descending lines are detected
- "Bands: On/Off" - Fills the space between and signal lines with colors to indicate up or down trends
- "Bands: Transparency" - sets the transparency of the fill color
Disclaimer: I am not a financial advisor. For purpose educate only. Use at your own risk.
- PineScript 4 compatibility increased. Deprecated attribute "transp" replaced by function color.new()
- Update function "funcSMMA()": extract the call of the the function 'sma' from the ternary operator
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.