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The MACD-V was created by Alex Spiroglou, CFTe, DipTA (ATAA), to overcome the issues/challenges of conventional range-bound indicators such as the RSI and Stochastic Oscillator and boundless indicators such as the Moving Average Convergence/Divergence (MACD) and Rate of Change (ROC). Spiroglou discovered the indicator in 2015 and publicized it in 2022 in the form of a research paper, which received the Founders Award for Advances in Active Investment Management from the National Association of Active Investment Managers (NAAIM) and the Charles H. Dow Award for outstanding research in technical analysis from the Chartered Market Technicians (CMT) Association.
Conventional range-bound indicators have a bounded scaling (0 – 100) and can't expand with the market. Therefore, they get “pegged” at high/low levels during strong market moves. They also get “skewed” by market trends. Because of their normalized scaling, they're comparable across markets and time.
Boundless indicators are absolute price indicators and cannot be comparable across markets and time. However, because of their unbounded nature, they can expand with the market. Boundless indicators present a truer form of momentum.
Spiroglou created a hybrid indicator that was the “best of these two worlds”—a boundless indicator with normalized scaling. He normalized the MACD by volatility, creating a momentum lifecycle model, and also addressing the following five limitations of the MACD:
The MACD-V is based on the Moving Average Convergence-Divergence (MACD). What's different is that it incorporates volatility into its calculations.
MACD-V =[(12-period EMA - 26-period EMA) / ATR (26)] * 100 Signal line = 9-period EMA of MACD-V Histogram = MACD-V - Signal Line where EMA = exponential moving average
The MACD-V has the following advantages:
The MACD-V can open the door to several pattern recognition strategies. The basic use is to help identify the following core seven momentum stages:
You can design several setups based on the seven ranges mentioned above. Spiroglou created a more powerful version of the MACD-V that doesn't use the signal line. This makes the indicator quicker to signal momentum changes and locate highs/lows in the indicator for advanced pattern recognition strategies.
The MACD-V indicator is available as a standard indicator in StockCharts ACP.
To access it:
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