The MACD KC Lines indicator is built from a standard MACD indicator with Keltner Channels added to the signal line. The MACD values are shown as dots. During an uptrend the MACD dots will print above the upper Keltner Band. Accordingly, MACD dots print below the lower Keltner Band for a downtrend.
Indicator Description
The MACD KC Lines indicator allows for identifying four trend states:
- First Trend State: MACD rising and above upper Keltner Band (uptrend)
- Second Trend State: MACD rising and below upper Keltner Band (neutral)
- Third Trend State: MACD falling and below lower Keltner Band (downtrend)
- Fourth Trend State: MACD falling and above lower Keltner Band (neutral)
The four trend states correspond to the MACD colored dots. The trend is available as a public property and can be accessed via strategies and other indicators.
A bullish trend is more likely to persist when it starts near or slightly above the MACD zeroline. A bearish trend is more likely to persist when it starts near or slightly below the MACD zeroline.
The MACD KC Lines comes with paint bars, visual and sound alerts. The alerts allow for detecting breakouts from the Keltner Channel and zeroline crosses.
Other Library Indicators
Our library also features the MACD BB Lines, Multiple MACD, the Gapless MACD and the Gapless Keltner Channel. The MACD KC Lines is best used when aligned with a higher timeframe trend / momentum bias. For a few suggestions on how to do that, please review our Indicator Spotlights on the TDI indicator, the Donchian Channel or the Heikin Ashi bars. The Traders Dynamic Index, Donchian Channel and the Heikin Ashi indicator are all available from the indicator library.
You may also increase the probability of successful trades by “buying support and selling resistance”. Additional information on that can be found in our Indicator Spotlights on the Daily Pivot Levels. A variety of Pivot indicators are available from the Session Tools category, including the Standard Daily Pivots. Finally, you may consider managing positions by using the Wilders Volatility Stop. Other trailing stop indicators are available from the Trailing Stops category.
Our Indicator Spotlight has also reviewed other indicators from our Channel Indicators category, namely the Regression Channel and the Squeeze indicator (the dizygotic twin of the Squeeze Channel indicator). Finally, the Ichimoku Kinko Hyo, also discussed in our Indicator Spotlight, has certain similarities with the MACD.
Finally, in our Indicator Spotlight on the Z-score we discussed how to create a fixed scale for the Awesome Oscillator. Specifically, the post discussed how the Z-score can be used to create a fixed scale for an Awesome Oscillator strategy. The same can be achieved with the MACD and is particularly useful if you want to create testable entry and exit conditions for trading systems.
The indicator is available for NinjaTrader 8.
