BB_MACD_v1.01
Download script
This custom technical indicator combines two popular trading methodologies—the Moving Average Convergence Divergence (MACD) and Bollinger Bands—into a single visual tool designed to help traders identify momentum shifts and potential trend reversals.
Core Functionality
The script analyzes price action by calculating the relationship between short-term and long-term price averages. It specifically focuses on the "velocity" of the market, looking for moments where the speed of price movement becomes extreme or begins to slow down.
How the Logic Works
1. Momentum Tracking (MACD Component) The tool first calculates a MACD line by finding the difference between two Exponential Moving Averages (EMAs). This helps the indicator understand the overall direction and strength of the current market trend.
2. Volatility Filtering (Bollinger Band Component) Instead of applying standard volatility rules to the price itself, this script applies them to the MACD values. It calculates a "moving average" of the MACD and determines the standard deviation (the "spread") of that movement. This creates two boundary lines:
- Upper Band: Represents an area of high-momentum strength.
- Lower Band: Represents an area of high-momentum weakness.
3. Visual Signals and Trend Identification The indicator provides clear visual cues on your chart to help distinguish between different market phases:
- Dynamic Movement: The script constantly compares the current MACD value against the previous one.
- Directional Highlights: It uses specific markers (arrows) to highlight changes in momentum. By checking if the current value is rising or falling relative to the previous bar, the script "filters" out certain signals, only showing relevant visual cues when a distinct shift in direction occurs.
- Boundaries: The solid lines on the indicator represent the volatility limits. When the MACD line pushes toward these boundaries, it suggests the market is reaching an extreme state that may be overextended.
Summary for the Trader
In essence, this tool allows you to see not just where the price is going, but how "stretched" the current momentum is. By combining momentum (MACD) with volatility limits (Bollinger Bands), it helps traders identify when a trend is gaining strength or when it may be becoming exhausted, providing a more comprehensive view of market dynamics than either indicator could provide alone.
//+------------------------------------------------------------------+
//| Custom BB_MACD.mq4 |
//| Copyright © 2005, adoleh2000 |
//| http://www.metaquotes.net/ |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2005, adoleh2000"
#property link "http://www.metaquotes.net/"
//---- indicator settings
#property indicator_separate_window
#property indicator_buffers 4
#property indicator_color1 Lime //bbMacd up
#property indicator_color2 Magenta //bbMacd up
#property indicator_color3 Blue //Upperband
#property indicator_color4 Red //Lowerband
//---- indicator parameters
extern int FastLen = 12;
extern int SlowLen = 26;
extern int Length = 10;
extern int barsCount = 400;
extern double StDv = 2.5;
//----
int loopbegin;
int shift;
double zeroline;
//---- indicator buffers
double ExtMapBuffer1[]; // bbMacd
double ExtMapBuffer2[]; // bbMacd
double ExtMapBuffer3[]; // Upperband Line
double ExtMapBuffer4[]; // Lowerband Line
//---- buffers
double bbMacd[];
double Upperband[];
double Lowerband[];
double avg[];
double bbMacdline;
double sDev;
double mean;
double sumSqr;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- 6 additional buffers are used for counting.
IndicatorBuffers(8);
//---- drawing settings
SetIndexBuffer(0, ExtMapBuffer1); // bbMacd line
SetIndexStyle(0, DRAW_ARROW);
SetIndexArrow(0, 108);
IndicatorDigits(Digits + 1);
//----
SetIndexBuffer(1, ExtMapBuffer2); // bbMacd line
SetIndexStyle(1, DRAW_ARROW);
SetIndexArrow(1, 108);
IndicatorDigits(Digits + 1);
//----
SetIndexBuffer(2, ExtMapBuffer3); // Upperband line
SetIndexStyle(2, DRAW_LINE, STYLE_SOLID, 1);
IndicatorDigits(Digits + 1);
//----
SetIndexBuffer(3, ExtMapBuffer4); // Lowerband line
SetIndexStyle(3, DRAW_LINE, STYLE_SOLID, 1);
IndicatorDigits(Digits + 1);
//----
SetIndexBuffer(4, bbMacd);
SetIndexBuffer(5, Upperband);
SetIndexBuffer(6, Lowerband);
SetIndexBuffer(7, avg);
//---- name for DataWindow and indicator subwindow label
IndicatorShortName("BB MACD(" + FastLen + "," + SlowLen + "," + Length+")");
SetIndexLabel(0, "bbMacd");
SetIndexLabel(1, "Upperband");
SetIndexLabel(2, "Lowerband");
//---- initialization done
return(0);
}
//+------------------------------------------------------------------+
//| Custor indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom BB_MACD |
//+------------------------------------------------------------------+
int start()
{
int limit;
int counted_bars = IndicatorCounted();
if(counted_bars < 0) return(-1);
if(counted_bars > 0) counted_bars--;
if (barsCount > 0)
limit = MathMin(Bars - counted_bars,barsCount);
else limit = Bars - counted_bars;
//----
for(int i = 0; i < limit; i++)
bbMacd[i] = iMA(NULL, 0, FastLen, 0, MODE_EMA, PRICE_CLOSE, i) -
iMA(NULL, 0, SlowLen, 0, MODE_EMA, PRICE_CLOSE, i);
//----
for(i = 0; i < limit; i++)
{
avg[i] = iMAOnArray(bbMacd, 0, Length, 0, MODE_EMA, i);
sDev = iStdDevOnArray(bbMacd, 0, Length, MODE_EMA, 0, i);
Upperband[i] = avg[i] + (StDv * sDev);
Lowerband[i] = avg[i] - (StDv * sDev);
ExtMapBuffer1[i]=bbMacd[i]; // Uptrend bbMacd
ExtMapBuffer2[i]=bbMacd[i]; // downtrend bbMacd
ExtMapBuffer3[i]=Upperband[i]; // Upperband
ExtMapBuffer4[i]=Lowerband[i]; // Lowerband
//----
if(bbMacd[i] > bbMacd[i+1])
ExtMapBuffer2[i] = EMPTY_VALUE;
//----
if(bbMacd[i] < bbMacd[i+1])
ExtMapBuffer1[i] = EMPTY_VALUE;
}
//---- done
return(0);
}
//+------------------------------------------------------------------+
Comments