How to read MACD?Submitted by admin on February 23, 2008 - 13:24. |
How to read MACD? MACD stands for Moving Average Convergence Divergence. This technique is one of the most often used by the different simulator software as performing the technical analysis of stock trend using this method is easy and very straightforward. As I mentioned, the MACD works well both for a "long term", middle term and intraday trading systems.
General usage of the MACD, a particular example of a Value Oscillator, is detecting price trends through forex market closing prices. In case of MACD growth the prices go up and they go down while MACD decreases. A 9-day exponential average against which the MACD is generally traded is its signal line. This value is generated by the MACD Signal Line function. MACD increasing over the signal line makes a signal to buy. MACD falling lower the signal line produces a signal to sell.
The curves are varying at the area near zero. Standard oscillator researching methods are used in MACD analyzing. The value crossing the line shows whether to buy or sell. The Divergence is described greatly by this indicator. Zero level crossing signalizes a possibility of trend changing. In case it is crossed up from below, it is a buy signal, otherwise if it is crossed downright it is a sell signal.
The process when a slower line is intersected by a faster one is not senseless either. In case the faster line crosses the slower one up from below it is a buy signal. If the situation is opposite and a slower line is intersected by a faster one downright it is a sell signal. The signal is developed in case of its confirmation, which is a continuing lines motioning in a parallel way towards and crossing the zero point. The basic trend confirmed by such signal is the most reliable and significant.
Use MACD for timeframe H1 or above.
MACD may have a lot of signal of Buy/Sell signal, I will explain some. So when we have buy/sell? REVERSAL STRATEGY Reversal Buy 1. If MACD below 0 2. MACD before smaller than MACD now 3. Previous MACD above MACD signal Reversal Sell 1. If MACD above 0 2. MACD before bigger than MACD now 3. Previous MACD below MACD signal.
DIRECT STRATEGY BUY 1. If 2 previous MACD still below 0 2. If previous MACD above or under 0 3. If MACD now above 0 or is cutting from under 0 to the 0 going upward SELL 1. If 2 previous MACD still above 0 2. If previous MACD below or above 0 3. If MACD now belowr 0 or is cutting the from the top above 0 and downwards below 0
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