What is MACD indicator?
MACD is a trend following indicator. MACD indicator is created by two EMI(exponential moving average)indicators,MACD indicator is the one type of moving average indicator.
The MACD indicator have 4 main point important
1.MACD line(fast line)-indicated with green line
2. Signal line (slow line)-indicated with green line
3. Zero line(baseline and center line)
4. MACD histogram
Exponential Moving Average (EMA)-calculation
MACD line (12 day EMA-26day EMA)
signal line (9 day EMA of MACD line)
MACD histogram (MACD line-signal line)
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How to trade with MACD indicator-(MACD-MOVING AVERAGE CONVERGENCE DIVERGENCE)
This indicator is invented by Gnvented in.MACerald Apple,this indicator is the most important and popular indicator for trading…
this indicator used in:
-share market
-commodity market
-forex market
-future market
MACD Indicator is very helpful for long term trader and short term trader, similarly.
NOTE– The most important MACD indicator is when you trade with MACD then your stop loss is in very close range.when your trade triggered stop loss it can give you a very small loss……it is helpful to take a smaller loss.
How does MACD work?
In this indicator have 2-important line, MACD line and signal line. MACD line and signal line provide a signal moving around zero line. When the MACD line and signal line are crossed over then it is given a signal for buying and selling.
The MACD indicator have 2 types of cross over
- Positive cross over(bullish crossover)
- Negative cross over(bearish crossover)
When the MACD line is cross over down-up, it is a signal for buying-positive cross over-BULLISH TREND. When the MACD line is cross over up-down, it is a signal for selling-negative cross over-BEARISH TREND.
In MACD Why is the zero line important?
When positive crossover created upside of zero line and positive crossover created in downside of zero line and after both lines going the upside of zero line -STRONG BULLISH TREND. When negative crossover created downside of zero line and negative crossover created in upside of zero line and after both lines going the downside of zero line -STRONG BEARISH TREND.
Note: When a positive crossover is created in the downside of zero line it is not a strong bullish trend then both lines cross over upside it is a strong bullish trend. If the both line is not cross over-wishaw. When negative crossover is created in the upside of zero line it is not a strong bearish trend, then both lines cross over downside it is a strong bearish trend. If the both line is not cross over-wishaw.
MACD indicator double top and double bottom
When MACD is created a double top in upside of zero line then more chances to trend reversal. When MACD is created a double bottom in downside of zero line then more chances to trend reversal.
How does MACD-histogram help?
MACD-histogram shows a trend and momentum in the positive divergence(trend strength) and negative(trend weakness) divergence. HISTOGRAMS DIVERGENCE-(1)histogram positive divergence(2)histogram negative divergence.
(1)histogram positive divergence-then price goes down, MACD goes down, but histogram will go up it is signal of bullish.
(2)histogram negative divergence-then price go up, MACD go up, but histogram will be going down it is sign of be
MACD divergence:(1)positive divergence(bullish divergence)(2)negative(bearish divergence)
(1)positive divergence(bullish divergence):-when price will move in downside and MACD gives a signal of up movement it is signal of positive divergence.
(2)negative(bearish divergence):-when price will move in upside and MACD gives a signal of down movement, it is a signal of negative divergence.
How does MACD help in buying and selling?
(1)when MACD line is cross over down-up, it is signal for buying-positive cross over-buying signal
(2)when a MACD line is cross over up-down, it is a signal for selling-negative cross over-selling signal.
Note: when MACD is created a double top in upside of zero line then more chances to trend reversal. When MACD is created a double bottom in downside of zero line then more chances to trend reversal
HISTOGRAMS DIVERGENCE-(1)histogram positive divergence(2)histogram negative divergence.
(1)histogram positive divergence-buy
(2)histogram negative divergence-sell.
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