Visual MACD Indicator

The visual MACD is a modified version of the traditional MACD and helps find market trends. The indicator highlights the trend by using two moving averages.

What is the Visual MACD Indicator?

The Visual MACD identifies the strength and momentum of a trend. It plots two moving averages and highlights when the trend is about to change. These moving averages are for a shorter and longer period.  The indicator illustrates purple bars for the bullish trend and maroon color bars for the bearish trend.

The indicator differs from the traditional MACD, which plots a histogram to find the market divergences. Also, it plots the signal lines on the chart rather than a bottom window.

Visual MACD
Visual MACD

Visual MACD Indicator Strategy

The Visual MACD has a simple strategy. To trade with the indicator, you only need to locate the purple and maroon bars.

When the trend changes from maroon to purple bars, it signals that bears have exhausted, and there can be a bullish reversal. Conversely, when the trend changes from purple to maroon bars, it’s a sign that bulls have exhausted, and there can be bearish reversals.

You can also apply other technical analysis or indicators to find trends and market divergences. For instance, a bullish divergence between the RSI and the Visual MACD occurs when the RSI makes a higher low while the Visual MACD makes a lower low. Conversely, a bearish divergence between the RSI and the Visual MACD occurs when the RSI makes a lower high while the Visual MACD makes a higher high.

The good thing is Visual MACD can be applied to all timeframes. However, it’s better to locate the trend on longer timeframes for short-term strategies to get an overall idea of the market.

Buy signal

  • The indicator must plot purple bars.
  • Wait for the trend to continue and then enter.
  • Place a stop-loss at the recent low.
  • Set take-profit at the previous high or exit the trade when the marron bars appear.
Visual MACD buy signal
Visual MACD buy signal

Sell signal

  • The indicator must plot maroon bars.
  • Wait for the trend to continue and then enter.
  • Place a stop-loss at the recent high.
  • Set take-profit at the previous low or exit the trade when the purple bars appear.
Visual MACD sell signal
Visual MACD sell signal

Visual MACD Pros and Cons

Here are the pros and cons of the indicator:

Pros

  • The visual representation of the Visual MACD makes it simple to identify trends, momentum shifts, and potential entry and exit points.
  • The indicator is an effective tool for traders looking for a simple yet effective way to identify potential trading opportunities.
  • The Visual MACD indicator can be customized to suit individual traders’ preferences and trading styles.

Cons

  • The Visual MACD Indicator is based on past price data and may not provide timely on shorter timeframes.

Conclusion

The Visual MACD is a modified version of the traditional MACD and plots moving averages and bars to identify the market trend. The indicator helps determine key market reversals and can be applied to multiple strategies.

Free Forex Robot