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MetaStock
Indicator - Divergence
Between the Close and an Indicator
Rev. 03/18/97
The following
formula will calculate the correlation of the
Close and the MACD. It is written using a
"long form" MACD so that the time
periods used by the MACD may be changed. This
indicator shows "divergence" between the
close and the indicator:
In the Windows versions of MetaStock the formula
is:
Correl(((Sum(Cum(1)*(Mov(C,12,E)-Mov(C,26,E)),100))-(Sum(Cum(1),100)*
Sum((Mov(C,12,E)-Mov(C,26,E)),100)/100))/((Sum(Power(Cum(1),2),100))-
(Power(Sum(Cum(1),100),2)/100)),((Sum(Cum(1)*C,100))-(Sum(Cum(1),100)*
Sum(C,100)/100))/((Sum(Power(Cum(1),2),100))-(Power(Sum(Cum(1),100),2)/100)),12,0) |
The interpretation of the indicator
output is as follows:
- - .08 (80%) and
lower is divergence between the Close and the
MACD.
- 1 is very strong divergence.
+ 1 is very strong correlation.
The formula was
constructed this way so that most other indicators
may be used in place of the MACD.
For example here is the same indicator using
the RSI(14):
Correl(((Sum(Cum(1)*(RSI(14)),100))-(Sum(Cum(1),100)*
Sum((RSI(14)),100)/100))/((Sum(Power(Cum(1),2),100))-(Power(Sum(Cum(1),100),2)/100)),
((Sum(Cum(1)*C,100))-(Sum(Cum(1),100)*Sum(C,100)/100))/((Sum(Power(Cum(1),2),100))-
(Power(Sum(Cum(1),100),2)/100)),12,0)
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