Constructing inverted MACD reversal prices

Invert MACD into the next close

This article teaches how to invert a familiar MACD oscillator so the next bar's closing price becomes the testable input. The construction finds the exact price that would flip the histogram, match a target MACD level, or hold the oscillator unchanged.

The inverted MACD construction returns three prices. PMACDsignal is the closing price that would make MACD cross its signal line or make the MACD histogram cross zero. PMACDlevel is the closing price that would make MACD equal a chosen numeric level. PMACDeq is the closing price that would make the current-bar MACD equal the previous-bar MACD.

The MACD oscillator is the MACD histogram or oscillator whose sign change is treated as a chart condition to invert into a price.

A QGEN example from the 2013 sample

On a QGEN chart from the 2013 sample, a next-day close of 20.72 or higher was the computed threshold that would move the MACD oscillator from negative to positive. The 20.98 close on September 11, 2013 met that condition.

Companion listing rules

Companion listing rules can restrict the inverted prices to names above a minimum price, to names whose required move is within a stated fraction of average range, or to names whose oscillator already crossed up on the current bar.

Next-bar offset on the chart

Because each inverted function solves for the next bar's price, plotted lines must be offset one bar ahead so the displayed level sits on the bar it applies to. That next-bar offset is required because each function solves for the following close.

EMA and SMA paths in a spreadsheet

The same inverted-price construction can be implemented as spreadsheet columns that compute EMA-based and SMA-based MACD paths in parallel and then choose which path is drawn.