MACD Volatility Adjusted (MACDV)
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Attribution & Intellectual Property Notice
This page and the accompanying implementation provide an independent code implementation of the concept known as MACD-V (volatility normalised MACD; often expressed as MACD / ATR), created by Alex Spiroglou (2015) and presented publicly in 2022 in the research paper “MACD-V: Volatility Normalized/Normalised Momentum.” The research received the NAAIM Founders Award (2022) and the Charles H. Dow Award (2022) from the CMT Association.This is an independent implementation provided for educational purposes. It is not affiliated with, endorsed by, or sponsored by Alex Spiroglou, NAAIM, or the CMT Association.
No Investment Advice / No Warranty
For informational/educational purposes only; provided “as is” without warranties. Use at your own risk.Reference
→ Alex Spiroglou (2022): MACD-V: Volatility Normalized/Normalised Momentum
An Intuitive Analogy: Why Volatility Normalisation Matters
Think of it this way—if you’re measuring wind speed, you’d want different standards for a calm summer day versus a hurricane. MACD-V applies this same adaptive logic to momentum analysis. By dividing the traditional MACD difference by ATR, the indicator automatically scales its readings based on how much the market is actually moving. This volatility adjustment produces comparable signals across different market regimes, whether you’re trading a sleepy consolidation or a trending breakout.
The genius of this approach lies in how it reveals genuine shifts in momentum that traditional MACD might obscure. During low-volatility periods, MACD-V amplifies subtle momentum changes that would otherwise go unnoticed. During high-volatility periods, it prevents you from overreacting to price swings that are actually normal for current market conditions. This dual capability makes MACD-V particularly valuable for traders who need consistent signal interpretation across changing market environments.
How MACD-V Works
The indicator modifies classical MACD by incorporating volatility normalization through this formula:
MACD-V = ((Fast EMA – Slow EMA) / ATR) × 100
Signal Line = EMA of MACD-V over Signal Period
Histogram = MACD-V – Signal Line
For each bar, the calculation proceeds through these steps:
First, the indicator computes the exponential moving average of closing prices over the fast period (typically 12 bars). This captures recent price momentum by weighting recent prices more heavily than older ones.
Second, it calculates the exponential moving average over the slow period (typically 26 bars), which represents the longer-term price trend and provides the baseline for comparison.
Third, the indicator determines the Average True Range over the ATR period (typically matching the slow period at 26 bars). This ATR value measures current market volatility by examining the true range of price movement—the greatest distance between today’s high and low, yesterday’s close and today’s high, or yesterday’s close and today’s low.
Fourth, it divides the difference between fast and slow EMAs by the ATR value, then multiplies by 100 to produce readable percentage-based values. This division by ATR is where the volatility adjustment occurs—when ATR is high (volatile market), the same EMA difference produces a smaller MACD-V reading, and when ATR is low (quiet market), the same difference produces a larger reading.
Finally, the indicator creates a signal line by taking the exponential moving average of MACD-V values over the signal period (typically 9 bars), and calculates the histogram as the difference between MACD-V and its signal line.
The resulting oscillator typically ranges between -500 and +500, though most trading occurs between -100 and +100. The zero line remains the critical reference point, but what makes MACD-V distinctive is that crossings of zero represent volatility-adjusted momentum shifts rather than raw price momentum changes.
Detection Logic
Rising Volatility-Adjusted Momentum (Positive MACD-V):
When MACD-V reads above zero, recent price momentum exceeds longer-term momentum after accounting for current volatility levels. This tells you something more sophisticated than traditional MACD—it means prices are accelerating in a way that’s significant given how much the market has been moving lately.
A MACD-V crossing above zero while the histogram turns positive signals the start of genuine momentum expansion. The beauty here is that this signal automatically adjusts its sensitivity—it requires more forceful price movement to trigger during volatile periods, but responds to subtler momentum in quiet markets.
MACD-V readings above +50 indicate exceptional momentum that’s strong even when measured against current volatility. When you see these elevated readings, you’re witnessing price acceleration that would be remarkable under any market conditions, suggesting powerful directional conviction from market participants.
Declining Volatility-Adjusted Momentum (Negative MACD-V):
MACD-V below zero reveals that recent momentum has weakened relative to longer-term trends, adjusted for volatility. This matters because it distinguishes between normal pullbacks in trending markets and actual momentum deterioration.
When MACD-V crosses below zero with the histogram turning negative, momentum is shifting bearish in a way that’s meaningful for current market conditions. During high volatility, this crossing confirms that downward pressure exceeds what random noise would produce. During low volatility, it catches even gentle momentum shifts before they become obvious.
Readings below -50 mark significant momentum weakness or selling pressure that stands out even after volatility adjustment. These extreme negative readings often develop during climactic selling events or trend exhaustion phases.
Key Signal Patterns:
Momentum Confirmation:
When price breaks above resistance with MACD-V rising and histogram expanding, you’re seeing a breakout supported by volatility-adjusted momentum. The indicator confirms this isn’t just a volatility spike masquerading as meaningful price action—it’s genuine momentum expansion that accounts for current market conditions.
Price making new highs while MACD-V forms lower highs creates bearish divergence that’s more reliable than traditional MACD divergence. Because MACD-V accounts for volatility, this divergence can’t be dismissed as a function of decreasing volatility—it represents true momentum weakening even as price extends.
When price trends strongly but MACD-V remains near zero, you’re witnessing a move driven primarily by volatility expansion rather than momentum improvement. The trend might continue, but it lacks the force that genuine volatility-adjusted momentum would provide.
Crossover Signals:
MACD-V crossing above its signal line while both are above zero generates the strongest continuation signals. This pattern shows momentum accelerating from an already positive base, adjusted for volatility—exactly what you want to see in healthy trends.
Crossovers occurring near the zero line carry extra significance because they mark transitions between positive and negative volatility-adjusted momentum. A crossover from below zero to above zero simultaneously generates both a zero-line cross and a signal line cross, creating high-conviction entry points.
Histogram Analysis:
Expanding histogram bars during trends confirm momentum is building in the direction of the trend. Because the histogram reflects the relationship between MACD-V and its signal line, expansion shows momentum is accelerating faster than the smoothed average can track.
Shrinking histogram bars warn that momentum is decelerating even if the trend direction hasn’t changed. When histogram bars begin shrinking from extreme readings (positive or negative), they often telegraph reversals before the price shows obvious signs of turning.
Histogram divergence—where price makes new extremes but histogram peaks fall short—provides early warning of momentum exhaustion. This divergence pattern works particularly well with MACD-V because volatility adjustment prevents false divergences that plague traditional momentum indicators during volatility regime changes.
Parameters & Configurations
FastPeriod (Default: 12) – Controls the exponential moving average that captures recent price momentum. Range: 2-500. Lower values increase responsiveness to immediate price changes but may generate more whipsaws. This parameter determines how quickly the indicator recognizes momentum shifts.
SlowPeriod (Default: 26) – Sets the exponential moving average representing longer-term price trend. Range: 2-500. Higher values create more stable trend references but reduce sensitivity to momentum transitions. The relationship between fast and slow periods defines the indicator’s core momentum detection characteristics.
SignalPeriod (Default: 9) – Determines the smoothing period for the MACD-V signal line. Range: 2-500. Shorter periods make the signal line track MACD-V more closely, generating earlier crossover signals but potentially more false signals. Longer periods create smoother signal lines with fewer but higher-quality crossovers.
ATRPeriod (Default: 26) – Controls the Average True Range calculation period for volatility adjustment. Range: 2-500. This parameter is crucial because it determines the time horizon over which the indicator measures volatility. Matching this to the slow period (the default approach) ensures consistent volatility normalization, while shorter ATR periods make the indicator more responsive to volatility changes.
Preset Configurations:
Standard Setup: FastPeriod=12, SlowPeriod=26, SignalPeriod=9, ATRPeriod=26
This balanced configuration mirrors traditional MACD’s classic ratio while adding volatility adjustment. It works well across most markets and timeframes, providing a good starting point for testing how volatility-adjusted momentum behaves compared to standard MACD. The matching of ATR period to slow period creates harmonious volatility scaling.
Responsive Setup: FastPeriod=8, SlowPeriod=17, SignalPeriod=9, ATRPeriod=17
This configuration increases sensitivity by shortening all periods while maintaining proportional relationships. It detects momentum shifts earlier, which benefits swing traders and those trading markets where trends develop quickly. The shorter ATR period makes volatility adjustments more reactive to recent volatility changes.
Aggressive Setup: FastPeriod=5, SlowPeriod=13, SignalPeriod=5, ATRPeriod=13
Designed for active traders and scalpers, this setup maximizes responsiveness to momentum changes. The compressed periods generate more signals and earlier entries, though with increased noise. The shortened signal period produces faster crossovers, while the reduced ATR period creates volatile volatility adjustments themselves—meaning the indicator rapidly adapts to changing market conditions.
Conservative Setup: FastPeriod=14, SlowPeriod=28, SignalPeriod=12, ATRPeriod=28
Extended periods reduce false signals by requiring more sustained momentum to generate signals. This configuration suits position traders and those who prefer high-probability setups over frequency. The longer ATR period smooths volatility measurement, preventing the indicator from overreacting to temporary volatility spikes.
Intraday Trading Setup: FastPeriod=8, SlowPeriod=21, SignalPeriod=8, ATRPeriod=21
Optimized for shorter timeframes like 5-minute or 15-minute charts, this setup balances responsiveness with reliability for day trading. The moderate periods catch intraday momentum shifts while the volatility adjustment helps distinguish genuine moves from noise in choppy intraday conditions.
Trend Following Setup: FastPeriod=16, SlowPeriod=34, SignalPeriod=11, ATRPeriod=34
Longer periods emphasize major momentum shifts while filtering out minor fluctuations. This configuration excels in trending markets where you want to ride extended moves without being shaken out by normal volatility. The extended ATR period provides stable volatility baselines for measuring true trend strength.
Trading Applications
MACD-V excels at confirming breakouts by revealing whether momentum expansion is genuine or merely a function of increased volatility. When price breaks key resistance with MACD-V crossing above zero and the histogram expanding, you’re witnessing a breakout supported by volatility-adjusted momentum strength. The critical insight here is that MACD-V won’t generate bullish signals during false breakouts caused by volatility spikes alone—the ATR adjustment prevents this by requiring momentum to exceed volatility expansion.
The indicator’s volatility adjustment makes it particularly valuable during range-to-trend transitions. As markets shift from consolidation to trending, volatility typically increases. Traditional MACD can give misleading signals during these transitions because increasing volatility affects both the signal numerator (price momentum) and the effective threshold for meaningful signals. MACD-V solves this by automatically adjusting expectations—it requires proportionally more momentum when volatility increases, ensuring signals represent genuine momentum shifts rather than volatility artifacts.
Use MACD-V for divergence analysis with enhanced confidence. When price makes new highs but MACD-V forms lower highs, you’re seeing momentum weakening after accounting for volatility. This divergence is more trustworthy than traditional MACD divergence because it can’t be explained away by changing volatility regimes. If momentum is declining on a volatility-adjusted basis, the trend truly is losing force regardless of how volatile or quiet the market has become.
Zero-line dynamics take on special meaning with MACD-V. When the indicator crosses above zero, it signals that volatility-adjusted momentum has turned positive—recent price action is strong relative to longer-term trends, scaled by current volatility levels. This makes zero-line crossovers particularly reliable trend filters. During uptrends, MACD-V remaining above zero confirms the trend maintains meaningful momentum even if volatility fluctuates. When MACD-V crosses below zero during uptrends, it warns that momentum has weakened in a way that matters given current market conditions.
The histogram provides nuanced insight into momentum acceleration and deceleration. Expanding histogram bars during trends show momentum building faster than the signal line can track, indicating strengthening conviction. Shrinking bars warn of momentum deceleration—the trend may continue, but its driving force is diminishing. Because these histogram dynamics occur after volatility adjustment, they reflect genuine changes in momentum character rather than volatility effects.
Signal line crossovers generate higher-quality entry and exit signals than traditional MACD crossovers. When MACD-V crosses above its signal line from below zero, you get simultaneous confirmation of positive volatility-adjusted momentum and accelerating momentum—a powerful confluence. These crossovers work especially well when they occur after MACD-V has bounced off extreme readings, marking the end of overextended moves.
For position sizing and risk management, MACD-V readings provide context-aware momentum gauges. During periods when MACD-V shows strong readings (above +50 or below -50), you might increase position size because momentum is exceptional even after volatility adjustment. During periods when MACD-V oscillates around zero despite apparent trends, you might reduce size because the moves lack conviction relative to volatility—suggesting lower probability of continuation.
The indicator proves invaluable for comparing momentum across different instruments or timeframes. Because MACD-V adjusts for volatility, you can meaningfully compare readings between a quiet stock and a volatile cryptocurrency, or between daily and 5-minute charts. A MACD-V reading of +30 represents similarly strong momentum regardless of the underlying instrument’s volatility characteristics, enabling consistent signal interpretation across your entire portfolio.
Best Practices
Match ATR period to your slow period for harmonious volatility adjustment. The default configuration of ATRPeriod=26 matching SlowPeriod=26 ensures that volatility measurement uses the same time horizon as trend measurement. This prevents timing mismatches where short-term volatility adjustments interact awkwardly with longer-term momentum measurements. If you modify the slow period, adjust the ATR period proportionally to maintain this relationship.
Test MACD-V alongside traditional MACD on your instruments to understand how volatility adjustment changes signal behavior. You’ll often find that MACD-V produces fewer but higher-quality signals, particularly in markets that alternate between high and low volatility regimes. During volatility expansion phases, MACD-V will be more conservative than traditional MACD. During volatility contraction phases, MACD-V will be more sensitive. This adaptive behavior is the indicator’s core strength.
Use extreme readings strategically based on market conditions. In strongly trending markets, MACD-V can remain at extreme levels (+70 or above, -70 or below) for extended periods without triggering reversals. These extremes simply confirm powerful trends with sustained momentum. In range-bound markets, the same extreme readings more reliably mark exhaustion and reversal points. Context determines whether extreme readings signal continuation or reversal.
Combine MACD-V with price structure for robust trading setups. The indicator tells you about momentum character, but price structure tells you where significant levels exist. Look for MACD-V zero-line crosses or signal line crossovers occurring near support and resistance, trendlines, or previous swing points. These confluence areas offer the highest-probability setups because both momentum and structure align.
Pay special attention to histogram behavior around the zero line. When the histogram expands just as MACD-V crosses zero, you’re seeing momentum accelerating through the critical transition between negative and positive. These patterns generate high-conviction signals because both the direction (zero cross) and rate of change (histogram expansion) confirm the momentum shift.
Monitor how quickly MACD-V reverses from extremes. Rapid reversals from +70 or -70 readings often mark “V-shaped” reversals where momentum snaps back sharply. Slow, grinding reversals suggest the trend may resume after consolidation. The speed of MACD-V recovery provides insight into whether exhaustion is temporary or represents genuine trend ending.
Consider using different parameter sets for different market regimes. During low-volatility environments, standard or responsive setups work well because the indicator naturally becomes more sensitive. During high-volatility environments, conservative setups prevent overtrading by requiring more substantial momentum to generate signals. You might even create “volatility regime rules” that automatically adjust MACD-V parameters based on current ATR readings.
Use MACD-V for multi-timeframe analysis with confidence. Because the indicator adjusts for volatility at each timeframe, signals across different timeframes become more comparable. A MACD-V crossover on a daily chart represents momentum comparable to a MACD-V crossover on a 15-minute chart, each adjusted for that timeframe’s typical volatility. This consistency enables cleaner multi-timeframe strategies.
Implement divergence scanning systematically. MACD-V divergence—where price makes new highs/lows while MACD-V forms lower highs/higher lows—provides some of the most reliable reversal signals in technical analysis. The volatility adjustment ensures these divergences represent genuine momentum deterioration rather than volatility regime changes, making them more actionable than traditional MACD divergence.
Remember that MACD-V measures momentum relative to volatility, not momentum in absolute terms. During extremely quiet markets, MACD-V can show strong readings even when absolute price movement is minimal. Always consider both the MACD-V reading and the underlying ATR value to understand whether signals reflect large absolute moves in volatile markets or small moves in quiet markets.
Conclusion
MACD-V represents a fundamental improvement over traditional MACD by incorporating the insight that momentum should be measured relative to volatility rather than in absolute terms. This volatility adjustment creates an indicator that adapts intelligently to changing market conditions, producing more consistent signals across different volatility regimes and enabling meaningful momentum comparison across instruments and timeframes. The indicator’s formula elegantly solves the core limitation of traditional momentum oscillators—their inability to distinguish between meaningful momentum shifts and volatility-driven noise. For traders seeking
momentum analysis that remains reliable whether markets are calm or chaotic, MACD-V provides the adaptive framework necessary for consistent signal interpretation in real-world trading conditions.
Indicator Availability:
This indicator is implemented for MT4, MT5, TradeStation, and MultiCharts.
Using Custom Blocks for Conditions:
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Thank you Ivan
Thank you Ivan ! It is an awesome indicator !
The MACD-v (volatility normalised MACD, aka MACD / ATR) is an indicator I have created in 2015, and presented to the public in 2022, as a paper called: “𝗠𝗔𝗖𝗗-𝘃: 𝗩𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝗡𝗼𝗿𝗺𝗮𝗹𝗶𝘀𝗲𝗱 𝗠𝗼𝗺𝗲𝗻𝘁𝘂𝗺” It received the following Awards: 1. “𝐅𝐨𝐮𝐧𝐝𝐞𝐫𝐬 𝐀𝐰𝐚𝐫𝐝” (2022), for advances in Active Investment Management from the National Association of Active Investment Managers (NAAIM) 2. “𝐂𝐡𝐚𝐫𝐥𝐞𝐬 𝐇. 𝐃𝐨𝐰 𝐀𝐰𝐚𝐫𝐝” (2022) for outstanding research in Technical Analysis, from the Chartered Market Technicians Association (CMTA) I have noticed that you have published a script that is clearly based on the indicator I originally created. However, you have failed to provide… Read more »