Percentile Rank of Moving Average Convergence Divergence

23 thg 9, 2022

This simple indicator provides you three useful information of the Moving Average Convergence Divergence (MACD) indicator:

• The percentile rank of the current value of the MACD line, displayed by the bright blue line.
  
• The percentile rank of the current value of the Signal line, displayed by the dark blue line.
  
• The percentile rank of the current value of the Histogram line, displayed by the olive histogram.
  

This indicator can be useful to identify the strength of trend. This indicator makes the assumption that market tends to revert into the opposite direction. If the market has been trending a lot, it should consolidate for a while later. If the market has been consolidating for a long time, it would begin trending real soon.

When we see a low percentile rank, no matter which line it is, this tells that the market hasn't been moving much, or there is little momentum. If the percentile rank stays below the median or even below the first quartile for a long time, this could suggest that the market is ready for the next trend since it has stored quite some energy.

When we see a high percentile rank, no matter which line it is, this tells that the market has been trending a lot, or there is much momentum. If the percentile rank stays above the median or even above the third quartile for a long time, it is probable that the market has used up much of its energy and is going to take a rest (consolidate).

23 thg 9, 2022

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