Combining CCI and MACD to Color Candles by Directional Agreement

Summary

This document presents a charting rule that colors candles according to whether the Commodity Channel Index and MACD agree on direction. It calculates CCI over 14 periods and compares the MACD line with its signal line, defined here as a 9-period exponential average of the MACD line. Candles are green when CCI is above zero and MACD is above its signal, red when both readings point down, and gray when they disagree.

The method is a visual classification overlay, not a complete trading strategy: it does not specify entries, exits, position sizing, or a holding period. The document provides indicator conditions and implementation code, but no tested results, market context, or evidence that the color categories predict future returns. It also leaves the zero or equality boundary cases unspecified, so an implementation may need an explicit default color. The overlay can help users quickly see directional agreement, but its usefulness and robustness require testing across instruments and timeframes.

Key ideas

• CCI above zero and MACD above its signal line produce a bullish candle color.
• CCI below zero and MACD below its signal line produce a bearish candle color.
• Opposing CCI and MACD readings are shown as neutral gray candles.
• The overlay classifies indicator agreement but does not define a full trade or risk plan.
• The document supplies no performance evaluation or market-specific evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.