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MACD Based Price Forecasting

Feb 22, 2024

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Forecasting
Oscillators
Cycle
Moving Averages
Works on the Following Platforms
tradingviewSymbolTradingView
For free use on the TradingView platform
ninjatraderNinjaTrader
For free use on the NinjaTrader platform
metatrader4MetaTrader 4
For free use on the MetaTrader 4 platform
metatrader5MetaTrader 5
For free use on the MetaTrader 5 platform
thinkorswimThinkorswim
For free use on the Thinkorswim platform

The MACD Based Price Forecasting tool is an innovative price forecasting method based on signals generated by the MACD indicator.

The forecast includes an area which can help traders determine the area where price can develop after a MACD signal.

USAGE

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The forecast returned by the tool allows users to obtain a general picture of how price tends to progress after a specific MACD signal. The forecast is constructed based on percentiles of previous price progressions done after a specific MACD signal is generated.

Users can change which condition is used to generate MACD signals from the "Trend Determination" dropdown menu, with "MACD" determining trends based on whether the MACD is positive (uptrend) or negative (downtrend) and "MACD-Signal" determining trends based on the position of the MACD relative to its signal line, with an MACD above the signal line indicating an uptrend, else a downtrend.

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Users can introduce bias to the forecast by changing the "Average Percentage" setting, with values above 50% introducing bullish bias, and below bearish bias.

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It can be possible for the forecast to highlight potential reversals depending on the selected forecasting horizon as long as reversals can be observed on trends detected by the MACD.

Forecasting Area

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The forecasting area can help visualize the area that will likely contain price after a specific signal. The area width is based on the "Top/Bottom Percentiles" settings, with a higher "Top Percentile" value returning a higher top bound and a lower "Bottom Percentile" value returning a lower bottom bound.

These areas can also serve as potential support/resistance areas.

SETTINGS

  • Fast Length: Fast length of the moving average used to compute the MACD
  • Slow Length: Slow length of the moving average used to compute the MACD
  • Signal Length: Length of the MACD moving average.
  • Trend Determination: Method used to determine a trend direction from the MACD.

Forecast

  • Maximum Memory: Determines the maximum amount of prices recorded at each steps succeeding a signal. Lower values will return forecasts with a higher degree of variability.
  • Forecasting Length: Forecasting horizon in bars, this value only serves as a limit of the forecasting horizon and might not be reached depending on user selected MACD settings.
  • Top Percentile: Percentile value used to determine the upper bound of the forecasting area.
  • Average Percentile: Percentile value used to determine the forecast.
  • Lower Percentile: Percentile value used to determine the lower bound of the forecasting area.

Trading is risky and many will lose money in connection with trading activities. All content on this site is not intended to, and should not be, construed as financial advice. Decisions to buy, sell, hold or trade in securities, commodities and other markets involve risk and are best made based on the advice of qualified financial professionals. Past performance does not guarantee future results.

Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, including, but not limited to, lack of liquidity. Simulated trading programs in general are designed with the benefit of hindsight, and are based on historical information. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.

As a provider of technical analysis tools for charting platforms, we do not have access to the personal trading accounts or brokerage statements of our customers. As a result, we have no reason to believe our customers perform better or worse than traders as a whole based on any content or tool we provide.

Charts used on this site are by TradingView in which the majority of our tools are built on. TradingView® is a registered trademark of TradingView, Inc. www.TradingView.com. TradingView® has no affiliation with the owner, developer, or provider of the Services described herein.

This does not represent our full Disclaimer. Please read our full disclaimer.

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