Moving Average Convergence/Divergence (MACD)
MACD Strategy Guide
The MACD Indices Indicator was developed by Gerald Appel.
The MACD Indices Indicator is one of the simplest, most reliable, and most commonly used technical indicators available. The MACD is a momentum oscillator with some trend-following characteristics. MACD Technical Analysis in Indices Trading - The most popular indices technical analysis of the MACD indicator first calculates the difference between two moving averages and draws this as the MACD "Fast " line: and A second MACD "Signal " (trigger) line - the signal line is calculated from the resulting MACD "Fast " line and drawn in the same frame as the "Fast " line. The "standard " MACD values for the MACD indicator "Fast " line are a 12-period exponential moving average and a 26-period exponential moving average and a 9-period exponential moving average for the MACD indicator "Signal " line.
MACD Trading Strategy PDF - Understanding MACD Technical Indicator
The MACD indicator is widely used as a trend following indicator and tends to work most effectively when measuring wide-swinging market stock indices market price movements. There are three basic techniques for using the MACD indicator to generate stock indices signals.
MACD Indices Trading Crossovers:
1. MACD Fast line and MACD Signal line Crossover: A buy signal occurs when the MACD Fast line crosses above the MACD Signal line and a sell signal occurs when the MACD Fast line crosses below the MACD Signal line.
2. MACD Fast Line / Zero Line Crossover: When the MACD Fast-line crosses above zero line a buy signal is given. Alternatively, when the MACD Fast-line crosses below the zero line a sell signal is given.
MACD Divergence: MACD Divergence Strategy
Looking for indices divergence between the MACD indicator and stock indices price can prove to be very effective in identifying potential stock indices trend reversal signals and/or trend continuation signals when it comes to stock indices price movement. There are several types of MACD divergence indices trading setups:
MACD Classic Divergence (Regular Divergence)
- MACD Bullish Divergence - Lower lows in stock indices price & higher lows in MACD indicator
- MACD Bearish Divergence - Higher highs in stock indices price & lower highs in MACD technical indicator
MACD Hidden Divergence
- MACD Bullish Divergence - Lower lows in MACD and higher lows in indices price
- MACD Bearish Divergence - Higher highs in MACD indicator and lower highs in indices price
MACD Technical Analysis in Indices Trading
The MACD indicator can be used to identify potential overbought & oversold levels in stock indices price movements. These overbought & oversold levels are generated by comparing the distance between the shorter moving average & the longer moving average used to calculate the MACD: if the shorter moving average separates dramatically from the longer moving average it may be a signal that stock indices price is over extending and it will soon return to more realistic levels.
Implementation of MACD settings
The stock indices price period, and Moving Average type for each of the moving averages (including the MACD Signal line) have been parameterized to allow a trader full customization of the MACD indicator setting. The MACD Indices Indicator Fast line is drawn as a solid blue line. The MACD Indices Indicator Signal line is plotted as a solid red line. A green Histogram drawn on the MACD indicator represents the difference between the MACD Fast line and the MACD Signal line is also included to make identifying their MACD indicator crossover points easier.
MACD
