This indicator measures price momentum in a smoother and less noisy way than the traditional MACD. It uses special moving averages to filter out market noise.
This is the main line that measures momentum:
- How it works: Calculates the distance between the average price and its upper/lower bands
- Above zero: Bullish momentum (the price is above its normal range)
- Below zero: Bearish momentum (the price is below its normal range)
- At zero: No defined momentum (the price is within its normal range)
This is a smoothed moving average of the green line (9 periods):
- It acts as a filter to confirm trend changes
- It moves slower than the green line
These are the vertical bars that show the difference between the green line and the red line:
- Large bars: Large difference between current momentum and its average (strong momentum)
- Small bars: Little difference (weak or changing momentum)
- Growing histogram: Momentum is strengthening
- Decreasing histogram: Momentum is weakening
This is simply a visual reference to the zero level.
Bullish Signal:
- Green line crosses above red line
- Histogram goes from negative to positive
Bearish Signal:
- Green line crosses below red line
- Histogram goes from positive to negative
Divergences (important):
- Price makes higher highs, but indicator makes lower highs = possible bearish reversal
- Price makes lower lows, but indicator makes higher lows = possible bullish reversal
- lengthMA (34): Main period for calculating momentum bands
- lengthSignal (9): Period for smoothing the signal