Momentum Composite Indicator
@CRYPTOSLIFE
This script creates a Momentum Composite Indicator (MCI) that combines four different momentum indicators: RSI, MACD, Stochastic Oscillator, and Rate of Change (ROC). Each of these indicators is calculated, normalized, and then combined with equal weights (25% each) to create the composite indicator. The script also includes a color change based on the change in the composite indicator's value.
Here's a brief explanation of the indicator:
Parameters: The script takes one input parameter, 'length,' which is used as the length for RSI, Stochastic Oscillator, and ROC calculations.
RSI: The Relative Strength Index (RSI) is calculated using the 'length' input parameter. The RSI is then normalized to range between 0 and 1.
MACD: The Moving Average Convergence Divergence (MACD) is calculated using the default lengths of 12, 26, and 9. The histogram is then computed as the difference between the MACD line and the signal line. The MACD histogram is normalized to range between 0 and 1.
Stochastic Oscillator: The Stochastic Oscillator is calculated using the 'length' input parameter, taking the lowest low and highest high over the specified period. The oscillator is then normalized to range between 0 and 1.
Rate of Change (ROC): The Rate of Change (ROC) is calculated using the 'length' input parameter. The ROC is then normalized to range between 0 and 1.
Composite Indicator: The normalized values of RSI, MACD, Stochastic Oscillator, and ROC are combined with equal weights to create the composite indicator.
Color Change: The line color changes based on the change in the composite indicator's value. If the value increases, the line color is green; if it decreases, the line color is red.
Plotting: The composite indicator is plotted on the chart with a linewidth of 5.
This Momentum Composite Indicator can help traders assess the overall momentum in the price movement of a financial instrument by combining the information from four popular momentum indicators.
This script creates a Momentum Composite Indicator (MCI) that combines four different momentum indicators: RSI, MACD, Stochastic Oscillator, and Rate of Change (ROC). Each of these indicators is calculated, normalized, and then combined with equal weights (25% each) to create the composite indicator. The script also includes a color change based on the change in the composite indicator's value.
Here's a brief explanation of the indicator:
Parameters: The script takes one input parameter, 'length,' which is used as the length for RSI, Stochastic Oscillator, and ROC calculations.
RSI: The Relative Strength Index (RSI) is calculated using the 'length' input parameter. The RSI is then normalized to range between 0 and 1.
MACD: The Moving Average Convergence Divergence (MACD) is calculated using the default lengths of 12, 26, and 9. The histogram is then computed as the difference between the MACD line and the signal line. The MACD histogram is normalized to range between 0 and 1.
Stochastic Oscillator: The Stochastic Oscillator is calculated using the 'length' input parameter, taking the lowest low and highest high over the specified period. The oscillator is then normalized to range between 0 and 1.
Rate of Change (ROC): The Rate of Change (ROC) is calculated using the 'length' input parameter. The ROC is then normalized to range between 0 and 1.
Composite Indicator: The normalized values of RSI, MACD, Stochastic Oscillator, and ROC are combined with equal weights to create the composite indicator.
Color Change: The line color changes based on the change in the composite indicator's value. If the value increases, the line color is green; if it decreases, the line color is red.
Plotting: The composite indicator is plotted on the chart with a linewidth of 5.
This Momentum Composite Indicator can help traders assess the overall momentum in the price movement of a financial instrument by combining the information from four popular momentum indicators.