Median Convergence Divergence as a Robust MACD-Style Oscillator

Summary

Median Convergence Divergence adapts MACD by subtracting a slower rolling median of price from a faster rolling median. It then forms a signal line from the rolling median of that difference, with a histogram showing the gap between the oscillator and its signal. The stated motivation is that medians are less affected by extreme observations than means, which may make the indicator useful when outliers distort moving-average calculations.

The document describes interpreting signal-line crosses, zero-line crosses, and divergences between price swings and oscillator swings. It gives suggested fast, slow, and signal windows for daily, weekly, and monthly charts, while advising that intraday settings need customization. These are indicator conventions and suggested settings, not evidence of predictive performance: no backtest or measured results are supplied. The author recommends combining the oscillator with other indicators when planning entries and exits.

Key ideas

• The oscillator replaces MACD's moving averages with rolling medians for both price and signal calculations.
• The MCD line is the difference between faster and slower price medians, and its signal line is a median of that difference.
• Signal-line crosses, zero-line crosses, and price-oscillator divergence are presented as possible interpretation methods.
• Suggested lookback settings vary by chart interval, and intraday settings require customization.
• The document explains the indicator's rationale and use but gives no performance testing or predictive evidence.

Tags

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