How to use the MACD indicator

Today we will talk about technical indicators. What is the MACD MACD? What parameters does not include how you can help entrepreneurs in the MACD trading. How to use the signal indicator to determine price direction.

What is MACD?

The indicator MACD, moving average convergence/stand for economic and technical indicators are most popular, either. It was invented by J. Appel, in late 1970 the indicators proposed by the author of an average of two on the chart. But in the year 1984, Thomas Aspray revised indicator and add graphs because the MACD indicator has become more accurate.

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MACD is in the Group's "oscillator", it helps to examine trends and finding trading signals.

The meaning of the name of the MACD indicator is on average – one shortly, two fast. The value of the indicator is the fast and slow EMA EMA different. Calculating a moving average, depending on the closing price. From the construction of the price trend indicator

The components of the MACD

  • EMA fast – the number of time periods, by default it is 12.
  • Slow EMA – number of time periods by default, 26.
  • MACD SMA – the difference between the length slowly. And average speed, average, which smoothes the movement easier, by default it is 9.

MACD parameters.

They have been developed by J. Appel, and still relevant. You can let them do not change. Or set your own.

The curve itself was not plotted on the chart. Calculate the difference between them, and then build up in the form of a bar graph, under the chart. "Fast" moving average has the top or bottom of the "slow" so that the value of the difference between them can be either positive. Or delete one.

SMA 9 period MACD signal line acts as a graph, which allows it to decide whether to buy or sell signal cable Smoothes the difference between "slow" and "fast" moving average and displayed as a dashed line in simple terms. This line is the average of the histogram itself.

MACD

The MACD is found?

MACD is included in the standard set of technical tools in the trading terminals. Metatrader 4 trading and I add the indicator through the window "Navigator" or "select" insert – indicators – oscillators – MACD ", respectively.

MACD in MT4

MACD trading method.

Now, talking about the signal indicator. MACD signal is prevalent:

  • crossovers
  • An economy

Crossovers

The basic MACD trading rule is to use the crossovers of the indicator with the signal line. The indicator MACD buy signal, the signal keeps cut up the bottom line. If MACD signal line cutting, top to bottom, it indicates that the development of a "bearish" sentiment and signaling in the sale.

MACD crossovers

Traders also use MACD crossovers of a buy-sell signals with zero Crossovers can be interpreted as follows:

  • If MACD is above zero line. There is a macro in the market. When the indicator's conquest by the centre line. It is recommended to turn the State long.
  • If MACD is below zero line. There is a downtrend in the market. When the directional center line on one should sell

MACD crossovers Center.

MACD divergence

The price and the MACD divergence is considered the strongest in the reverse signal analysis. When the divergence that occurred. The reverse shows a trend, it's going to happen when the price and the indicator is calculated from each other. Lol

Economic indicators and different price movements. An economy often appears when using oscillators, such as. RSI MACD, Stochastic Oscillator

Perhaps you have noticed the following: the price increase and at the same time. Power outage or up the histogram bar and the price discount that called, and bullish bearish divergence.

There are two different types:

  • A bullish Divergence occurs when price-low low And high low indicator The trend is likely to change from. The downtrend. Normal price increases mean bullish economy.

A bullish Divergence

  • The high price of a bearish Divergence occurs when high. While the indicators create high volume low. Indicates the weakness of current trends and changes. A bullish Divergence meant that the price fall.

A bullish Divergence

Using the MACD oscillator is.

Other signal sent indicator is the formation of the local high and low in the graph. If the volume of the current bar is closed, MACD previously. It means that the current trend is coming to an end. And reverse or amend market.

MACD histogram

MACD is a specialist:

  • MACD signal is the strongest economy in comparison with other oscillators MACD MACD divergence, that most accurately and, if the price is calculated from each other, it is a sign of the trend reversal occurs.
  • When the MACD as a trend The operator can easily identify the current trend. If MACD histogram in sonbuak Have a leg up in the market. If MACD histogram in the negative zone Shows the downtrend
  • Trading in the MACD signal line crossovers when under it is a sell signal. When the MACD rises above the signal line, one should buy. Buy-sell signals are crossovers with zero line with.

The disadvantages of the MACD is:

  • Analysis of market conditions. MACD graph, no matter whether they are oversold or overbought when the MACD histogram (overbought) or too low (oversold), back to the actual value, a lot more is expected, but MACD doesn't have any upper or lower level for overbought or oversold zone which indicates zones eye level indicator RSI copes very well in this job.

Therefore it may be concluded that the MACD indicator, refers to both the trending and oscillators. It helps to identify the power and direction of the current trend in the market. Reverse lookup can be used as an independent unit, MACD, or used in conjunction with other technical tools. Lol, but a combination of indicators that are more effective. And more accurate results.

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