Traders' Tips from TASC Magazine

MACD of Relative Strength

The "MACD of Relative Strength" can easily be created in MetaStock 6.5 or higher. In MetaStock select "Indicator Builder" from the "Tools" menu. In the Indicator Builder click "New" and enter the following formula:

Name: MACD of Relative Strength

Q:=Input("Relative Strength Time Periods",3,100,14);
z:=Wilders(If(ROC(C,1,$)>0,ROC(C,1,$),0),LastValue(Q));
y:=Wilders(If(ROC(C,1,$)<0,Abs(ROC(C,1,$)),0),LastValue(Q));
ZY:=Z/Y;
RS:=100-(100/(1+ZY));
RSMACD:=Mov(RS,12,E)-Mov(RS,25,E);
Signal:=Mov(RSMACD,9,E);
RSMACD;
Signal

Next click "Ok" and "Close" out of the Indicator Builder. Open a chart and plot the new formula by dragging it from the Indicator QuickList or by using "Indicators" from the "Insert" menu. Both the MACD line and the Signal line will be plotted.

If you prefer to view the RS MACD line in a histogram style, in MetaStock 7.0 select the RS MACD line and use the "Style" toolbar to change it to the histogram style. In MetaStock 6.5 plot the following formula:

Name: MACD of Relative Strength

Q:=Input("Relative Strength Time Periods",3,100,14);
z:=Wilders(If(ROC(C,1,$)>0,ROC(C,1,$),0),LastValue(Q));
y:=Wilders(If(ROC(C,1,$)<0,Abs(ROC(C,1,$)),0),LastValue(Q));
ZY:=Z/Y;
RS:=100-(100/(1+ZY));
RSMACD:=Mov(RS,12,E)-Mov(RS,25,E);
RSMACD;

Next select the RS MACD line and use the "Style" toolbar to change it to the histogram style. To plot the Signal line, drag "Moving Average" from the Indicator QuickList, and drop it on top of the RS MACD line. When the moving average is placed on top of the RS MACD line, the RS MACD line will change color and the status bar will say "Calc Moving Average using MACD of Relative Strength" to signify that the RS MACD will be used to calculate the moving average. Select 9 for the "Time Periods" and Exponential for the "Method", then click OK.

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