The Modified Advance Decline Line (MADL) is a fantastic tool for traders looking to enhance their market analysis on MetaTrader 5. This indicator takes the classic ADL (Advances/Declines Line) and gives it a fresh twist. It compares the differences between upward and downward movements of a currency pair over a specified period, helping you gauge the strength of trends and spot potential market reversals.
One of the best features of the MADL is its simplicity, with just one configurable parameter:
- Period – This defines the calculation period for the indicator.
How It’s Calculated:
MADL = PrevMADL + (2.0 * Close - High - Low) / (High - Low) * (Volume + MA)
Where:
MA - SMA(Volume, Period)
Here's a little insider tip: If you notice the price of a trading instrument is climbing while the MADL is trending downward, this hints at a divergence that could signal a market reversal. Keep in mind, though, that this divergence could persist for a while due to the indicator's characteristics. However, when the MADL aligns with the price movement, it’s a strong confirmation of the existing trend.
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