MACD Wave Strength For ThinkOrSwim

[Thinker]

I created this new MACD indicator yesterday, so I can't vouch for it yet. I'd love to see people's thoughts and possible tweaks to improve it if it seems interesting to anyone.

I am not a coder, but I'm good with AI. The indicator I'm going to show was created by me working with AI to get a good swing trading indicator (not a standalone indicator to make trading decisions).

When I use MACD, I change the settings to 8/17/9 instead of the default settings. I've back tested my settings versus the standard ones and have seen better results. I also subscribe to VectorVest that allows quick proprietary back testing, and my settings also show better results than the standard ones. I asked AI if my settings make sense, and it said they do (keep in mind that AI tends to be very complimentary, so take its answers to my questions with that in mind).

The other way I use MACD is to compare the size of the histograms to the size of a prior histograms during moves. I asked AI if that's a good way to use MACD, and it responded that it's the best way to use it.

When I started asking AI to create a workable code for ThinkScript, the first attempts contained multiple errors that I eventually got corrected. The more I threw at AI, the more complex the indicator became.

The "final" version does not repaint though the current one-hour bar will repaint until the bar closes.

This indicator is non-repainting (closed bars do not change) and is intended as a momentum quality filter, not a standalone buy/sell signal. It works best when combined with trend and location tools such as EMAs and VWAP to help avoid low-quality breakouts and manage continuation trades."

I haven't used VWAP, so I need to look into that as an indicator to use with the new MACD I'm about to post. With the new MACD, I mentioned I also use three EMAs (5, 8, and 21); AI said those are great indicators to use as complementary, confirming indicators.

See the next post for updated code.

 

[antwerks]

I have combined the strength interpretation into one of the ones I use.
This is extremely powerful I think.

mod note:
How to Use the Updated MACD Hybrid
The updated MACD Hybrid is a momentum dashboard. It doesn’t tell you when to enter — it tells you whether the environment is helping you, hurting you, or warning you. Use it to confirm the strength behind your idea, not to generate the idea itself.

Histogram — Momentum Read

Bright Green	Strong upside push	Longs have wind at their back.
Dark Green	Upside slowing	Don’t chase; tighten risk.
Bright Red	Strong downside push	Shorts have wind at their back.
Dark Red	Downside slowing	Don’t chase; tighten risk.

Zero‑Line Cross Arrows — Momentum Shift Alert

Cyan Up Arrow	Momentum turning up from weak territory	Confirms long ideas already forming.
Magenta Down Arrow	Momentum turning down from strong territory	Confirms short ideas already forming.

High‑Volume Spike — Conviction Check

White Up Arrow

Volume is unusually high

Treat moves as higher‑conviction; confirms follow‑through potential.

Divergence — Early Warning System

Bullish Divergence	Price makes a lower low but momentum doesn’t	Watch for reversal setups; don’t pre‑empt.
Bearish Divergence	Price makes a higher high but momentum doesn’t	Watch for exhaustion; protect profits.

Wave Strength — Trend Quality Meter

Strong Bull Wave	Current push is stronger than the last	Favor continuation longs.
OK Bull Wave	Normal bullish pressure	Safe to follow if structure agrees.
Strong Bear Wave	Current drop is stronger than the last	Favor continuation shorts.
OK Bear Wave	Normal bearish pressure	Safe to follow if structure agrees.
Neutral	No active wave	Don’t rely on MACD here; use structure.

Momentum Slope — “Is It Getting Better or Worse?” Meter

Positive	Momentum improving	Hold winners; continuation likely.
Negative	Momentum fading	Avoid chasing; expect hesitation.

MACD Line Above/Below Zero — Bias Filter

Above Zero	Bullish backdrop	Longs have tailwind.
Below Zero	Bearish backdrop	Shorts have tailwind.

How MACD Hybrid Fits Into Your 3‑Chart Workflow

Timeframe	How MACD Hybrid Helps
High Timeframe	Adds almost nothing; structure does the heavy lifting here.
Middle Timeframe	This is where it shines; confirms whether the environment supports your idea.
Short Timeframe	Too slow; always late. Use structure for timing instead.

Putting It All Together

Situation	What to Look For	What It Tells You
Thinking Long	Green bars, positive slope, MACD above zero, volume spike	Environment supports longs.
Thinking Short	Red bars, negative slope, MACD below zero, volume spike	Environment supports shorts.
Avoiding Trouble	Dark colors, fading slope, no volume	Weak conditions; wait.
Watching for Reversal	Divergence + slowing colors	Prepare, don’t jump early.
Riding a Trend	Strong wave + matching histogram	Trend has quality; stay with it.

DECLARE LOWER;

############################
# === MACD CORE (Script 2) ===
############################
input fastLength = 12;
input slowLength = 26;
input MACDLength = 9;
input averageType = AverageType.EXPONENTIAL;

input HighVolume = yes;
input VolumeAveragingLength = 20;
input VolumePercentThreshold = 60;

plot Value = MovingAverage(averageType, close, fastLength) -
             MovingAverage(averageType, close, slowLength);
plot Avg = MovingAverage(averageType, Value, MACDLength);
plot Diff = Value - Avg;
plot ZeroLine = 0;

ZeroLine.SetDefaultColor(GetColor(0));

Value.SetDefaultColor(GetColor(1));
Avg.SetDefaultColor(GetColor(8));
Diff.SetPaintingStrategy(PaintingStrategy.HISTOGRAM);
Diff.SetLineWeight(3);

Diff.DefineColor("Positive and Up", Color.GREEN);
Diff.DefineColor("Positive and Down", Color.DARK_GREEN);
Diff.DefineColor("Negative and Down", Color.RED);
Diff.DefineColor("Negative and Up", Color.DARK_RED);

Diff.AssignValueColor(
    if Diff >= 0 then
        if Diff > Diff[1] then Diff.Color("Positive and Up")
        else Diff.Color("Positive and Down")
    else
        if Diff < Diff[1] then Diff.Color("Negative and Down")
        else Diff.Color("Negative and Up")
);

#################################
# === HIGH VOLUME LOGIC (Script 2)
#################################
def aVol = Average(volume, VolumeAveragingLength);
def pVol = 100 * ((volume - aVol[1]) / aVol[1]);
def HV = pVol >= VolumePercentThreshold and HighVolume;

plot HiVolArrow = if HV then 0 else Double.NaN;
HiVolArrow.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
HiVolArrow.SetDefaultColor(Color.WHITE);
HiVolArrow.HideTitle();
HiVolArrow.HideBubble();

#################################
# === SIGNALS & ALERTS (Script 2)
#################################
def ValueCrossBelowZeroline = Value[1] < Avg[1] and Value[1] < 0 and Value > Avg;
plot belowZeroCross = if ValueCrossBelowZeroline then Value else Double.NaN;
belowZeroCross.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
belowZeroCross.SetDefaultColor(Color.CYAN);

def ValueCrossAboveZeroline = Value[1] > Avg[1] and Value[1] > 0 and Value < Avg;
plot aboveZeroCross = if ValueCrossAboveZeroline then Value else Double.NaN;
aboveZeroCross.SetPaintingStrategy(PaintingStrategy.ARROW_DOWN);
aboveZeroCross.SetDefaultColor(Color.MAGENTA);

Alert(aboveZeroCross, "ValueCrossAboveZeroline", Alert.BAR, Sound.Bell);
Alert(belowZeroCross, "ValueCrossBelowZeroline", Alert.BAR, Sound.Ding);

#################################
# === LABELS (Script 2)
#################################
AddLabel(yes,
    "MACD Momentum: " + Round(Diff, 2),
    if Diff >= 0 then
        (if Diff > Diff[1] then Color.GREEN else Color.DARK_GREEN)
    else
        (if Diff < Diff[1] then Color.RED else Color.DARK_RED)
);

AddLabel(yes,
    if Value > 0 then "MACD Line Above Zero" else "MACD Line Below Zero",
    if Value > 0 then Color.GREEN else Color.RED
);

AddLabel(HV, "High Volume Spike", Color.YELLOW);

def StrongBullishSignal = belowZeroCross and HV;
AddLabel(StrongBullishSignal, "Strong Bullish Signal (MACD + Volume)", Color.LIGHT_GREEN);

def momentumSlope = Diff - Diff[1];
AddLabel(yes,
    "Momentum Slope: " + Round(momentumSlope, 2),
    if momentumSlope > 0 then Color.GREEN else Color.RED
);

#################################
# === DIVERGENCE (Script 2)
#################################
def priceHigh = high > high[1] and high > high[2];
def priceLow  = low  < low[1]  and low  < low[2];

def macdHigh = Diff > Diff[1] and Diff > Diff[2];
def macdLow  = Diff < Diff[1] and Diff < Diff[2];

def priceHigh1 = if priceHigh then high else priceHigh1[1];
def priceLow1  = if priceLow  then low  else priceLow1[1];
def macdHigh1  = if macdHigh  then Diff else macdHigh1[1];
def macdLow1   = if macdLow   then Diff else macdLow1[1];

def bullishDiv = low  < priceLow1  and Diff > macdLow1;
def bearishDiv = high > priceHigh1 and Diff < macdHigh1;

AddLabel(bullishDiv, "Bullish Divergence", Color.GREEN);
AddLabel(bearishDiv, "Bearish Divergence", Color.RED);

#################################################
# === WAVE STRENGTH LOGIC (FROM SCRIPT 1 – ADDED)
#################################################
input strongPct = 120;
input okPct     = 95;

def bullWave = Diff > 0;
def bearWave = Diff < 0;

def bullStart = Diff crosses above 0;
def bearStart = Diff crosses below 0;

def bullEnd = Diff crosses below 0;
def bearEnd = Diff crosses above 0;

# Current wave peak
def curBullPeak =
    CompoundValue(1,
        if bullStart then Diff
        else if bullWave then Max(curBullPeak[1], Diff)
        else curBullPeak[1],
    Diff);

def curBearPeakAbs =
    CompoundValue(1,
        if bearStart then AbsValue(Diff)
        else if bearWave then Max(curBearPeakAbs[1], AbsValue(Diff))
        else curBearPeakAbs[1],
    AbsValue(Diff));

# Previous completed wave peaks
def prevBullPeak =
    CompoundValue(1,
        if bullEnd then curBullPeak[1] else prevBullPeak[1],
    Double.NaN);

def prevBearPeakAbs =
    CompoundValue(1,
        if bearEnd then curBearPeakAbs[1] else prevBearPeakAbs[1],
    Double.NaN);

# Percent strength
def bullPct =
    if prevBullPeak > 0 then (curBullPeak / prevBullPeak) * 100 else Double.NaN;

def bearPct =
    if prevBearPeakAbs > 0 then (curBearPeakAbs / prevBearPeakAbs) * 100 else Double.NaN;

# Wave strength label
AddLabel(yes,
    if bullWave and !IsNaN(bullPct) then
        "BULL Wave Strength: " + Round(bullPct, 0) + "%"
    else if bearWave and !IsNaN(bearPct) then
        "BEAR Wave Strength: " + Round(bearPct, 0) + "%"
    else
        "Wave Strength: Neutral",
    if bullWave and bullPct >= strongPct then Color.GREEN
    else if bullWave and bullPct >= okPct then Color.YELLOW
    else if bearWave and bearPct >= strongPct then Color.RED
    else if bearWave and bearPct >= okPct then CreateColor(255,165,0)
    else Color.LIGHT_GRAY
);

 

[Thinker]

I have combined the strength interpretation into one of the ones I use, now I have the following:

Layer	What it tells you
MACD Histogram + slope	Direction & acceleration
Zero-line arrows	Entry timing
Volume spike arrows	Participation confirmation
Divergence labels	Early reversal warnings
Alerts	Real‑time triggers
Wave strength %	Whether this move is weaker, equal, or stronger than the last

This is extremely powerful because you are no longer just trading signals. You are trading signal quality.
What it tells you
#MACD Histogram + slope Direction & acceleration
#Zero-line arrows Entry timing
#Volume spike arrows Participation confirmation
#Divergence labels Early reversal warnings
#Alerts Real‑time triggers
#Wave strength % Whether this move is weaker, equal, or stronger than the last

This is extremely powerful I think.

DECLARE LOWER;

############################
# === MACD CORE (Script 2) ===
############################
input fastLength = 12;
input slowLength = 26;
input MACDLength = 9;
input averageType = AverageType.EXPONENTIAL;

input HighVolume = yes;
input VolumeAveragingLength = 20;
input VolumePercentThreshold = 60;

plot Value = MovingAverage(averageType, close, fastLength) -
             MovingAverage(averageType, close, slowLength);
plot Avg = MovingAverage(averageType, Value, MACDLength);
plot Diff = Value - Avg;
plot ZeroLine = 0;

ZeroLine.SetDefaultColor(GetColor(0));

Value.SetDefaultColor(GetColor(1));
Avg.SetDefaultColor(GetColor(8));
Diff.SetPaintingStrategy(PaintingStrategy.HISTOGRAM);
Diff.SetLineWeight(3);

Diff.DefineColor("Positive and Up", Color.GREEN);
Diff.DefineColor("Positive and Down", Color.DARK_GREEN);
Diff.DefineColor("Negative and Down", Color.RED);
Diff.DefineColor("Negative and Up", Color.DARK_RED);

Diff.AssignValueColor(
    if Diff >= 0 then
        if Diff > Diff[1] then Diff.Color("Positive and Up")
        else Diff.Color("Positive and Down")
    else
        if Diff < Diff[1] then Diff.Color("Negative and Down")
        else Diff.Color("Negative and Up")
);

#################################
# === HIGH VOLUME LOGIC (Script 2)
#################################
def aVol = Average(volume, VolumeAveragingLength);
def pVol = 100 * ((volume - aVol[1]) / aVol[1]);
def HV = pVol >= VolumePercentThreshold and HighVolume;

plot HiVolArrow = if HV then 0 else Double.NaN;
HiVolArrow.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
HiVolArrow.SetDefaultColor(Color.WHITE);
HiVolArrow.HideTitle();
HiVolArrow.HideBubble();

#################################
# === SIGNALS & ALERTS (Script 2)
#################################
def ValueCrossBelowZeroline = Value[1] < Avg[1] and Value[1] < 0 and Value > Avg;
plot belowZeroCross = if ValueCrossBelowZeroline then Value else Double.NaN;
belowZeroCross.SetPaintingStrategy(PaintingStrategy.ARROW_UP);
belowZeroCross.SetDefaultColor(Color.CYAN);

def ValueCrossAboveZeroline = Value[1] > Avg[1] and Value[1] > 0 and Value < Avg;
plot aboveZeroCross = if ValueCrossAboveZeroline then Value else Double.NaN;
aboveZeroCross.SetPaintingStrategy(PaintingStrategy.ARROW_DOWN);
aboveZeroCross.SetDefaultColor(Color.MAGENTA);

Alert(aboveZeroCross, "ValueCrossAboveZeroline", Alert.BAR, Sound.Bell);
Alert(belowZeroCross, "ValueCrossBelowZeroline", Alert.BAR, Sound.Ding);

#################################
# === LABELS (Script 2)
#################################
AddLabel(yes,
    "MACD Momentum: " + Round(Diff, 2),
    if Diff >= 0 then
        (if Diff > Diff[1] then Color.GREEN else Color.DARK_GREEN)
    else
        (if Diff < Diff[1] then Color.RED else Color.DARK_RED)
);

AddLabel(yes,
    if Value > 0 then "MACD Line Above Zero" else "MACD Line Below Zero",
    if Value > 0 then Color.GREEN else Color.RED
);

AddLabel(HV, "High Volume Spike", Color.YELLOW);

def StrongBullishSignal = belowZeroCross and HV;
AddLabel(StrongBullishSignal, "Strong Bullish Signal (MACD + Volume)", Color.LIGHT_GREEN);

def momentumSlope = Diff - Diff[1];
AddLabel(yes,
    "Momentum Slope: " + Round(momentumSlope, 2),
    if momentumSlope > 0 then Color.GREEN else Color.RED
);

#################################
# === DIVERGENCE (Script 2)
#################################
def priceHigh = high > high[1] and high > high[2];
def priceLow  = low  < low[1]  and low  < low[2];

def macdHigh = Diff > Diff[1] and Diff > Diff[2];
def macdLow  = Diff < Diff[1] and Diff < Diff[2];

def priceHigh1 = if priceHigh then high else priceHigh1[1];
def priceLow1  = if priceLow  then low  else priceLow1[1];
def macdHigh1  = if macdHigh  then Diff else macdHigh1[1];
def macdLow1   = if macdLow   then Diff else macdLow1[1];

def bullishDiv = low  < priceLow1  and Diff > macdLow1;
def bearishDiv = high > priceHigh1 and Diff < macdHigh1;

AddLabel(bullishDiv, "Bullish Divergence", Color.GREEN);
AddLabel(bearishDiv, "Bearish Divergence", Color.RED);

#################################################
# === WAVE STRENGTH LOGIC (FROM SCRIPT 1 – ADDED)
#################################################
input strongPct = 120;
input okPct     = 95;

def bullWave = Diff > 0;
def bearWave = Diff < 0;

def bullStart = Diff crosses above 0;
def bearStart = Diff crosses below 0;

def bullEnd = Diff crosses below 0;
def bearEnd = Diff crosses above 0;

# Current wave peak
def curBullPeak =
    CompoundValue(1,
        if bullStart then Diff
        else if bullWave then Max(curBullPeak[1], Diff)
        else curBullPeak[1],
    Diff);

def curBearPeakAbs =
    CompoundValue(1,
        if bearStart then AbsValue(Diff)
        else if bearWave then Max(curBearPeakAbs[1], AbsValue(Diff))
        else curBearPeakAbs[1],
    AbsValue(Diff));

# Previous completed wave peaks
def prevBullPeak =
    CompoundValue(1,
        if bullEnd then curBullPeak[1] else prevBullPeak[1],
    Double.NaN);

def prevBearPeakAbs =
    CompoundValue(1,
        if bearEnd then curBearPeakAbs[1] else prevBearPeakAbs[1],
    Double.NaN);

# Percent strength
def bullPct =
    if prevBullPeak > 0 then (curBullPeak / prevBullPeak) * 100 else Double.NaN;

def bearPct =
    if prevBearPeakAbs > 0 then (curBearPeakAbs / prevBearPeakAbs) * 100 else Double.NaN;

# Wave strength label
AddLabel(yes,
    if bullWave and !IsNaN(bullPct) then
        "BULL Wave Strength: " + Round(bullPct, 0) + "%"
    else if bearWave and !IsNaN(bearPct) then
        "BEAR Wave Strength: " + Round(bearPct, 0) + "%"
    else
        "Wave Strength: Neutral",
    if bullWave and bullPct >= strongPct then Color.GREEN
    else if bullWave and bullPct >= okPct then Color.YELLOW
    else if bearWave and bearPct >= strongPct then Color.RED
    else if bearWave and bearPct >= okPct then CreateColor(255,165,0)
    else Color.LIGHT_GRAY
);

Thanks. I've added your indicator. It looks great!