Normalized Smoothed MACD with Min-Max Bounds

Summary

This note describes a modified MACD that smooths a normalized version of the indicator and adds bounds based on minimum and maximum values. It briefly reviews conventional MACD, formed from the difference between fast and slow exponential moving averages, with a further average used as the signal line.

The proposed indicator can be read through color changes: one reflects changes in the MACD’s slope, while another corresponds to signal-line crossings. The document compares these behaviors with regular MACD and says they are generally similar, with occasional differences attributed to smoothing. It also observes that zero crossings of the normalized version occur at different points and may give earlier indications of trend changes. These are qualitative claims; the note provides no detailed calculation rules, backtest, performance statistics, or evidence across markets and time periods. Treat the suggested early warnings as a hypothesis to test rather than a demonstrated trading advantage.

Key ideas

• The modified indicator normalizes and smooths MACD, adding bounds derived from minimum and maximum values.
• Color changes are proposed as signals for MACD slope changes and signal-line crossings.
• The author reports that these signals broadly resemble those from regular MACD, with some smoothing-related differences.
• Normalized MACD zero crossings occur at different times and are suggested as possible early trend warnings.

Tags

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