The Moving Average Convergence Divergence (MACD) is one of the most popular momentum indicators. This version of the indicator displays the MACD from up to three different time frames - all in one lower subgraph study. This indicator also shows when there is a divergence between price and MACD by displaying green and red dots in the center of the indicator for bullish and bearish divergences, respectively.
When looking at the indicator, the white line is the MACD line in the current time frame. The purple line is the signal line (moving average of the MACD) in the current time frame. The histogram represents the second higher time frame. It is the difference between the MACD and signal line in the second time frame. The background color of the indicator represents the third higher time frame. The histogram and background change color depending on whether each higher time frame MACD Histogram is above or below zero, and whether it is increasing or decreasing.
A red dot will appear on the zero line when there is a bearish divergence. A bearish divergence occurs when price is increasing while the MACD is decreasing (shown in the last picture). A green dot will appear when there is a bullish divergence, which is when price is decreasing while the MACD is increasing. These divergence signals are real-time and do not repaint. This indicator can be used with stocks, futures, and forex on any time frame, but it does not work on tick or range charts.