MACD Histogram Multi Timeframe Multi Color Indicator for MT5

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MACD Histogram Multi Timeframe Multi Color Indicator for MT5

Introduction to the MACD Histogram Multi Timeframe Multi Color Indicator

Seasoned traders know how important it is to trade based on the confluence of multiple timeframes. This is because trading based such confluences allow for trade setups which have significantly higher win probabilities compared to trade signals with no confluences. This indicator allows users to analyze momentum based on multiple timeframes using a MACD oscillator.

What is the MACD Histogram Multi Timeframe Multi Color Indicator?

The MACD Histogram Multi Timeframe Multi Color Indicator is a momentum oscillator which is a modified version of the classic Moving Average Convergence and Divergence (MACD) Indicator.

This indicator modifies the MACD by having the option to calculate the MACD values based on a different timeframe.

This indicator plots a blue line, which is the MACD Line, and red line, which is the Signal Line. It also plots histogram bars which change color.

MACD Histogram Multi Timeframe Multi Color Indicator for MT5

This oscillator indicates a bullish momentum direction whenever the MACD Line is above the Signal Line and the bars are positive. Inversely, it also indicates a bearish momentum whenever the MACD Line is below the Signal Line and the bars are negative.

Green bars also indicate a bullish momentum direction, while red bars indicate a bearish momentum direction.

How the MACD Histogram Multi Timeframe Multi Color Indicator Works?

The MACD Histogram Multi Timeframe Multi Color Indicator has an algorithm which calculates for the MACD Line based on the timeframe chosen by the user. Just like the standard MACD, it has two underlying Exponential Moving Average (EMA) with one faster than the other. It calculates for the difference between the two and its resulting value would be a point on the MACD Line. It then calculates for the Signal Line, which is a Simple Moving Average (SMA) derived from the MACD Line.

The histogram bars are basically the difference between the MACD Line and the Signal Line. The indicator plots green bars whenever the value of the current bar is higher than the previous bar, and red bars if the value of the current bar is lower than the previous bar.

How to use the MACD Histogram Multi Timeframe Multi Color Indicator for MT5

The MACD Histogram Multi Timeframe Multi Color Indicator has several modifiable options within its settings.

How to use the MACD Histogram Multi Timeframe Multi Color Indicator for MT5

“Timeframe 2” allows users to select the timeframe in which the indicator is based on.

“Fast EMA period” and “Slow EMA period” modifies the number of periods which the indicator uses for its underlying EMA lines.

“Singal MA period” modifies the number of periods used to calculate for the Signal Line.

“Applied MA method for signal line” allows users to modify the moving average type used for the Signal Line.

If the indicator does not display properly, modify the “Timeframe 2” option preferably on a higher timeframe.

MACD Histogram Multi Timeframe Multi Color Indicator as a Trade Direction Filter

This indicator is best used as a trend direction filter. Traders may identify the direction of the higher timeframe trend or momentum and trade exclusively in the direction indicated by the oscillator.

Below are charts showing markets with an uptrend and downtrend momentum as indicated by the higher timeframe MACD values.

MACD Histogram Multi Timeframe Multi Color Indicator as a Trade Direction Filter - Uptrend

MACD Histogram Multi Timeframe Multi Color Indicator as a Trade Direction Filter - Downtrend

Conclusion

This indicator can be a very useful multi timeframe indicator. Traders can have higher probability trades simply by trading in the direction of the higher timeframe momentum as indicated by this oscillator. However, the precise trade entries should still be based on other technical analysis indications.

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MACD Histogram Multi Timeframe Multi Color Indicator for MT5

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